Term
| Gross Method Vs Net Method (Accounts Payable w/ discounts) |
|
Definition
Gross: Record the purchase like the discount will not be taken in time (usually 15 days). Book Discount as a credit whenever taken. Inventory is the DR for the full amount regardless.
Under net method, the discount is booked right away. DR inventory for the full amount, and then CR accounts payable and discount |
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Term
|
Definition
| Net Income-preferred Dividends/Weight average common shares outstanding |
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Term
| Simple vs Complex capital structure |
|
Definition
Simple: only common stock outstanding, nothing that could change the number of shares outstanding
Complex: have to calculate and throw into the calculation of EPS all of the securities that could have a dilutive effect on EPS |
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Term
| Options and Warrants "in the money" |
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Definition
| Average price>strike (exercise) price, which means they most likely are included first into diluted EPS calculation. The option and warrant holders have good value with these because they are saving money when they exercise them. |
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Term
| Reporting requirements for EPS |
|
Definition
-on the face of the IS
-Equal prominence for basic and dilutive
-both income from continuing operations and net income calculations present
-Per-share amounts for discontinued operations can be reported on the face of the IS or in the notes to the FS |
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Term
| 3 sections of the cash flow statement (for profit accounting) |
|
Definition
Operating- cash flows from IS transactions and CA/CL
Investing: Cash flows from non-current assets
Financing: cash flows from debt and equity |
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Term
| 2 methods for cash flow statements, and which is preferred |
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Definition
Direct and indirect methods
Direct is preferred, but is used there must include a reconciliation of net income to net cash provided by operating activities as a supplemental schedule (GAAP only) |
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Term
| Name the most common classes of receipts and disbursements under the direct method |
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Definition
-received from customers
-paid to suppliers
-paid to employees
-dividends received
-income taxes paid
-purchases and sales of trading securities |
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Term
| Common adjustments to cash flows from operation under the indirect method |
|
Definition
Depreciation +
Changes in CA and CL
Amortization +
Deferred and unearned items |
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Term
| Financial statements required for NFP entities |
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Definition
Statement of Financial Position
Statement of Activities
Statement of Cash Flows
Disclosure of functional expenses |
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Term
| 3 required elements of the statement of activities |
|
Definition
Change in total net assets
Change in assets with donor restrictions
Change in assets without donor restrictions |
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Term
| What are the functional classifications of expenses used for not for profits |
|
Definition
Program Expenses
Support Expenses (including membership development, fundraising costs, and management and general admin costs) |
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Term
| Recognition criteria for cash contributions, unconditional promises, and multiyear pledges |
|
Definition
Cash: Recognized as revenue in the period received, at fair value of the date of gift
Unconditional Promises: Receivables and revenue are recognized. Fair value when received. If it is a long way away (see multiyear), recognized a increase in net assets with donor restrictions (time) and use its present value.
Conditional Promises: no receivable or revenue until the condition is met
Multiyear pledges: recognized contribution revenue and receivable recognized at net present value on the date the pledge is made. donor restricted (implied time restriction) |
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Term
| reclassification of net assets |
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Definition
| simultaneous increase in one class of net assets while the other goes down. This usually means that the donor-restrictions on the assets are satisfied or otherwise lapsing. |
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Term
| Donated services and when they are recognized as revenue in a NFP |
|
Definition
SOME
Specialized skill
Otherwise purchased
Measured
Easily
OR
it can be any type of work that enhances a capital asset. |
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Term
| Variance power in regards to NFP foundations |
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Definition
If they HAVE variance power, the just recognize the contributed assets as revenue.
If the DO NOT HAVE variance power, when they receive the asset(s), it is booked as a liability to the beneficiary |
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Term
| NFP's economic interest in another entity |
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Definition
1) the entity holds or utilizes significant resources that must be used for the purpose of the NFP by producing income or providing services
2) the NFP is responsible for the liabilities of the other entity |
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Term
| Examples of Exit and Disposal Costs |
|
Definition
Involuntary employee termination benefits
costs to terminate a contract (not a capital lease)
Cost to consolidate facilities
Costs to relocate employees |
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Term
| How is ARO initially recognized? |
|
Definition
-At fair value/present value of the future obligation
-As an asset (Asset retirement cost)
-As a liability (Asset retirement obligation |
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|
Term
|
Definition
-Probable and reasonably estimated: Then record and disclose them
-Possible: disclose
-Remote: not disclosed, unless they are guaranteeing someone's debt, which must be disclosed.
