CPA Exam (Becker F1) with Accurate
Solutions
__________ requires quarterly financial reports. - ANS-The SEC
A change from non-GAAP to GAAP is a(n) ______________. - ANS-correction of an
error
A Statement of Changes in AOCI is similar to a Statement of R/E except instead of
subtracting dividends from the beginning balance ______________ are subtracted from
the beginning balance in AOCI. - ANS-amounts reclassified from AOCI
Accumulated other comprehensive income is a(n) ___________ account. - ANS-equity
An entity's commitment to an exit or disposal plan, by itself, is not enough to result in
liability recognition. What other criteria must be met? - ANS-1. An obligating event as
occurred (i.e. profit < budget)
2. The event results in a present obligation to transfer assets or to provide services in
the future (i.e. payment to the landlord for canceling a lease agreement), and
3. The entity has little or no discretion to avoid the future transfer of assets or providing
of services
An IFRS must be approved by at least __________ members of the ___________. -
ANS-9, IASB
Annual financial statements filed with the SEC must be _________. - ANS-audited
Another name for current cost is __________. - ANS-replacement cost
Another term for "fair value less costs to sell" is ________________. - ANS-net
realizable value
Are SFAC GAAP? - ANS-No, but they provide a basis for GAAP.
At the end of each accounting period, all components of comprehensive income are
closed to the _________________. - ANS-balance sheet
Closing a hub is considered a(n) __________ or ______________ activity. - ANS-exit,
disposal
,Comprehensive income is comprised of ______________ transactions. - ANS-non-
owner
Define operating segment. - ANS-An operating segment is a component of an
enterprise:
(i) That engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other
components of the same enterprise),
(ii) Whose operating results are regularly reviewed by the enterprise's "Chief Operating
Decision Maker" to make decisions about resources to be allocated to the segment and
assess its performance, and
(iii) For which DISCRETE financial information is available.
Define XBRL. - ANS-Extensible Business Reporting Language (XBRL) is a software
that uses Extensible Markup Language (XML) data tags to describe financial
information for business and financial reporting. XBRL and XML tell computers how to
interpret the context of the text.
Depreciation is a(n) _____________ expense. - ANS-operating
Describe a single step income statement. - ANS-Total revenues less total expenses =
net income.
Describe the "10% 'Size' Test" for reportable segments. - ANS-There are three different
10% tests. If ONE of the tests is met, the segment is reportable.
1. REVENUE: A segment meets the test if its reported revenue, including both sales to
external customers and intersegment sales or transfers (excluding interest income on
advances and loans to other segments), is 10% or more of the combined revenue,
internal and external, of all operating segments.
2. PROFIT OR LOSS: A segment meets the size test if the absolute amount of its
reported profit or loss is 10% or more of the greater, in absolute amount, of
(i) The combined reported profit of all operating segments that did not report a loss
(ii) The combined reported loss of all operating segments that did report a loss
3. ASSETS: A segment meets the size test if its assets are 10% or more of the
combined assets of all operating segments.
Describe the "75% 'Reporting Sufficiency' Test" for reportable segments. - ANS-If the
total of external (consolidated) revenue reported by operating segments constitutes less
than 75% of external (consolidated) revenue, additional operating segments need to be
identified as reportable segments, even if they do not meet the size test, until at least
75% of external (consolidated) revenue is included in reportable segments.
, Downsizing is considered a(n) ____________ or ___________ activity. - ANS-exit,
disposal
Each interim financial statement should be marked _____________. - ANS-"unaudited"
Financial information provided in general purpose financial reports is designed to
___________. - ANS-meet "informational needs"
Freight-in is part of ____________. - ANS-cost of goods sold
Freight-out is a(n) _________ expense. - ANS-selling
Give four common examples of extraordinary items. - ANS-1. Infrequent earthquake or
infrequent flood
2. Expropriation of a plant by the government
3. Prohibition of a product line by a newly enacted law or regulation
4. Gains or losses from extinguishment of LT-debt IF SPECIFIED AS UNUSUAL AND
INFREQUENT
How are changes in accounting entity's treated? - ANS-Restated (retrospectively)
How are changes in accounting estimates treated? - ANS-Prospectively
How are changes in accounting principles treated? - ANS-Retrospectively
How are income taxes estimated for interim financial statements? - ANS-Step 1:
Multiply the year to date income by the estimated effective tax rate.
Step 2: Subtract income taxes from previous quarters.
How are marketable securities measured on the balance sheet? - ANS-Current market
value
How are segments that are not reportable based on the materiality tests presented? -
ANS-They are lumped together and disclosed in an "all other segments" category.
How do you estimate the effective tax rate used to calculate the provision for income
taxes for an interim period? - ANS-Use the best information available at that time.
Note: you are estimating the effective rate applicable for the full fiscal year.
How is a component classified as held for sale measured and valued? - ANS-It is
measured at the LOWER OF its CARRYING VALUE or FAIR VALUE LESS COSTS TO
SELL.
