CPA Study cards F1 17-30

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CPA Study cards F1 17-30
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2012-07-11 17:19:47
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CPA study cards F1 17 30
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CPA Study cards F1 17-30
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  1. What is the income statement for?
    it provides information about the uses of funds in the income process, the uses of funds that will never be used to earn income, the sources of funds created by those expenses, and the sources of funds not associated withthe earning process
  2. What is the use of the income statement
    useful in determining profitablity, value for investment purposes, and credit worthiness.  also helpful in predicting future cash flow based on past performance.
  3. Income statement


    what is cost 
    is an amount expended for items such as capital assets, services, and merchandise received.  it is the amount actually paid for something.
  4. Income statement

    what is unexpired costs 
    costs that will expire in future periods and be charged against revenues from future periods
  5. income statement

    list some unexpired cost 
    • inventory
    • prepaid insureance
    • net book value of fixed assets
    • unexpired cost of patents   
  6. income statement

    match the unexpired costs to the expired costs


    unexpired cost ( asset)--inventory----prepaid insurance----net book value of fixed assets-----unexpired cost of patents  


    Expired Cost (expense)---depreciation expense----cost of goods sold----patents expense(amortization)----insurance expense     
    inventory  -----  cost of goods sold

    Prepaid insurance  -----   insurance expense

    Net book value of fixed assets  ----  Depreciation expense

    Unexpired cost of patents  -----   Patents expense (amortization     
  7. Income statement --  Gross Concept

    How are revenues reported  

     
    at their gross amounts----less allowance for returns and discounts given
  8. Income statement --  Gross Concept

    How are Expenses reported 
    at gross amounts
  9. Income statement --- Net concept

    How are gains reported 
    at their net amounts
  10. Income statement ---  Net Concept

    How are losses reported 
    at net amounts
  11. income statement -- net concept


    A ---------------------------- is the recognition of an asset either not in the ordinary course of business or withut the incurrance ofan expense 
    gain
  12. Income Statement --  net concept

    A ----------------------------------is cost expiration either not int he ordinary course of business or without the generation of revenue. 
    loss
  13. income statement

    what does gross of tax mean 
    before taxes are taken out
  14. Income statement

    what does net of tax mean 
    after taxes are taken out
  15. income statement
    what are the major components of the income statement 
    • income/Loss from continuing operations
    • income/loss from discontinued operations
    • extraordinary items  
  16. Retained earnings

    what is a major compoent of the statement of retained earnings 
    cumulative effect of change in accounting principle
  17. put the following in presentation order of an income and retained earning statement

    extraodardinary items
    cumulative effect of change in accounting principle
    income /loss from continuing operations
    income / loss from discontinued operatoins
    • income /loss from continuing operations
    • income / loss from discontinued operatoins
    • extraodardinary items
    • cumulative effect of change in accounting principle
  18. Income statement
    for the following items, what is reported net of tax and what is reported as gross of tax

    extraodardinary items
    cumulative effect of change in accounting principle income /loss from continuing operations
    income / loss from discontinued operatoins
    • extraodardinary items --net of tax 
    • cumulative effect of change in accounting principle  -- net of tax
    • income /loss from continuing operations -- gross of tax
    • income / loss from discontinued operatoins -- net of tax
  19. Income statement

    What does IDEA stand for 
    it helps to present the income statement

    Income/loss from continueing operations

    income/loss from Discontinued operations

    Extraordenary items

    cumulative effect of change in Accounting principle       
  20. Income statement---income from continueing operations

    what is a multiple income statement  

     
    it reports operating revenues and expenses separately from non-operating revenues and expenses and other gains and losses.
  21. income statement---income from continueing operations

    what is the benefit of the multiple step income statement 
    it has enhanced user information (because the line items presented often provide the user with readily avaiable data with which to calculate various analytical ratios)
  22. income statement---income from continueing operations

    list what items on the multi-step income statement are normal operations
    • net sales
    • cost of sales
    • gross margin
    • selling expenses
    • general and administrative expenses
    • depreciation expense
    • income/loss from operations
  23. income statement--income from continueing operations

    list what items on the multi-step income statement are non-normal operations
    • other revenues and gains
    • interest income
    • gain on sale of fixed asset
    • other income
    • other expenses and losses
    • interest income
    • loss on sale of fixed assets
    • income before unusual items and income tax
    • unusual or infrequent items
    • loss on sale of avaiable-for-sale securities         
  24. income statement--income from continueing operations

    what are inventory cost
    • purchase price
    • freight in
  25. income statement--income from continueing operations