GAAP uses the low end of the range for the loss contingency, IFRS uses the midpoint of the range. |
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Term
| Premium or discount on bonds issued in regards to market/effective rate vs stated/coupon rate |
|
Definition
Stated/coupon rate>market rate, Premium
Market rate/effective rate>stated rates, discount |
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Term
|
Definition
Face at PV of 1
Plus
Interest payments at PV of annuity
Calculated using the market/effective rate on the date the bonds are issued. |
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|
Term
| Major disclosures for long term debt |
|
Definition
-maturity dates
-interest rates
-call and conversion privileges
-assets pledged as security
-borrower-imposed restrictions |
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Term
|
Definition
1) Transfer of assets
2) Transfer of equity interest
3) Modification of terms
4) a combination of above |
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Term
| gain on troubled debt restructuring |
|
Definition
| Fair value of assets surrenderred-carrying amount of debt that is forgiven (if your are the lender) |
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|
Term
| Extinguishment of debt is when: |
|
Definition
-the debtor pays the creditor and is relieved of its obligations to them
OR
-the debtor is legally released from being the primary obligor under the liability, either judicially or by the creditor |
|
|
Term
| The single source of authoritative nongovernmental US GAAP |
|
Definition
| The FASB Codification (ASC) |
|
|
Term
| primary users of general purpose financial reports |
|
Definition
| (existing and potential) investors, creditor, and lendors |
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Term
| The fundamental QUALITATIVE characteristics of USEFUL financial information |
|
Definition
| relevance and faithful representation |
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|
Term
| Three elements of relevance |
|
Definition
1)Predictive value
2) confirming value
3) materiality
"capable of making a difference in the decisions made by users" |
|
|
Term
| Three elements of faithful representation |
|
Definition
Nuetrality
Completeness
Freedom from Error
"completely neutral is free from error" |
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|
Term
| Enhancing qualitative characteristics of financial information |
|
Definition
-compararbility
-verifiability
-timeliness
-understandability |
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|
Term
| A "full set" of financial statements includes |
|
Definition
-statement of financial position (BS)
-statement of earnings (IS)
-statement of comprehensive income
-Statement of cash flows
-Statement of changes in owner's equity |
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|
Term
| Why is present value of money taken into account? "element of present value measurement" |
|
Definition
Estimate of future cash flows
Expectations about timing variance of future cash flows
Time value of money
the price for bearing uncertainty
liquidity issues and market imperfections |
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|
Term
| Multi-step income statement vs single step income statement |
|
Definition
Muli-step: reports operating revenues and expenses separately from non-operating revenues and expenses and other gains and losses.
Single step income statements income from continuing operations, total expenses are subtracted from total revenues without separation between the operating and non-operating |
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|
Term
| Bill and hold arrangements (to recognize revenue) |
|
Definition
-there must be a substantive reason for the arrangements
-the product is separately identified as belonging to the customer
-the product is ready for transfer where it is right now
-the entity cannot use the product or sell it to another customer |
|
|
Term
|
Definition
The selling entity controls the product until a specified event occurs (such as a sale)
-the dealer/distributor does not have an unconditional obligation to pay the entity for the product
-the entity/sellor has the authorization to require the return of the product or transfer it to another party |
|
|
Term
|
Definition
| should be recognized when the seller know the customers have a right to return and the entity anticipates that will mean a portion of the consideration already received will have to be returned. |
|
|
Term
| Percentage of completion formula for gain or loss |
|
Definition
| (Cost to date/total estimated cost or contact)X Total estimated gross profit - gross profit recognized to date |
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|
Term
| conditions for a disposal to be reported in discontinued operations |
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Definition
-represents a Major strategic shift
-has or will have a major effect on an entity's operations and financial results |
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|
Term
| Change in accounting estimate |
|
Definition
Handled prospectively
-includes change in salvage value, useful life (depreciation stuff), settlements of litigation.
