Exam (elaborations)
CPA Exam - FAR| Questions with 100% Verified Answers
- Course
- Institution
CPA Exam - FAR| Questions with 100% Verified Answers
[Show more]
Content preview
CPA Exam - FAR| Questions with100% Verified Answers
Bad Debts - Direct Write-Off Method - ✔ ✔ - No entry for bad debts until
customer actually defaults.
- At default, the cutomer's account is written off.
- Theoretically weak, matching issue
- Only allowed if bad debt expense is immaterial
Bad Debts - Allowance Method - ✔ ✔ Income Statement
Approach Balance Sheet Approach
Income Statement Approach - ✔ ✔ - Matching Concept
- Estimate of bad debt expense is based on the income statement
- Allowance account balance has no bearing on the amount of adjustment
Balance sheet reporting: - ✔ ✔ Accounts Receivable
Less: Allowance for bad debts
= Net realizable value of A/R
Balance Sheet Approach - ✔ ✔ - Estimate of bad debt expense is based on
the balance sheet
, - Period sales have no bearing on the amount of adjustment
Written-off account later collected - ✔ ✔ Reverse write-off entry. Collect as usual.
Assigning Accounts Receivable - ✔ ✔ - Assignment of A/R normally is done
with recourse
- Assignment usually is done without notification to customers
Factoring Accounts Receivable - ✔ ✔ - With or without recourse.
Pledging A/R - ✔ ✔ - Use receivables as security for a
loan - Requires footnote disclosure
Noninterest-Bearing Notes - ✔ ✔ APB 21 requires interest to be inputed
- When a note is made under customary trade terms and is due in less than one
year, there is no requirement to impute interest to that note.
Investments - ✔ ✔ - Held-to-Maturity
- Trading Securities
- Available-for-Sale Securities
Held-to-Maturity Securities - ✔ ✔ - Debt securities only
- Mgt has both intent and ability to hold the securities to maturity
- Classified on BS based on maturity date
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Examsplug. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
78252 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now