    What are selling expenses 
    • Freight out
    • salaries and commissions
    • advertising  
  26. income statement--income from continueing operations

    What are General and Administrative expenses 
    • officers salaries
    • accounting and legal
    • insurance  
  27. income statement--income from continueing operations

    What are non-operating expenses 
    • Auxiliary activities
    • interest expense 
  28. income statement

    what is a single step insome statement 
    it is the presentation of income from continuing operations, total expenses are subtracted from total revenues all in one step.  Very simple design / just the facts
  29. income statement--discontinued operations


    Discontinued operations are reported --------------------from continueing operations in the income statement
    separately
  30. income statement--discontinued operations

    discontinued operations are reproted ------------ if tax 
    net
  31. income statement--discontinued operations

    discontinued operations can consist of what? 
    • impairment losses
    • gain/loss from actual operations
    • gain/loss on disposal
    •   
  32. income statement--discontinued operations

    all amounts of discontinued items are reported in the -------------------------------------------------------------------. 
    period in which they occur
  33. income statement--discontinued operations

    what is a component of an entity 
    it is the lowest part of an entity for which operations and cash flows can be clearly distinguished, both operationally and for financial reporting
  34. income statement--discontinued operations

    Under U.S. GAAP what can a component of an entity be?
    • An operating segment
    • A reportable segment
    • A reporting Unit
    • A subsidiary
    • An asset group
  35. income statement--discontinued operations

    Under IFRS what can a component of an entity be?
    • A separate major line of business or geographical area of operations
    • A subsidiary aquiried exclusively with a view to resale 
  36. income statement---discontinued operations

    a component of a business (U.S. GAAP) or a disposal group ( IFRS) is classified as held for sale in the period in which all of these criteria are met 
    • 1. management commits to a plan to sell the component
    • 2. the compnent is available for immediate sale in its present condition
    • 3. An active program to locate a buyer has been inititated
    • 4. The sale of the compnent is probable and the sale is expected to be complete within one year
    • 5. the sale of the component is being actively marketed
    • 6. actions required to complete the sale make it unlikely that signifcant changes to the plan will be made or that the plan will be withdrawn     
  37. income statement--discontinued operations

    under IFRS --------------- a component can be classified as held for sale the individual assets and liabilities of the component must be measured in accordance with applicatable standards and any resulting -------------------------------- must be recognized
    before/gains and losses
  38. income statement--discontinued operations

    the results of operations of a component of an entity will be reported in discontinued operations if either the component 
    • 1. has been disposed of
    • 2. is classified as held for sale 
  39. income statement--discontinued operations

    what must be present inorder for discontinued operations to be reported 
    it is eliminated from ongoing operations--no cash flows from the component

    there is no significant continueing involvement 
  40. income statement--discontinued operations

    what types of items are included in the results of discontinued operations 
    • 1. results of operations of the component
    • 2. gain or loss on disposal of the component
    • 3. impairment loss of the component  
  41. income statement--discontinued operations

    the results of discontinued operations of a component are reported in discontinued operations in the period the component is either--------------------------------------------------------------- 
    disposed of or is held for sale
  42. income statement--discontinued operations


    Are assets within the component depreciated or amortized after it is in discontinued operations?
    No
  43. income statement

    a gain or loss not preveiously recognized that results from the sale of the componeent is recognized at the --------------------------and not before 
    date of sale
  44. income statement

    Gains or losses anticipatied to occur in the future are---------------------------------they occur 
    not recognized until
  45. income statement

    adjustments to amounts previously reported in discontinued operations that are directly related tothe disposal of a component of an entity in a prior period are classified in --------------------------------------------------discontinued operations 
    the current period in
  46. income statement