How is A/R measured on the balance sheet? - ANS-Net realizable value
Solutions
__________ requires quarterly financial reports. - ANS-The SEC
A change from non-GAAP to GAAP is a(n) ______________. - ANS-correction of an
error
A Statement of Changes in AOCI is similar to a Statement of R/E except instead of
subtracting dividends from the beginning balance ______________ are subtracted from
the beginning balance in AOCI. - ANS-amounts reclassified from AOCI
Accumulated other comprehensive income is a(n) ___________ account. - ANS-equity
An entity's commitment to an exit or disposal plan, by itself, is not enough to result in
liability recognition. What other criteria must be met? - ANS-1. An obligating event as
occurred (i.e. profit < budget)
2. The event results in a present obligation to transfer assets or to provide services in
the future (i.e. payment to the landlord for canceling a lease agreement), and
3. The entity has little or no discretion to avoid the future transfer of assets or providing
of services
An IFRS must be approved by at least __________ members of the ___________. -
ANS-9, IASB
Annual financial statements filed with the SEC must be _________. - ANS-audited
Another name for current cost is __________. - ANS-replacement cost
Another term for "fair value less costs to sell" is ________________. - ANS-net
realizable value
Are SFAC GAAP? - ANS-No, but they provide a basis for GAAP.
At the end of each accounting period, all components of comprehensive income are
closed to the _________________. - ANS-balance sheet
Closing a hub is considered a(n) __________ or ______________ activity. - ANS-exit,
disposal
,Comprehensive income is comprised of ______________ transactions. - ANS-non-
owner
Define operating segment. - ANS-An operating segment is a component of an
enterprise:
(i) That engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other
components of the same enterprise),
(ii) Whose operating results are regularly reviewed by the enterprise's "Chief Operating
Decision Maker" to make decisions about resources to be allocated to the segment and
assess its performance, and
(iii) For which DISCRETE financial information is available.
Define XBRL. - ANS-Extensible Business Reporting Language (XBRL) is a software
that uses Extensible Markup Language (XML) data tags to describe financial
information for business and financial reporting. XBRL and XML tell computers how to
interpret the context of the text.
Depreciation is a(n) _____________ expense. - ANS-operating
Describe a single step income statement. - ANS-Total revenues less total expenses =
net income.
Describe the "10% 'Size' Test" for reportable segments. - ANS-There are three different
10% tests. If ONE of the tests is met, the segment is reportable.
1. REVENUE: A segment meets the test if its reported revenue, including both sales to
external customers and intersegment sales or transfers (excluding interest income on
advances and loans to other segments), is 10% or more of the combined revenue,
internal and external, of all operating segments.
2. PROFIT OR LOSS: A segment meets the size test if the absolute amount of its
reported profit or loss is 10% or more of the greater, in absolute amount, of
(i) The combined reported profit of all operating segments that did not report a loss
(ii) The combined reported loss of all operating segments that did report a loss
3. ASSETS: A segment meets the size test if its assets are 10% or more of the
combined assets of all operating segments.
Describe the "75% 'Reporting Sufficiency' Test" for reportable segments. - ANS-If the
total of external (consolidated) revenue reported by operating segments constitutes less
than 75% of external (consolidated) revenue, additional operating segments need to be
identified as reportable segments, even if they do not meet the size test, until at least
75% of external (consolidated) revenue is included in reportable segments.
, Downsizing is considered a(n) ____________ or ___________ activity. - ANS-exit,
disposal
Each interim financial statement should be marked _____________. - ANS-"unaudited"
Financial information provided in general purpose financial reports is designed to
___________. - ANS-meet "informational needs"
Freight-in is part of ____________. - ANS-cost of goods sold
Freight-out is a(n) _________ expense. - ANS-selling
Give four common examples of extraordinary items. - ANS-1. Infrequent earthquake or
infrequent flood
2. Expropriation of a plant by the government
3. Prohibition of a product line by a newly enacted law or regulation
4. Gains or losses from extinguishment of LT-debt IF SPECIFIED AS UNUSUAL AND
INFREQUENT
How are changes in accounting entity's treated? - ANS-Restated (retrospectively)
How are changes in accounting estimates treated? - ANS-Prospectively
How are changes in accounting principles treated? - ANS-Retrospectively
How are income taxes estimated for interim financial statements? - ANS-Step 1:
Multiply the year to date income by the estimated effective tax rate.
Step 2: Subtract income taxes from previous quarters.
How are marketable securities measured on the balance sheet? - ANS-Current market
value
How are segments that are not reportable based on the materiality tests presented? -
ANS-They are lumped together and disclosed in an "all other segments" category.
How do you estimate the effective tax rate used to calculate the provision for income
taxes for an interim period? - ANS-Use the best information available at that time.
Note: you are estimating the effective rate applicable for the full fiscal year.
How is a component classified as held for sale measured and valued? - ANS-It is
measured at the LOWER OF its CARRYING VALUE or FAIR VALUE LESS COSTS TO
SELL.
How is A/R measured on the balance sheet? - ANS-Net realizable value
