Financial Reporting Standards
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CPA Financial Accounting and Reporting (FAR) › Financial Reporting Standards
A city government is currently preparing fund-based financial statements. What guides the timing of recognition for the transactions to be reported?
Accrual accounting
Modified accrual accounting
Accrual accounting for the governmental funds and modified accrual accounting for the proprietary funds
Modified accrual accounting for the governmental funds and accrual accounting for the proprietary funds
Explanation
Governmental funds are prepared using the modified accrual basis of accounting, while proprietary funds use regular accrual accounting.
IFRS requires which revenue recognition method when the outcome of rendering services cannot be estimated reliably?
Percentage of completion method
Completed contract method
Installment sales method
Cost recovery method
Explanation
IFRS requires that the cost recovery method be used with an outcome of rendering services is uncertain.
Under IFRS, an entity is required to file the following financial statements initially?
2 income statements
2 statements of cash flows
2 statements of changes in equity
3 statements of comprehensive income
Explanation
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
A city government is currently preparing fund-based financial statements. What guides the timing of recognition for the transactions to be reported?
Accrual accounting
Modified accrual accounting
Accrual accounting for the governmental funds and modified accrual accounting for the proprietary funds
Modified accrual accounting for the governmental funds and accrual accounting for the proprietary funds
Explanation
Governmental funds are prepared using the modified accrual basis of accounting, while proprietary funds use regular accrual accounting.
The objectives of financial reporting, as set forth by the FASB conceptual framework, are based on which of the following?
Materiality
SEC reporting requirements
Generally accepted accounting principles
The needs of financial statement users
Explanation
FASB basis its objectives for financial reporting on the needs of the ultimate financial statement user.
IFRS requires which revenue recognition method when the outcome of rendering services cannot be estimated reliably?
Percentage of completion method
Completed contract method
Installment sales method
Cost recovery method
Explanation
IFRS requires that the cost recovery method be used with an outcome of rendering services is uncertain.
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Correction of an error in a period that is not being presented
Cumulative effect of a change in inventory from FIFO to weighted average
Both of these
None of these
Explanation
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
The objectives of financial reporting, as set forth by the FASB conceptual framework, are based on which of the following?
Materiality
SEC reporting requirements
Generally accepted accounting principles
The needs of financial statement users
Explanation
FASB basis its objectives for financial reporting on the needs of the ultimate financial statement user.
Under IFRS, an entity is required to file the following financial statements initially?
2 income statements
2 statements of cash flows
2 statements of changes in equity
3 statements of comprehensive income
Explanation
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Correction of an error in a period that is not being presented
Cumulative effect of a change in inventory from FIFO to weighted average
Both of these
None of these
Explanation
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.