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level: Financial Statements

Questions and Answers List

level questions: Financial Statements

QuestionAnswer
2 Components of an Income Statement1) Income from Continuing Ops 2) Income from Discontinued Ops
2 Components of Continuing Operations1) Operating Rev/Exp 2) Non-Operating (Other Rev/Exp, Gain/Loss)
Elements of Other Comprehensive IncomePension, Unrealized G/L on Debt Securities, Foreign Currency Translation, Instrument Specific Risk, Effective Portion of CF Hedge, Revaluation Surplus (IFRS ONLY)
Comprehensive Income CalculationNet Income (after tax) + OCI [PUFIER] (net of tax)
Single-Step Income Statement vs Multiple-StepSingle Step: Revenues - Expenses Multiple Step: Multiple Subtotals
Changes in Accounting Estimate are adjusted:Prospective - DO NOT RESTATE
Change to LIFO or Depreciation Method is adjusted:Prospective - DO NOT RESTATE
Changes in Accounting Principle or Error Correction:Retrospectively- Adjust Beginning RE NET OF TAX (earliest period presented)
Going Concern: Management should evaluate the entity's going concern within one year of ???The BS ISSUE date NOT Statement date
Going Concern: Results of management's evaluation should be disclosed unless ???There is no substantial doubt
Subsequent Events: 1. When should subsequent events be recognized? 2. When should they be recorded/disclosed?1. Recognize if they have existed at the BS Date 2. JE and Disclosure if they occur before the BS Date, Disclosure only if afterwards
OCBOA: Presentation Guidelines: (2)-Don't use GAAP terms -Statement of CF not required
OCBOA: Cash Basis vs Modified Cash BasisModified cash basis has expenses and revenues, but does not have receivables or payables
OCBOA: How should non-taxable revenues and expenses be reported on an Income Tax Basis F/S?As separate line items, additions/deductions to NI, or a disclosure
Cash to Accrual Basis:For AR and Unearned Revenue: - Add Good (Increase in A or Decrease in L) - Subtract Bad (Decrease in A or Increase in L) For Everything Else: - Subtract Good (Increase in A or Decrease in L) - Add Bad (Decrease in A or Increase in L)
How should contingency Gains/Losses be accounted for if they are: 1) Probable 2) Reasonably Possible 3) Remote1) Gains = Disclose; Loss = JE and Disclose 2) G/L = Disclose Only 3) G/L = Ignore (Unless guarantee of indebtedness to others, then disclose)
How should contingencies be accounted for if a range of potential losses is given?Choose the lowest amount