WGU D105 - Intermediate Accounting III - Units 5-9

WGU D105 - Intermediate Accounting III - Units 5-9 Leave the first rating Students also studied Terms in this set (77) Western Governors UniversityD 104 Save

WGU D105 OA #2

181 terms ljo1373Preview D215 Auditing 168 terms Prime6668Preview D080 Pre-Assessment Questions an...70 terms JADAMS486Preview WGU D 250 term mal depreciation expenseaddition to operating activities amortization of intangibles and deffered charges addition to operating activities amoritization of discount on bonds payableaddition to operating activities increase in deferred income tax liabilityaddition to operating activities loss on investment in common stock using equity method addition to operating activities loss on sale of plant assetsaddition to operating activities loss on impairment of assetsaddition to operating activities decrease in receivablesaddition to operating activities decrease in inventoryaddition to operating activities decrease in prepaid expenseaddition to operating activities increase in accounts payableaddition to operating activities increase in accrued liabilitiesaddition to operating activities amoritization of premium on bonds payablededuction to operating activities decrease in deferred income tax liabilitydeduction to operating activities

income on investment in common stock using equity method deduction to operating activities gain on sale of plant assetsdeduction to operating activities increase in receivablesdeduction to operating activities increase in inventorydeduction to operating activities increase in prepaid expensededuction to operating activities decrease in accounts payablededuction to operating activities decrease in accrued liabilitiesdeduction to operating activities repurchase of common stockdeduction to financing activities sale of fixed assetsaddition to investing activities purchase of capital expendituresdeduction in investing activities issuance of common stockaddition to financing activities acquisition of a businessdeduction in investing activities proceeds from the sale of a divisionaddition to investing activities reduction of equity accountdeduction to financing activities payment of cash for equipmentinvesting activity noncurrent asset accountinvesting activity long term liabilitiesfinancing activity making a loaninvesting activity paying dividendsfinancing activity purchase of debt (bonds)investing activity purchase of equity (stock) securitiesinvesting activity sale of treasury stockaddition to financing activities issuance of notes or bonds payableaddition to financing activities payment of notes or bonds payablededuction to financing activities

increase in current asset accountdeduction to operating activities increase in current liability accountaddition to operating activities decrease in equipmentaddition to operating activities How does the change in prepaid expenses affect the statement of cash flows?A decrease in prepaid expenses increases cash flows from operating activities.How does the change in accounts receivable affect the statement of cash flows?An increase in accounts receivable decreases cash flows from operating activities.How does the change in accounts payable affect the statement of cash flows?A decrease in accounts payable decreases cash flows from operating activities.An increase in a current asset accountdecreases cash flows from operating activities.a decrease in a current asset accountincreases cash flows from operating activities.An increase in a current liability accountincreases cash flows from operating activities.How does the change in equipment affect the statement of cash flows?A decrease in equipment increases cash flows from investing activities.An increase in a noncurrent asset accountecreases cash flows from investing activities How does the change in common stock affect the statement of cash flows?An increase in common stock increases cash flows from financing activities.An increase in an equity accountincreases cash flows from financing activities Which sources provide the information for preparing statements of cash flows?Comparative accrual-based balance sheets Disclosure for change in accounting principle from LIFO to FIFO?A discussion of the nature of and reason for the change, including an explanation for the reason that FIFO is preferable to LIFO Change in accounting principle is reported ... retrospectively Financial statements from annual report areadjusted for the new accounting priciple and carrying values of assets and liabilities as of the beginning of the first year presented is adjusted Accounting principle change disclosure in the notes includes The nature of and reason for the change in accounting principle and an explanation of why the newly adopted accounting principle is preferable. The effect of the accounting change on the carrying amounts of assets and liabilities as of the beginning of the first year's financial statements presented. The cumulative effect on retained earnings. The cumulative effect of the accounting change is reported on the beginning (opening) balance of retained earnings for the earliest period financial statement presented.

Exception to the retrospective approachAlthough a change to the equity method is a change in accounting principle, it is accounted for prospectively and not retrospectively. It is impracticable to estimate the impact of the accounting change because of a lack of information.This is referred to as the impracticability exception.What is not an accounting change?Deferring marketing costs that were previously expensed but are now material.Adopting the percentage-of-completion method of recognizing the revenue of newly acquired contracts.Changing from FIFO to LIFO is accounted forProspectively. This change would require subjective assumptions about the LIFO layers.The cumulative effect of an accounting change is reported in Retained earnings statement at the beginning balance of the earliest year presented When an accounting change is reported under the retrospective approach, prior years' financial statements are Revised to reflect the use of the changed principle Which disclosure is required for a change from LIFO to FIFO?The cumulative effect on prior years (net of tax) in the current retained earnings statement; the justification for the change; and restated prior year income Correction of an error is handled asA prior period adjustment, thus the cumulative effect at the beginning of the period of change is entered directly as an adjustment to the opening balance of retained earnings.Indirect impact to a change in accounting principle the expense is Recorded in the current period, not retrospective.Direct effects of a change in accounting principle is Presented retrospectively Change from FIFO to LIFO is accounted for byRecognize a direct effect and record a retrospective adjustment Change from LIFO to FIFO is accounted for byRecognize a direct effect and record a retrospective adjustment How does a direct effect of a change to a financial statement compare to an indirect effect?Indirect effects do not change prior period amounts; direct effects change prior period amounts Which of the following is considered an indirect effect of a change in accounting principle?An employee profit-sharing plan based on net income when a company uses the percentage-of-completion method A change in accounting estimates is reported in (1) the period of change if the change affects that period only, or (2) the period of change and future periods if the change affects both.Examples of changes in estimates include:Uncollectible receivables, Inventory obsolescence, Useful lives and salvage values of assets, Liabilities for warranty costs and income taxes, Change in depreciation methods.Changes in accounting estimates made as part of normal operations do not need to be disclosed unless the change is material.