Special rule: if it is considered impractical to calculate the cummulative adjustment on other changes (ex, a change to LIFO inventory), or it cannot be separated from an asset (depreciation, amortization,depletion), treat these as changes in accounting estimate |
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|
Term
| Change in accounting principle |
|
Definition
handled retrospectively, with a cumulative change in RE as an adjustment to beg RE in the earliest period presented.
Net of tax
GAAP to GAAP only
ec- change in inventory valuation or revenue recognition practice |
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|
Term
| Change in accounting entity |
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Definition
| Reported retrospectively, current and prior period financial statements are restated |
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|
Term
|
Definition
| restatement as prior period adjustments are required and all comparative financial statements are restated |
|
|
Term
|
Definition
| change in equity that results from transactions and other events and circumstances from nonowner sources |
|
|
Term
|
Definition
Pension plan adjustments
Unrealized gain/loss on available for sale securities
Foreign currency items (translation stuff and hedges of net investments in foreign entities)
Effective portion of cash flow hedge
Revaluation surplus |
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|
Term
| Approaches to reporting a statement of comprehensive income |
|
Definition
-using a statement of comprehensive income (single statement approach)
-using a statement of income followed by a separate statement of comprehensive income (two statement approach)
GAAP and IFRS allow both of these presentations |
|
|
Term
| Disclosure requirements for comprehensive income |
|
Definition
-tax effects of each component included in current OCI
-changes of accumulated balances of components of OCI
- total AOCI
- reclassification adjustments between OCI ad NI |
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|
Term
| recording deferred revenue |
|
Definition
Dr Deferred revenue
Cr Revenue |
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|
Term
| Components of an operating segment |
|
Definition
must incur revenues and expenses
operating results are reviewed by the chief decision maker
financial information is available |
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|
Term
| Rules of consolidated financial statements |
|
Definition
-C ommon stock of sub eliminated
-A PIC of sub eliminated
-R etained earnings of sub eliminated
-I nvestment in subsidiary is eliminated
-N on controlling interest is recognized
-B alance sheet adjustments of A/L
-I ntangible assets adjustments
-G oodwill or gain on bargain purchase is recognized
Income from sub is recognized proportionally to ownership after the date of acquisition.
Acquisition costs are expensed to APIC
Eliminate intercompany transactions |
|
|
Term
|
Definition
AR turnover in days
+
Inventory turnover in days |
|
|
Term
|
Definition
change in operating assets and liabilities, usually CA and CL
includes no cash and cash equivalents |
|
|
Term
| Net periodic pension costs (pension expense) |
|
Definition
Service cost
Interest costs (PBO X discount rate)
-Return on plan assets (beg FV on plan assets X rate of return)
-Amortization of prior service cost (unrecognized prior service cost/avg remaining service life)
-Gain amortization (Gain on plan/ avg remaining service life)-the greater of 10% of the PBO or beg plan assets for the period)
Amortization of existing net obligation or asset |
|
|
Term
| Deferred tax assets and deferred tax liability |
|
Definition
DTL is when future accounting income < tax income
DTA is when future accounting income > tax income
These can be netted against each other when shown on the BS and are always shown as non-current |
|
|
Term
|
Definition
IFRS
Gain on OCI, loss in NI after reversing the total accumulated gain
A class of fixed assets are reported at fair value less subsequent AD and impairment |
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|
Term
| Criteria and recognition of a capital lease |
|
Definition
OWNS
Ownership transfers to leasee at the end
Written bargain purchase option
Ninety percent of the FV of the lease property is covered in the lease payments
Seventy five percent of the leased assets useful life is during the lease term
Book a lease liability and book an asset and depreciate it if the leasee |
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|
Term
| Depreciation period for a capital leased asset |
|
Definition
If the OW terms are met, then depreciate it over the asset's useful life.
If the NS is met, then you can depreciate the item over the lease term.
