Significant Policies
Which one is not an acceptable accounting method that a company can choose?
1.)LIFO
2.)FIFO
3.)Bob's method
4.)Straight-line
Bob's method, you must use any "equally acceptable alternative accounting method"
Subsequent events must be documented even if the event is not material or will impact investor's decisions. (T/F)
False, "Disclosure of these subsequent events is required if they are material and are likely to influence investors' appraisal"
Under GAAP, what statement in a 10-K are related party transactions disclosed under?
Notes to the Financial Statements
A company doesn't need to provide more detail on specific accounting policies if there is a "known" issue or it is an "industry understanding". (T/F)
False, a company needs to provide details about what accounting methods they use
What are representation letters used for in an audit?
They notify the audit team of any events that occurred during the subsequent period that require adjustments or disclosures in the F/S
Are family members considered a related party? (Y/N)
Yes, immediate family members are considered related parties
Which statement can information on significant accounting policies be found?
1.) Overview of Key Financial Practices
2.) Summary of Significant Accounting Policies
3.) Description of Important Financial Policies
4.) Summary of Accounting Practices
Summary of Significant Accounting Policies, within a company's 10-K report
!!!! Daily Double !!!!!
Which type of subsequent event doesn't need to be recognized on the balance sheet, but still needs to be disclosed?
A.) Semi-Recognized Event
B.) Recognized Event
C.) Material Event
D.) Nonrecognized Event
D.) Nonrecognized Event
"Information about conditions that occurred after the balance sheet date but did not exist at balance sheet date"
Are transactions where a family member has shares in a mutual fund considered a related party transaction? (Y/N)
No, there is no direct control over management in a mutual fund
Which of the following is most likely not an example of an account requiring a significant accounting policy footnote?
1.)A/R
2.)Retained Earnings
3.)PP&E
4.)Goodwill
Retained Earnings
Disclosures of subsequent events are required if the event was...
Material and likely to influence investors' decisions
Who is ultimately responsible for reporting related party transactions in the Notes to F/S section?
Management holds the ultimate responsibility for disclosures within the financial statements