F2 - M4 (Notes FS)

Question 1

Disclosure of vulnerability to concentration is required if all of the following criteria are met:

Answer 1

Concentration exists as of the financial date

Concentration makes the entity vulnerable to the risk of a near-term severe impact

At least reasonably possible, the events could cause a severe impact from the vulnerability to occur in the near term.

Question 2

If a company is a SEC registrant, how long do they have to evaluate subsequent events opposed to non-SEC registrants?

Answer 2

SEC registrants evaluate up until they receive all necessary approvals for issuance and comply with GAAP.

Non-Sec registrants have up until the financial statements are available to be issued

Question 3

Which of the following should be disclosed in the footnotes to the financial statements?

A. Information about changes in stockholders’ equity.

B. Management’s estimate of sales for the upcoming year.

C. An analysis of the company’s major competitors.

D. A projection of future market conditions.

Answer 3

A. Information about changes to stockholders’ equity

As the others could be in the management discussion and analysis. They forecast and analysis not direct information for the external user.

Question 4

The summary of significant accounting policies in the NTFS should include?

Answer 4

Revenue recognition policies
Criteria for determining which investments are treated as cash equivalents.
Basis of profit recognition (e.g. on long-term construction contracts.)

Question 5

What are the disclosure requirements related to risks and uncertainties under U.S. GAAP?

Answer 5

Estimates of the effects of changes in significant estimates

Statement that actual results could differ from the estimates included in the FS

Disclosure of the relative importance of each business when an entity operates multiple businesses

Question 6

When should Disclosure of vulnerability due to all identified concentrations be shown?

Answer 6

Must times it is not but only if it exists as of the FS date, makes the entity volunerable to risks in the near term, and the impacts are reasonably possible to cause severe impacts in the near term.