Think of it as the first two terms mean that you will likely have the leased asset for its entire life. |
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|
Term
| Form 10-Q and reporting deadlines |
|
Definition
This is the quarterly report filed with the SEC
Filing deadline is 40-40-45 |
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|
Term
| Book Value per common share |
|
Definition
| Sommon S/E (total SE without dividends in arrears and preferred stock outstanding "liquidation value")/ Common shares outstanding |
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|
Term
| Funded status of pensions plan and its classification |
|
Definition
FV of plan assets
-PBO
=funded status
If positive, the fund is overfunded, and that is a non-current asset
If negative, the fund is a non-current liability
If the current maturity of the PBO is more than the FV of the assets, then it is a current liability for that amount, and then a non-current for the rest of the PBO that isn't currently maturing |
|
|
Term
|
Definition
| are deducted from the CV of the bond like a discount and amortized like one |
|
|
Term
| Declining balance depreciation |
|
Definition
| depreciation expense= 2 X (1/N) (cost-AD) |
|
|
Term
Functional currency
Remeasurement method vs translation method |
|
Definition
currency of the primary economic environment in which the entity operates
The remeasurement method is when the reporting currency is the functional currency. It starts with the BS and converts monetary items using the current exhange rates while non-monetary items like PP&E are done using historical rates. A gain or loss is plugged to net income to adjust RE so that the balance sheet balances.
Translation is when the functional currency is not the reporting currency. Starts with the IS, converts all elements using a weighted average exchange rate. A/L are converted with the current year exchange rate, with a gain or loss plugged to OCI (F) |
|
|
Term
| Operating cash flow/total debt |
|
Definition
| ability of a company to cover total debt with its yearly cash flow |
|
|
Term
| periodic inventory system |
|
Definition
Beginning inventory
+purchases
=COGAFS
-Ending inventory
=COGS |
|
|
Term
| Presentation and disclosure of discontinued operations |
|
Definition
Present as a separate component of net income
Net of tax
Includes the impariment initially, operating losses, and cost of disposal (gain or loss) |
|
|
Term
| When is it okay to use the completed contract method in GAAP |
|
Definition
-difficult estimates (% complete or total costs)
-many different contracts
-short duration of contract |
|
|
Term
| Sale-leaseback gain recognition |
|
Definition
if the PV or future lease payments is 10% or less of the FV of the asset, then recognize the whole gain immediately
If it is between 10 and 90%, then defer the gain up to the value of the PV of the lease payments, and then recognize the rest now
If above 90% of the FV of the leased object, defer all |
|
|
Term
|
Definition
converting a company's accounts receivable to cash by assigning them to a factor (buyer)
With recourse: can be a pledge or a sale
To be a sale with recourse:
-seller's obligation has a reasonably estimate due from
-the transfer surrenders control
-transferor cannot be required to purchase any AR
Without recourse, it is treated like a full sale, debiting cash, loss (probably), due from factor (maybe) and crediting the account receivable carrying amount |
|
|
Term
|
Definition
options: have an option to call or put something at a specific price in the future. Buy call option: hope price increases. But put options, hope price decreases
Forwards: privately negotiated, but there is no option here. Buy/long on something, profit if price increases above the exercise price and lose is it is less than the exercise price. Short: profit if price deacreases
Futures are the same as forwards except they are publicly traded
Swaps swap interest rates for some reason or the other so I guess you hope your old one goes up and the one you have now goes down
forwards
futures,
swaps |
|
|
Term
|
Definition
net profit margin X total asset turnover
Net income/total sales X net sales/ Avg total assets |
|
|
Term
|
Definition
| net credit sales/ avg accounts receivable |
|
|
Term
| Transfers between investment categories |
|
Definition
If any investment is from trading to anything else, G/L is already on IS
Anything else to trading: g/l on the income statement
HTM to AFS: recorded in oci
AFS to HTM: amortize the G/L from OCI with any other premium or discount amortization |
|
|
Term
|
Definition
two step process
1) carrying value is compared with the sum of undiscounted FCF expected to bring in
If the FCF are less than the carrying amount:
2) CV is marked down to FV and an impairment loss is reached for the amount of the markdown |
|
|
Term
|
Definition
| NI-PD/avg total common equity |
|
|
Term
| sum of years digits depreciation |
|
Definition
| Depreciable base X (years remaining/sum of years digits)= depreciation expense |
|
|
Term
| Direct method for cash flow statement |
|
Definition
Revenues
+- change in AR
+- change in unearned revenue
=cash collected from customers
- cash paid to suppliers (COGS, change in inv and AP)
- cash paid to employees (salary expense, change in wages payable)
- income taxes paid
- interest stuff
=cash flows from operations |
|
|
Term
|
Definition
| Starts with net income + depreciation + losses - gains - equity earnings +- change in different OA +- change in different OL =cash flows from operations |
|
|
Term
|
Definition
an entity must evaluate subsequent events from the end of the period until the FS are issued (50% I think)
Events that provide additional information about accruals on the FS's can be updated and disclosed
Events that are material but did not exist on the statement date should be disclosed if necessary |
|
|
Term
|
Definition
|
|
Term
| The two methods of accounting for treasury stock purchases |
|
Definition
| Cost method: gain or loss recognized upon reissuance. Initially the treasury stock is recorded at cost (that's where it gets the name). The differene between the repurchase price and the reissue price is the gain or loss per share Par method: gain or loss recognized on purchase (both begin with P). Stock is bought back and recognized at par value. When the stock is bought APIC TS is credited for the gain (RE debited for the loss) between the original issue price and the amount repurchased for. RE is never credited on TS transactions |
|
|
Term
| working capital turnover ratio |
|
Definition
| sales/ avg working capital |
|
|
Term
|
Definition
| total liabilities/total assets |
|
|
Term
|
Definition
an exit price, can be determined through three methods
1) cost method
2) income method
3) market method
There are level 1, 2, and 3 inputs.
