Term
| How often are interim financial reports prepared? |
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Definition
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Term
| On interim reports, the emphasis is on what part of the financial statements? |
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Definition
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Term
| What is the major issue that interim financial reporting faces? |
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Definition
| Is each period different from the rest of the year or a partof the annual part of the year. (Discrete vs Integral View) |
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Term
| APBO Generally Adopts the _____ Viewpoint of Interim Reporting |
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Definition
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Term
| Interim Reporting: When are revenues recgnized? |
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Definition
| On the same basis as for the full year. |
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Term
| How are period costs allocated for interim financial reporting? |
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Definition
| Allocated on basis of time, benefit received, sales, etc. They are flexible, but subjective. |
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Term
| How should you estimate COGS for interim financial reporting? |
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Definition
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Term
| For temporary liquidation of LIFO, what should you use for valuation? |
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Definition
| Current replacement cost -- only if product is to be replaced by year end. |
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Term
| What tax rate should be used for Interim Fiancial Reporting? |
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Definition
| Estimated annual effective tax rate -- cumulative ITE to date minus any ITE previously recorded. |
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Term
| Should a company disclose EPS for interim financial reporting? |
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Definition
| Yes -- both basic and diluted. |
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Term
| SFAS 131 requires _____ and ____ segmental data for ublicly held companies |
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Definition
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Term
| How must a company determine the operating segments it is involved in? |
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Definition
| By the management approach -- how management segments the company internally in order to make operating decisions and assessing overall performance. |
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Term
| What are the three requirements for segmental disclosures? |
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Definition
| 1. Revenue must be at least 10% of the combined revenues (includes unaffiliated and intersegment sales)
2. Profit (or loss): at least 10% of the greater of the combined profit of all operating segments. [includes everything inetrnally associated with the segment including sales, interest revenue/expense, investment income, gains/losses, taxes, etc.... excludes any general corporate expenses not internally allocated)
3. Assets: At least 10% of the combined assets of all operating segments - excludes general corporate assets not allocated to segments. |
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Term
| What is the limitation of segmenting? |
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Definition
| Total revenue of all reportable segments must be at least 75% of total consolidated revenue (excluding any intersegment sales). |
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Term
| What are the required disclosures of segmental disclosures? |
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Definition
1. General information about each operating segment
2. Segment profit, including information on all sales (external and intersegment), interest revenue/expense, depreciation, investment income, taxes, extraordinary items.
3. Segment assets
4. Infrmation about products and geogrraphic areas
5. Sales to major customers, if at least 10% of total company revenues
6. Reconciliations of segment totals to corresponding enterprise totals. |
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Definition
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Term
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Definition
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Term
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Definition
| (Cash+ s-t investments + receivables) / CL |
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Term
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Definition
| net credit sales/average net AR |
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Term
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Definition
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Term
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Definition
| (income/average total assets) comes ouut to be a % |
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Term
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Definition
| (net income - preferred stock divident)/weighted average shares of CS |
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Term
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Definition
| CS Equity/shares of CS outstanding |
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Term
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Definition
| total liabilities/total equity |
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Term
| Name the two types of price changes |
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Definition
General: Overall level of prices
Specific: Market Value changes Individual goods and services |
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Term
| General Price Level Indicies Measure...? |
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Definition
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Term
| Constant Dollar Accounting adjusts only for...? |
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Definition
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Term
| Specific Market Value Changes effect a firms...? |
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Definition
| Individual assets and liabilities |
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Term
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Definition
| Adjusts for specific market value changes |
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Term
| What are Monetary Assets? |
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Definition
All claims involving fixed number of dollars, regardless of the level of inflation.
monetary assets -- cash and receivables, both short and long term.
monetary liabilities -- most liabilities are monetary |
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Term
| Are revenue and expenses monetary or non monetary? |
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Definition
| Non-monetary if related to nonmonetary assets/liabilities. |
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Term
| Purchasing power gains and losses arise from...? |
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Definition
| Holding monetary assets and liabilities -- gains if have a liability, losses if hold monetary assets. |
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Term
| Name the advantages of Constant Dollar Accounting |
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Definition
| Greater comparability; reliable data because based on historical cost; new inforamtion; and income and asset amounts are mroe meantingful and easier to understand. |
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Term
| What are the disadvantages to constant dollar accounting? |
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Definition
| Cost/Benefit (if inflation isn't material); CPI-U is inappropriate for business; need current cost, not adjust historical cost; opposed by IRS and management; purchasing power gain may be misleading. |
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Term
| Current costing: Revenues minus expenses at current cost = ? |
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Definition
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Term
| Asset's Current Cost - Historical Cost = ? |
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Definition
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Term
| Name three different variations of current value: |
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Definition
| Current Cost, Current Selling Price, Net Realizable Value |
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Term
| The FASB says to use ________ or ____ for current ccost |
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Definition
| Lower of Current Cost or NRV |
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Term
| Advantages of Current Cost Accounting: |
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Definition
| more relevant B/S valuation; separates holding gains and losses from operating profits; better future cash flow indicators. |
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Term
| Disadvantages of Current Cost Accounting: |
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Definition
| subjective and therefore not reliable; difficult to adjust for technological change; current entry prices are not always relevant. |
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Term
| SFAS 89 Says that Supplemental Disclosures for Constant Dollar/Current Cost Accounting...? |
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Definition
are optional.
Thse disclosures indicate purchasing power gains/losses; current cost for intbentory and PP&E; current cost income; holding gains and losses. |
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Term
| What is financial capital maintenance? |
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Definition
| Current GAAP -- historical costing. |
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Term
| In a merchandising transaction, one must record... |
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Definition
using the current exchange rate at the date of transaction.
two current/spot rates exist -- they are a buying rate and a selling rate. |
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Term
| A financing transaction results from: |
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Definition
Delaying Local Currency Unit receipt or payment.
Exchange rates usually fluctuate and as a result, there is a transaction gain or loss.
This is caused by remasurement of LCUs into dollars at:
1. end of acg period
2. settlement of the receibable or payable |
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Term
| Explain a fair value hedge |
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Definition
Hedge of a foreign currency credit sale of merchandise; exposed asset position is an excess of assets denominated in FC over liabilities denominated int eh same foreign currency.
-- exchange g/l from receivable offsets exchange loss or gain from payable, if the hedge is effective
- difference between spot and futures rate is called a discount -- represents cost to company of transferring risk to a bank. |
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Term
| Explain a cash flow hedge |
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Definition
- anticipated future inventory purchase or sale with a foreign company.
- no receivable or pay in foreign currency is recorded on books at time of contract.
- any exchange gain or loss is deferred -- OCI |
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Term
| Speculating in foreign currency exchange rates effects ____ right away |
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Definition
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