(Financial Accounting & Reporting) Flashcards
7 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 (Financial Accounting & Reporting) flashcards as text
Which financial statement reports a company's financial position at a specific point in time?
Answer: Balance sheet
The balance sheet (statement of financial position) presents assets, liabilities, and equity as of a specific date.
Under ASC 805, how are acquisition-related costs (e.g., legal and advisory fees) treated in a business combination?
Answer: Expensed in the period incurred
ASC 805 requires that direct transaction costs in a business combination be expensed as incurred, not capitalized.
A company reports comprehensive income of $150,000 and net income of $120,000. What is the amount of other comprehensive income?
Answer: $30,000
Other comprehensive income = Comprehensive income − Net income = $150,000 − $120,000 = $30,000.
Under the indirect method of presenting operating cash flows, depreciation expense is:
Answer: Added back to net income because it is a non-cash charge
Depreciation is added back to net income under the indirect method because it reduced net income without using cash.
Which of the following events occurring after the balance sheet date but before the financial statements are issued would require adjustment to the financial statements?
Answer: Settlement of a lawsuit that existed at year-end for an amount different from the accrual
A subsequent event that provides evidence of conditions that existed at the balance sheet date requires adjustment to the financial statements.
Under ASC 350, goodwill is:
Answer: Tested for impairment annually or when a triggering event occurs, and not amortized
Under US GAAP, goodwill is not amortized but is tested for impairment at least annually at the reporting unit level.
When a company retires treasury stock, the excess of the cost of treasury stock over its par value is charged to:
Answer: Paid-in capital from treasury stock transactions and retained earnings as needed
On retirement, the excess of treasury stock cost over par is first charged against paid-in capital from prior treasury stock transactions, with any remaining excess charged to retained earnings.