CFAS Final Exam Flashcards

Questions and Answers

Under what condition can an entity classify a financial asset that meets the amortized cost criteria at FVPL?

If doing so eliminates or reduces an accounting mismatch.

An entity shall prepare and present what as an integral part of its basic financial statements?

A statement of cash flows.

What costs are incurred in bringing inventory to the present location and condition?

Cost of designing the product for specific customers.

Biological transformation results from asset changes through all of the following, except?

Production of agricultural produce Signup and view all the answers

Agricultural activity results in which type of asset?

Biological asset and agricultural produce Signup and view all the answers

Consumable stores or supplies to be consumed in the production process are reported as what?

Inventory. Signup and view all the answers

Which of the following is not a purpose of the notes?

To rectify inappropriate accounting policies Signup and view all the answers

The financial statements of Entity A show line items described as 'Other current assets', 'Other noncurrent liabilities', and 'Miscellaneous expenses.' Which of the following is correct?

Entity A considers the items included in these line items as dissimilar and cannot be included in material classes of similar items and are also individually immaterial to warrant separate presentation. Signup and view all the answers

What does the term 'Other Comprehensive Income' comprise?

Items of income and expense including reclassification adjustments, that are not recognized in profit or loss as required or permitted by PFRS. Signup and view all the answers

When an investor purchased a bond between interest dates at a premium, what is the cash paid to the seller?

More than the face amount of the bond. Signup and view all the answers

The costs of conversion of inventory include all of the following, except?

Systematic allocation of administrative overhead Signup and view all the answers

Entity A recognizes sales revenue on Day 1 rather than on Day 30. This is an application of which accounting concept?

Accrual Basis. Signup and view all the answers

Which statement is true when a financial asset at FVOCI is reclassified to FVPL?

All of these statements are true. Signup and view all the answers

Which of the following events is not considered an exchange or reciprocal transfer?

Payment of taxes Signup and view all the answers

What is the treatment for abnormal freight in?

Charge to expense for the period. Signup and view all the answers

Fair value of an asset should be based upon what?

The price that would be received to sell the asset at the measurement date. Signup and view all the answers

Study Notes

Financial Asset Classification

Financial assets can be classified at Fair Value Through Profit or Loss (FVPL) if this reduces an accounting mismatch.

Cash Flow Statement Requirement

A statement of cash flows is a fundamental part of an entity's basic financial statements.

Inventory Costs

Costs associated with inventory include designing products specifically for customers and delivering inventory to its current condition.

Biological Transformation

Biological transformation pertains to asset changes, including procreation, degeneration, growth, but not the production of agricultural produce.

Agricultural Activity Assets

Agricultural activities yield both biological assets and agricultural produce.

Consumable Supplies

Consumable stores or supplies meant for production are categorized as inventory.

Notes to Financial Statements

Notes to financial statements serve various purposes, including the presentation of accounting policies, providing additional required disclosures, and clarifying any relevant but unreported information. They do not include rectifying inappropriate accounting policies.

Financial Statement Presentation

Items in line items like "Other current assets" are treated as dissimilar and too insignificant to justify separate presentation if considered individually immaterial.

Other Comprehensive Income

Other Comprehensive Income includes specific items of income and expenses, including reclassifications not recognized in profit or loss under PFRS.

Bond Purchase Pricing

When buying a bond between interest dates at a premium, the cash paid exceeds the bond's face amount.

Costs of Conversion

Costs of converting inventory include direct labor and systematic allocations of variable and fixed production overhead, not administrative overhead.

Accrual Basis Concept

Under the accrual basis, sales revenue is recognized upon the sale, regardless of when payment is received, exemplified by a sale on Day 1 with payment due on Day 30.

Reclassification of Financial Assets

Upon reclassification of a financial asset from Fair Value Through Other Comprehensive Income (FVOCI) to FVPL, cumulative gains or losses in OCI are reclassified to profit or loss, and fair value at the reclassification date establishes the new carrying amount.

Non-Reciprocal Transfers

Among the actions listed, the payment of taxes is classified as a non-reciprocal transfer, while purchases and loans represent reciprocal transfers.

Treatment of Abnormal Freight

Abnormal freight charges should be recognized as an expense for the period in which they occur.

Fair Value Measurement

Fair value of an asset is determined by the price expected to be received upon selling the asset at the measurement date.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge with these CFAS final exam flashcards. Each card presents essential accounting terms and definitions related to financial asset classification and cash flow statements. Perfect for students preparing for their finance exams.