F2

Question 1

Items not included in summary of significant accounting policies

Answer 1

• composition & dollar amounts of account balances
• details relating to changes in accounting principles
• maturity dates & amounts for long term debt
• yearly computation of depreciations

Question 2

Disclosures of Risks & Uncertainties

Answer 2

• Nature of operations
• Use of estimates in preparing financial statements
• Certain significant estimates that are material
• Vulnerability to certain concentrations

Question 3

Examples of concentrations

Answer 3

• volume of business with someone
• revenue from certain shit
• available supply chain
• market or geographic area?

Question 4

When should you disclose vulnerability to concentrations

Answer 4

• concentration exists at financial statement date
• there is a risk of near term severe impact
• reasonably possible that event that could cause a severe impact will occur in the near term

Question 5

Recognized subsequent events

Answer 5

If a litigation or loss on an uncollectible receivable occurs after year end but before financial statements are issued or available to be issued then they are recognized

Question 6

Evaluation period for subsequent events

Answer 6

SEC companies are through the date the financial statements are issued on Non-SEC are through the date financial statements are available to be issued.

Question 7

How to account if a significant event that occurs after balance sheet date can be estimated

Answer 7

Disclose the nature of the event along with the estimated financial impact

Question 8

SEC filers vs non SEC filers

Answer 8

Non SEC filers need to report the evaluation period bullshit while SEC filers don’t need to

Question 9

Where FV doesn’t apply

Answer 9

• share based compensation

- fv used for leases

Question 10

FV Valuation techniques

Answer 10

Market approach

Income approach: converts future amounts into single discounted amounts

Cost: replacement cost

Question 11

FV disclosures

Answer 11

• valuation techniques & inputs used
• uncertainty of FV measurements as of reporting date
• how changes in FV affect performance & cash flows

Question 12

10% size test for segment reporting

Answer 12

• combined revenue
• combined profit & loss
• combined assets

Question 13

What must a firm submit to the SEC when it issues new securities

Answer 13

• disclosures about securities being offered
• relationship of new securities to company’s other securities
• info similar to that file in annual filing
• audited financial statements
• description of business risk factors

Question 14

For 10-k and 10-q rules

Answer 14

• 700 mill large accelerated has 60-40 days
• between 700 and 75 mill is accelerated and has 75-40 days
• under 75 mill has 90-45 days

Question 15

Form 11-k

Answer 15

Annual report of company’s employee benefit program

Question 16

Forms 20-F & 40-F

Answer 16

Forms for foreign private issuers; 40-F is for Canadians while 20-F is for everyone else and they are similar to form 10-K

Question 17

What’s in form 10-K

Answer 17

• Summary of financial data
• Management’s discussion & analysis
• Audited financial statements

Question 18

Form 6-k

Answer 18

Like form 10-q for foreign private issuers so doesn’t need to be audited

Question 19

Forms 3,4,5

Answer 19

Forms required to be filed by directors, officers, or beneficial owners of more than 10% of a class so there are no financial statements and are not included in XBRL

Question 20

Regulation S-X

Answer 20

Sets forth the form & content for interim and annual financial statements

Question 21

Regulation S-X note

Answer 21

Needs 2 of the most recent balance sheets and 3 of every other financial statement

Question 22

OCBOA Disclosures

Answer 22

• summary of significant accounting policies
• informative disclosures similar to GAAP for all financial statement items that are similar to GAAP items
• includes notes like related party transactions or subsequent events

Question 23

More OCBOA disclosures

Answer 23

• titles should be different than GAAP titles
• should explain changes in equity
• no cash flow statement required

Question 24

Cash basis financial statements

Answer 24

• Statement of cash & equity where cash is the only asset and there are no liabilities; cash equals equity
• Statement of cash receipts & disbursements which shows cash in & out

Question 25

Common modifications for Modified cash flow basis

Answer 25

- fixed assets - income tax accrual - long and short term borrowings and related interest - inventory - recording investments at FV and recording unrealized gains & losses

Question 26

Modified cash flow presentation

Answer 26

- statement of assets and liabilities | - statement of revenues & expenses and retained earnings

Question 27

Accrual to Cash

Answer 27

^Cash = ^L + ^E - ^OA

Question 28

Cash to Accrual

Answer 28

^E = ^A - ^L

Question 29

Cash to Accrual worded questions

Answer 29

- Add ending assets and subtract beginning assets | - Add beginning liabilities and subtract ending liabilities

Question 30

Asset receivable turnover

Answer 30

Indicates how good firm is at collecting receivables, the higher the better

Question 31

Days sales in inventory

Answer 31

Indicates average number of days required to collect receivables

Question 32

Inventory turnover

Answer 32

How quickly inventory is sold, he higher the better

Question 33

Days in inventory

Answer 33

Average number of days required to sell inventory

Question 34

Accounts payable turnover

Answer 34

Number to times trade payables turn over during the year; a low turnover may indicate a delay in payment like shortage of cash

Question 35

Asset turnover

Answer 35

How a company makes effective use of its assets, high ratio indicates effective asset use to generate revenues

Question 36

Debt to equity

Answer 36

Degree of protection to creditors in case of insolvency; the lower the ratio the better

Question 37

Times Interest earned

Answer 37

Ability of a company to cover interest charges

Question 38

Working capital turnover

Answer 38

Sales divided by average working capital (current assets minus current liabilities)

Question 39

Partnership contributions

Answer 39

Assets at FV Liabilities assumed are recorded at PV Partner's capital account equals difference between FV of contributed assets and PV of liabilities

Question 40

How to account for investment capital of new partner

Answer 40

Add up all the partner's capital accounts and then divide the % of new partner minus 1 (If 20% then divide by 80%)

Question 41

Bonus Method for partners

Answer 41

With bonus method you add up all capital accounts and multiply by % interest for new partner. That amount and by more of less than the partner invested so if that amount is more than what was given the bonus goes to new partner and if less it goes to existing partners all based on their profit/loss ratio

Question 42

Bonus Method Journal entry

Answer 42

Dr. Cash - amount invested Dr. Capital A Dr. Capital B Cr. Capital C

Question 43

Goodwill method for partnerships

Answer 43

Multiply contribution of new partner by 1/%(if for one third multiply by 3) then subtract by the sum of everyone's capital and that is goodwill. You also spread goodwill to existing partners based on profit/loss ratio.

Question 44

Goodwill method journal entry

Answer 44

``` Dr. Cash - new partner Dr. Goodwill Cr. Capital A Cr. Capital B Cr. Capital C - amount contributed ```

Question 45

Question capital balance for partnerships

Answer 45

- Top row show be net assets and each partner with their % - Left column should be contributions, then goodwill to get initial capital balances - Then net income, draws, and ending balance