FAR Study Group January/February 2013 - Page 73

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  • February 17, 2013 at 11:48 pm #400369
    peetree
    Member

    @williteverend remember cash basis treats all cash received as revenue.

    What do we do in our cruel world when we receive cash for services that will be performed in the future? Do we put it up on the balance sheet?

    Write out the JE.

    FAR 02/21/13 - 95
    REG 07/02/13 - 87
    AUD 08/02/13 - 94
    BEC 08/30/13 - 85
    Ethics Exam - 90

    Illinois candidate awaiting his license

    Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

    February 18, 2013 at 12:08 am #400370
    Anonymous
    Inactive

    “What do we do in our cruel world when we receive cash for services that will be performed in the future? Do we put it up on the balance sheet?”

    No, we record a liability.

    Dr. Cash

    Cr. Unearned Revenue

    Hence, why we would not include it in the Net Income (?)

    February 18, 2013 at 12:10 am #400371
    peetree
    Member

    Bingo.

    So if you had cash basis income of 70k, and 30k of that cash was for services not yet performed.

    What would your net income be under the accrual method?

    FAR 02/21/13 - 95
    REG 07/02/13 - 87
    AUD 08/02/13 - 94
    BEC 08/30/13 - 85
    Ethics Exam - 90

    Illinois candidate awaiting his license

    Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

    February 18, 2013 at 12:13 am #400372
    Anonymous
    Inactive

    Just the $70k

    February 18, 2013 at 12:18 am #400373
    peetree
    Member

    If the 30k is already included in the 70k number, you would want to subtract the 30k from the 70k because it is unearned revenue, not revenue.

    FAR 02/21/13 - 95
    REG 07/02/13 - 87
    AUD 08/02/13 - 94
    BEC 08/30/13 - 85
    Ethics Exam - 90

    Illinois candidate awaiting his license

    Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

    February 18, 2013 at 12:25 am #400374
    Anonymous
    Inactive

    OH!!!!!!!! I think I might have figured out what I'm doing wrong. I'm treating the given Net Income and all the account changes as separate and individual situations. I really need to think that the account changes were already occurred and were accounted for in the given Net Income part.

    I thought the accrual net income would be $70k because the $30k is a *new* transaction. But really, the $30k has been accounted for within the $70k. So yes, to answer your question. My accrual net income would need to back out the $30k from $70k

    ……I've spent all day staring at the computer. My brain is toast (burnt toast).

    Thanks peetree – sorry to have bothered you. Good luck this week!

    February 18, 2013 at 12:26 am #400375
    peetree
    Member

    mmmmmmmmmmmmmmmm burnt toast.

    No problem man. Talking through problems with people on here helps me learn as well. It like solidifies the concepts in my brain.

    FAR 02/21/13 - 95
    REG 07/02/13 - 87
    AUD 08/02/13 - 94
    BEC 08/30/13 - 85
    Ethics Exam - 90

    Illinois candidate awaiting his license

    Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

    February 18, 2013 at 12:34 am #400376
    Anonymous
    Inactive

    Sometimes talking out loud is good too. I feel bad for my boyfriend. We have such amazing pillow talk sometimes *sarcasm*. One night he fell asleep while I was explaining the monetary and fiscal policies for business cycles. 🙂

    Guess he will have to endure some cash and accrual basis accounting discussion now, too!!!!

    February 18, 2013 at 12:42 am #400377
    peetree
    Member

    lol, yup!

    I stopped trying with my girlfriend, I don't need her falling asleep on me anymore than she already does!

    FAR 02/21/13 - 95
    REG 07/02/13 - 87
    AUD 08/02/13 - 94
    BEC 08/30/13 - 85
    Ethics Exam - 90

    Illinois candidate awaiting his license

    Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

    February 18, 2013 at 12:47 am #400378
    MCLKT
    Participant

    One thing that used to confuse me on the Cash to Accrual questions was making sure I know what account they are talking about being impacted. It makes a huge difference in determining the change from one to the other.

    Example #1 they were looking for the Expenses (Debit Balance) to be adjusted from cash to accrual.

    so I do a Taccount beginning with the 150 debit balance:

    —if Prepaids increase by 5 that's s DR to prepaid – Credit to Expense

    —If the accr. liabilities increase by 20 that's a CR to Liability – Debit to Expense

    so Expenses = 150 DR – 5 CR + 20 DR = 165

    Example #2 they are looking for the Income to be adjusted from cash to accrual.

    Begin with Income credit balance of 70:

    —Unearned Revenue increased by 30 that's a CR to unearned rev – Debit to Income

    So Income = 70 CR – 30 DR = 40

    This seems to always work out correctly for me 🙂

    A:[73]97 F:[74]85 R:86 B:[74]82
    *NINJA 10 Pt. COMBO & Yaeger*

    February 18, 2013 at 1:08 am #400379
    WICPA06
    Member

    I can't believe exam week is finally here! I'm getting really nervous though. I always say, nothing in FAR is overly complicated. The most challenging part is just the pure amount of information. Good luck to all FAR exam takers this week! We will all rock it. Idk why I sysc myself out. I'm consistently scoring 80% or higer on the becker stuff now.

    BEC - 77 (lost credit), 4/5/13
    AUD - 83
    REG - 77
    FAR - 73, 74, 80! One more to go!!

    February 18, 2013 at 2:50 am #400380
    Anonymous
    Inactive

    Consolidations is just flying over my head right now…. More specifically dealing with intercompany journal entries. I'm fine with CAR IN BIG, but inventory/transaction journal entries have me lost

    February 18, 2013 at 3:50 am #400381
    swanstju
    Member

    Hi all,

    This starts exam week for me too. I am scheduled to take FAR on 2/23. I was wondering if any of you knew if Govt or NFP are ever tested in the SIMS? I haven't been able to find any practice SIMS for these areas. Are these topics only MCQs.

    I am so not looking forward to preparing financial statements on this subject.

    REG - 75
    FAR - 5/25/2013
    AUD - 2013
    BEC - 2013

    February 18, 2013 at 3:52 am #400382
    MCLKT
    Participant

    Yeah, good luck there cpahopeful 🙂

    lol, I say that because it's my weakness for sure. I still can't manage it. Well, the inventory transactions I kind of get.

    Basically, it's what happens at the Parent company level that counts. Anything the sub does with intercompany inventory gets backed out or eliminated.

    A:[73]97 F:[74]85 R:86 B:[74]82
    *NINJA 10 Pt. COMBO & Yaeger*

    February 18, 2013 at 4:14 am #400383
    Anonymous
    Inactive

    Book BAE

    > Close BAE

    Graspp SE PAPI

    Soc away the revenue

    lol those mnemonics :/ and my husband knows them too :/ YOOO!!

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