1: identical items in active markets
2: similar items in active markets
3: unobservable inputs
In the principal market or most advantageous market
Transaction costs are not included but transportation cost may be included |
|
|
Term
|
Definition
| cash and cash equivalents + mktable securities + net receivables/ current liabilities (not inventories) |
|
|
Term
|
Definition
Total debt/total equity
This you want to be a low fraction even though it could go both ways |
|
|
Term
|
Definition
| current assets-current liabilites |
|
|
Term
|
Definition
| Net sales/avg total assets |
|
|
Term
|
Definition
|
|
Term
|
Definition
annual report mandated by the SEC
60-75-90 |
|
|
Term
| computer software development costs |
|
Definition
| expense until technological feasibility, then capitalize until it is released for sale |
|
|
Term
| expenditures related directly to the acquisition of equipment |
|
Definition
Invoice price
-discounts
+freight in
+installation charges
+sales and federal excise taxes
+ more than likely, construction period interest |
|
|
Term
| Times interest earned ratio |
|
Definition
|
|
Term
Form 11k
Forms 20f and 40f
Form 6k
Form 8k
Forms 3, 4, 5 |
|
Definition
-benefit plans
-non US 10k and canadian 10k
-semi-annual (foreign)
-major events
- major owners (10% or more) |
|
|
Term
|
Definition
| net income/avg total assets |
|
|
Term
|
Definition
| cash and cash equivalents and marketable securities/current liabilities |
|
|
Term
|
Definition
cost-salvage/total number of unit or hours it can work: rate per hour or unit
That rate X hours works or unites produced=depreciation expense for the period |
|
|
Term
| multi-step income statement form |
|
Definition
net sales
-cost of sales
=gross margin
-selling expenses
-G&A
=income/loss from operations
+other revenues and gains
-other expenses and losses
=income/loss before unusual items and tax
+- other things
=income before tax
-income tax expense
=income from continuing operations
+- discontinued operations
= Net income |
|
|
Term
| relevant information to decision makers in the notes to the financial statements |
|
Definition
-change in stockholders equity
-contingencies
-off-balance sheet financing (contracts)
-pension-plan disclosures
-post B.S disclosures (subsequent events)
-related party transactions
-significant estimates
-concentration risks |
|
|
Term
|
Definition
Total revenues (including non-operating and gains)
- total expenses (including losses, non-operating expenses, and income taxes)
=net income |
|
|
Term
| market cap for sec filing registration deadlines |
|
Definition
>700 million: large accelerated (60 days 10k, 40 days 10Q
<75 million: "other" (90 days 10k, 45 days 10Q)
In between: (75 days 10K, 40 days 10Q) |
|
|
Term
| Foreign currency translation |
|
Definition
conversion of a subsidiary's financial statements into the reporting currency of the parent. There are two methods and they rely on whether or not the local currency is the functional currency.
Remeasurement: Functional currency is the reporting currency
Translation Method: functional currency is not the reporting currency |
|
|
Term
|
Definition
translating FS to the parents currency when the reporting currency is the functional currency for the subsidiary.
Starts with BS: Converts monetary items using current exchange rates and nonmonetary using historic exchange rates.
