[jeff]

Welcome to the Q2 2016 CPA Exam Study Group for FAR.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[hhyy365]

@hitmi ahhh same! I didn't wanna change it because the new SIMs change! I'm still debating if I should change my date and review more, or just take it and see how it goes? Tough decision. when is your test date?

REG-83 (4/4/2016)
FAR (6/9/2016)
AUD TBD
BEC TBD

[MaLoTu]

Orange Township has two general obligation bond issues outstanding. One is for $2,000,000 and the other is for $3,000,000. Cash of $62,500 has been set aside in debt service funds, per the annual budget, to pay the interest due on these issues January 1, 20X2. What is the net liability that must be shown in the fund-based statements prepared as of December 31, 20X1?

A. $5,000,000

B. $5,062,500

C. $62,500

D. $0

The answer is D, but how was I supposed to know that they were just asking about governmental funds? It just says fund-based and they all use funds, don't they?

[JT]

Long term debt goes to the govt wide financial statements not the fund financials nor does it go to any funds.

There wouldn't be any long term debt in any fund f/s at all, ever. The $62.5k is basically cash sitting in the debt service fund waiting to pay the liability (that's reported on the govt wide fund). That's how ki remember it. Let me know if I'm clear or not on this.

A trick to realize what's going on is that the debt service fund pays off ONLY long term debt for governmental funds. So if a question says that $1mill is held in the debt service fund for paying all of the entitys debt you can conclude: the 1mill cash is only for LT debt; and the entity has no other debt, and all of the debt is on the govt wide f/s

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[MaLoTu]

Well, couldn't the fiduciary hold bonds for a pension or for an endowment, both of which would technically be full accrual? The question does not say specifically say for governmental, although the only the only account it specifies is debt service, but it services debt for all the funds governmental or not …

Because the governmental funds do not hold LTD then I automatically assume that it came from another fund. I don't know.

[JT]

The debt service funds only services governmental funds, not prop or fiduciary funds. Those funds take care of themselves.

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[MaLoTu]

OK! Thanks for the clarification, Dab.

[MaLoTu]

Mend Co. purchased a 3-month U.S. Treasury bill. Mend's policy is to treat as cash equivalents all highly liquid investments with an original maturity of three months or less when purchased. How should this purchase be reported in Mend's statement of cash flows?

A. As an outflow from operating activities

B. As an outflow from investing activities

C. As an outflow from financing activities

D. Not reported

The answer is D … is this because they will be an outflow and an inflow in the same period … I don't get why it isnt reported on the CF. In my opinion it should have been an investing outflow. It has something to do with it being a cash or cash equivalent, but it was still purchased …

[JT]

I think this is one of the few exception. T-bills are pretty unique. I believe t-bills are also treated as cash/cash equivalent.

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[MaLoTu]

Stupid question, but are cash and cash equivalents excluded from cash flows? I still haven't gotten to F7 in Becker, but I have been doing review with NINjA.

[hitmi]

@ thebigguy1992 i had the same inquiry. something should be wrong on the question!!

FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)

will Ninja MCQs make the difference in 09 June, Lets wait!

[hitmi]

@MaLoTu T-Bs are an exemption from the GR

FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)

will Ninja MCQs make the difference in 09 June, Lets wait!

[MaLoTu]

oh, ok. Thanks, hitmi.

[JT]

I might have missed what you guys are talkig about. What is the general rule? About cash flow statements?

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[MaLoTu]

I think because when a company purchased securities or sells securities it is supposed to be an investing activity… I am going to go through this section in Becker on Tuesday.

[hitmi]

@Dab in CF we report the cash inflow and outflow of the entity. in our case we have purchased T-B we are only converting one form of cash (T-B) into another form of cash (Cash)!!

FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)

will Ninja MCQs make the difference in 09 June, Lets wait!

[Author]

Replies