    A component that is classified as avaiable for sale is measured how? 
    at the lower of its carrying amount or fair value less costs to sell
  47. income statement

    How are the results of discontinued operations, net of tax, reported 
    a separate component of income before extraordinary items
  48. insome statement

    where and how on the income statement is discontinued operations listed 
    as a separate component before extraordinary items
  49. The results of dicontined items are reported -----------------of tax
    net
  50. income statement

    The results of discontinued operations, net of tax, are reported as a -------------------------------------. 
    separate component of income before extraordinary items
  51. income statement

    a gain or loss recognized on the disposal shall be disclosed either on the ------------------------------------------or in the -------------------------------------------- 
    face of the income statement / notes to the financial statements
  52. income statement

    as part of its convergence with IFRS, U.S. GAAP requires the recognition of a ------------------------------------------------------------------------------------ 
    liability for the costs associated with an exit or disposal activity
  53. income statement

    What are some cost associated with exit or disposal activities that need to be recognized 
    • 1. involuntary termination benefits
    • 2. costs to terminate a contract that is not a capital lease
    • 3. other costs associated with exit or disposal activities including costs to consalidate faciltites or relocate employees.  
  54. income statement
    a liability associated with an exit or diposal activity should be recognized only when all of the following critera are met 
    • 1. an obligating event has occurred
    • 2. the event results in a present obligation to transfer assets or to provide services in the future (payment)
    • 3. the entiry has little or no discretion to avoid future transfer of assets or providing of services  
  55. income statement

    in disposal activities, the liability should be measured at------------------------------
    fair value
  56. income statement

    costs associated with an exit or disposal activity related to a discontinued operation will be reported in ---------------------------------------------------------------------
    discontinued operations
  57. income statement

    costs associated with an exit or disposal activity not related to a iscontinued operation will be reported in ------------------------------------------------------------------ 
    income from continueing operatoins
  58. income statement

    Under U.S. GAAP what are extraordingary items and transactions and other events that are 
    • 1. material in nature
    • 2. fo a character significantly fidderent from the typical or customary business activities
    • 3. not expected to recur in the foreseeable future infrequent
    • 4. not mormally considered in evaluating the ordinay operating results of an enterpirise    
  59. income statement

    extraordary items must be ----------------------------------------------disclosed in the income statement 
    separately
  60. income statement

    list some examples of extraordingary items
    • 1.The abandonment of or damage to a plant due to an infrequent earthquake or an infrequent flood
    • 2. an expropriation of a plant by the goverment
    • 3. a prohibition of a product line by a newly enacted law or regulation
    • 4. certain gains or losses from extinguishment of long term debt provided they are not part of the entity recurring operations and thus meet the criteria of unusual and infrequent   
  61. insome statement

    extraordinary items are ---------------------of tax 
    net
  62. income statement

    a gain or loss from a foreign curreny transaction is ------------------------extraordinary item 
    not
  63. retained earning statement

    a change is accounting principle is ----------------of tax 
    net
  64. retained earning statement

    Accounting changes are broadly classified as 
    • 1. changes in accounting estimate
    • 2. changes in accounting principle
    • 3.changes in accounting entity   
  65. retained earning statement
    error corrections are ----------------------------------------------accounting changes 
    not considered
  66. retained earnings statement

    when a change in account estimte occurs, are the prior periods restated? 
    no
  67. retained earnings statement

    what events result from a change of accounting principle 
    • 1. changes in the lives of fixed assets
    • 2. adjustments of year end accrual of officers saleries and bonus
    • 3. write down of obsolete inventory
    • 4. material nonrecurring IRS adjustments
    • 5. settlement of litigation
    • 6. Changes in accounting principle that are inseparable from a change in estimate     
  68. retained earning statement

    changes in accounting estimate are accounted for -------------------------------. They ---------------- affect previous periods. 
    prospectively / do not
  69. retained earnings statement

    If there is a change in the accounting estimate, where should the affect of that change be disclosed 
    in the notes of the finacial statement
  70. retained earnings statement

    A change from one accounting principle to another --------------------------------------------------accounting principle 
    acceptiable
  71. retained earning statement

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