IS items are done using a weighted average rate. (except BS related ones like depreciation, which is done using the historic rate)
G/L is plugged to NI to make retained earnings reflect an amount that will balance the balance sheet.
Gains included in income |
|
|
Term
|
Definition
Functional currency is not the reporting currency.
Starts with the I/S
Uses a weighted average exchange rate. Translated NI is then transferred to RE.
A/L on the BS are done using the current year rate.
C/S and APIC are done using the historic rates.
G/L is plugged into OCI to have the B/S balance (F in PUFE) |
|
|
Term
| Gains and losses dealing with foreign currency |
|
Definition
If foreign currency asset goes up in value, recognize a gain, and vice versa for loss.
If a foreign currency transaction results in a liability, and the foreign currency goes up in value, recognize a loss, and vice versa for a gain |
|
|
Term
| Which type of lease are people referring to when they say "off-balance sheet financing" |
|
Definition
| operating lease, because the use of an asset is being provided without any corresponding liability or decrease in assets. |
|
|
Term
| Capitalized asset amount for a capital lease |
|
Definition
| It is the LESSER of the present value of the minimum lease payments OR the fair value of the asset at the inception of the lease |
|
|
Term
| Direct-financing lease (US GAAP) |
|
Definition
| the lessor receives interest income only |
|
|
Term
| Sales-type lease (US GAAP) |
|
Definition
the lessor receives gross profit and interest income
One of the OWNS criteria must be met, and the collectability of payments must be reasonably predictable, while performance of the lessor is complete. |
|
|
Term
| Modified approach (govt) for accounting for infrastructure |
|
Definition
-must keep a summary of the condition of the assets
- must keep an inventory of the assets
-must keep records of the amount f resources needed to keep those assets in the condition they're in |
|
|
Term
| NOL carryback and carryforward |
|
Definition
| a company can carry a net loss back for two years, or forward for twenty, and use the loss amount to offset in past or future income, creating a tax benefit equal to the tax rate in each period |
|
|
Term
| nonmonetary excanges and the recognition of gain criteria |
|
Definition
if the transaction has commercial substance (a change of risk, timing, or cash flows happens as a result), a gain or loss is recognized equal to the FV new-BV of old. The FV of assets given up is assumed to = FV disposed
Laccking commercial substance: losses are ALWAYS recognized regardless.
Gains are recorded when boot is received, and proportional amount of gain is recognized.
Boot given: no gain
No boot: no gain |
|
|
Term
| Incidental expenditures related to acquisitions of equity interests |
|
Definition
| expensed as incurred. Includes finder's fees of legal cost |
|
|
Term
| Corridor (relating to pension plans) |
|
Definition
| 10% or the larger of the bed FV of plan assets or beginning PBO. Used to subtract from the amortization of gain for net periodic pension cost. |
|
|
Term
| Govt revenue recognition for derived non-exchange tax revenues |
|
Definition
| tax that is a result from an economic activity. Theyy are accrued based on the timing of receipt (when they receive money of withing 60 days of years end) |
|
|
Term
| govt revenue recognition for imposed non-exchange tax revenues |
|
Definition
| fines and property taxes, recognized when imposed (billed) because collection is not in doubt. |
|
|
Term
| government mandated non-exchange transactions |
|
Definition
| includes grants by one government to another and are recognized when eligibility requirements are met |
|
|
Term
Basic financial statements for government entities
Basic financial structure |
|
Definition
-government-wide statements
-fund financial statements
-notes to the financial statements
(NOT a statement of cash flows)
Basic financial statements
Required supplementary information |
|
|
Term
| Required supplementary information |
|
Definition
information in the governmental financial statements (CAFR)
occurs both before and after the basic financial statements
Before: MD&A
Following: multi-year pension data, infrastructure data (for modified approach), and budgetary disclosures. |
|
|
Term
| Other supplementary information |
|
Definition
optional governmental accounting disclosures in the CAFR
Includes budget variances, and individual financial statements for nonmajor funds |
|
|
Term
| governmental funds financial statements |
|
Definition
balance sheet: assets + deferred outflows of resources - liabilities + deferred inflows of resources = fund balance
Statement of revenues, expenditures, and changes in fund balance: other financing sources (proceeds from debt and other interfund transfers) and other financing uses
Modified accrual and current financial resources measurement focus. No cash flows statement |
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Term
| proprietary funds financial statements |
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Definition
statement of net position
statement of revenues, expenses, and changes in fud net position
statement of cash flows
-full accrual ad economic resources measurement focus |
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Term
| fiduciary fund financial statements |
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Definition
statement of fiduciary net position
statement of changes in fiduciary net position |
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Term
| Determination of major funds |
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Definition
a fund total assets + deferred outflows of resources
OR
a funds liabilities + deferred inflows of resources
OR
revenues
OR
expenditures/expenses
are at least 10% or more of the corresponding amount of ALL governmental funds OR enterprise funds (whichever matches the fund in question)
AND
it must be 5% of the combined total of enterprise funds and governmental funds |
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Term
| Statement of cash flows for governmental entities |
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Definition
do not use a statement of cash flows for governmental funds
proprietary fund (SE) accounting does use the statement of cash flows
-direct method is REQUIRED
-Four categories
1) operating
2) noncapital financing (transfers in/out, property tax collections, special assessments, and related interest expense)
3) capital financing (capital assets purchases, interest expense associated)
4) investing (interest received (different than GAAP)) |
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Term
| required approach to infrastructure |
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Definition
| misleading name, but it is the apprach taken when you capitalized infrastructure such as roads, drainage systems and brides and include them in net assets, and then depreciate them on the statement of activities. |
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Term
| Modified approach to infrastructure |
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Definition
if a government is unable to arrive at the cost data for the infrastructure, the modified approach to accounting for infrastructure is permitted.
no capitalization is needed.
Required supplementary information describes the infrasturcture, its condition, and the estimation of expenses needed to maintain condition. complete professional assessment has to be redone every 3 years |
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Term
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Definition
Section 1: introductory section
- letter of transmittal
- organizational chart
- list of principle officers
section 2: basic FS's ans RSI
- MD&a
- govt-wide statements
- fund statements
- notes to the FS
- RSI
section 3: statistical section (unaudited)
-ten years of selected data
-ten years of economic data
-other data |
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Term
| classes of net fund balance/net position (least to most liquid) |
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Definition
Nonspendable
restricted (outside party)
committed (inside party)
assigned
un-assigned |
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Term
| reconciliation of governmental fund balance to change in net position of government activities is found __________ |
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Definition
bottom (face) of the balance sheet for the governmental funds
also, it can have its on statement entirely |
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Term
| Primary government reporting units |
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Definition
-has a separately elected governing board
-legal entity
-financially independent
(SELF) |
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Term
| discrete vs blended presentation |
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Definition
If a reporting unit is not a primary government, they can either be discrete of blended
Discrete is presented as a separate column on the primary govts financial statements
blended is when the component unit exclusively serves the primary government OR when the unit's governing body is essentially the same as the primary government. These units consolidate activities with the primary government. |
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Term
| Interfund activity (reciprocal) |
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Definition
exchange-type transactions
-interfund loans are receivables/payables
-interfund services provided and used represent sales and purchases accounted for as revenues and expenses |
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Term
| Interfund activity (non-reciprocal) |
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Definition
non-exchange transactions
interfund transfers of assets are other financing sources and uses
interfund payment of expenses on behalf of another fund are accounted for as reimbursements and are not displayed as interfund transactions |
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Term
| govt wide financial statements display of interfund transactions |
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Definition
withing a particular column (govt to govt, business type to business type), are eliminated prior to preparation
Between columns (ex govt to business type), are not eliminated and reported as "internal balances" (fund balance/net position) or "transfer" (activities)
primary government to fiduciary activities should be reported as if it were to an outside party (fiduciary funds are not in govt wide statements) |
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Term
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Definition
dr Estimated revenues control
dr budgetary control (if more appropriations)
Cr Appropriations
Cr budgetary control (if more est revenues)
Budgetary accounts are only affect when establishing, amending, or closing the budget. |
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Term
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Definition
| govermental accounting's version of AP |
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Term
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Definition
are recorded when a purchase order is issued (so a government does not overspend its assets) This reduces the available fund balance.
dr encumbrance
cr budgetary control
Upon receipt of the goods-
Dr budgetary control
Cr encumberances
Dr expenditure
Cr vouchers payable/cash
So, the encumbrance is reversed out when goods are received.
Accounts are closed at the end of the year |
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Term
Inventory of supplies for governments
Two methods |
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Definition
The purchase method: marks a DR to expenditures right away, then if inventory is still on hand at the end of the year, dr supply inventory and cr nonspendable fund balance-inventory
Consumption method: begin by dr inventory of supplies (like normal accrual), then at the end of year, use the amount remaining to figure out how much was used, and book an expenditure and a decrease in inventory of supplies |
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Term
| Nonspendable fund balance |
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Definition
| represents resources that are nonspendable because they are nonspendable in form (inventories and prepaids) or legally/contractually required to be left intact like permanent funds |
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Term
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Definition
| resources that have be limited to their use by external factors such as creditors, contributors, laws, legislation, or constitution |
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Term
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Definition
| resources that can only be used for a specific purpose because of formal action by the highest level of decision-making authority |
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Term
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Definition
| constrained by the government's INTENT to be used for a specific purpose, but are not restricted or committed. |
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Term
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Definition
| the leftover/residual fund balance after every other asset is assigned another fund balance. The general fund should be the only fund with a positive unassigned fund balance, and if there is an over-expenditure of resources, then it can have a negative unassigned fund balance |
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Term
| deferred outflows of resources |
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Definition
-a consumption of net assets that is applicable to a future reporting period
-positive effect on net position
-added and presented right after assets and before liabilities begin on the statement of net position |
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Term
| deferred inflows of resources |
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Definition
-an increase/addition in assets that is attributable to another period
-negative affect on net position, presented after liabilities and added to them. |
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Term
| Format of govt wide statement of net position to the govt funds balance sheets and other funds statement fo net position |
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Definition
govt wide: a+DIR-L+DOR=net position
govt funds: a+DIR=L+DOR+fund balance
prop: encouraged to use A-L=NP, but can use BS approach like accrual accounting
fid:required to use A-L=NP |
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Term
| examples of deferred inflows/outflows of resources |
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Definition
| refunding of debt, imposed non-exchange revenues, government mandated non-exchange transactions and voluntary non-exchange transactions, debt issue cost, leases |
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Term
| gross revenue for universities |
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Definition
includes: tuition, scholarships, tuition waivers
Subtracts: cancelled classes |
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Term
| NFP basic financial statements |
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Definition
statement of financial position
statement of activities
statement of cash flows
A disclosure of functional expenses is required as well (present programmic and supportive expenses horizontally on the statement of activities |
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Term
| Types of donor-imposed restrictions |
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Definition
Purpose
Time
Acquisition of plant |
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Term
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Definition
includes agency transactions
includes receipts of resources without donor restrictions designated by the internal governing body for use on plant assets |
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Term
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Definition
proceeds from the sale of works of ark or purchases of works of art
investment in equipment (like for profit)
special rule: includes proceeds from the sale of assets that were recognized in prior periods and whose sale proceeds were donor-restricted to equipment or other long-term assets |
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Term
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Definition
includes cash received with donor-imposed restrictions limiting its use to purchases of long-term assets or annuity agreements
includes receipts and disbursements with borrowing ans receipts of dividends and interest that is donor-restricted to reinvestment |
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Term
| refundable advances (NFP accounting) |
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Definition
| NFP receives a conditional gift in advance of satisfying the condition. These are recorded as refundable advances and are LIABILITIES |
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Term
| net asset class in which the restriction will be satisfied within one year of receipt |
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Definition
| net assets without donor restriction |
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Term
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Definition
admin costs
management compensation
fundraising
membership development |
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Term
| net asset classification of expenses in a NFP |
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Definition
| net assets without donor restriction |
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Term
| Increases and decreases in marketable securities owned by a NFP are recognized as ____ |
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Definition
| net assets without donor restrictions unless there are donor-stipulated restrictions as to the change |
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Term
| healthcare service revenue recognition |
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Definition
| patient service revenue should be accounted for on the accrual basis at the usual and customary fees. Gross basis. DEDUCTIONS are made to display revenues net. Cahrity care, is not displayed (so it needs to be deducted). Also many times there is a settle ment with insurance companies for less than the original amount, these and similar reductions are either expenses or a reduction in revenue. Bad debt must have a consideration of a patient's ability to pay, otherwise it is a reduction of revenue |
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