[Anonymous]

In my review for FAR today, I came across 2 SIMS based on SFAC(STATEMENTS OF FINANCIAL ACCOUNTING CONCEPTS). I wasn’t able to find the answers within the Authoritative Literature and I was wondering how I should go about answering questions like these. I was able to guess on a lot of it and get it right and I know some might be common sense but a few I was unsure of and wasn’t able to find it in the codification. Here are the two SIMS I came across…

SIM 1

SFAC 5 provides guidance on measuring assets and liabilities. The following measurement methods are available to measure

assets and liabilities, as shown in the list below.

Measurement methods:

A. Historical cost or historical proceeds

B. Current cost

C. Current market value

D. Net realizable value or settlement rate

E. Present value of future cash flows

Account (Choose A,B,C,D,or E for the following)

1. Long-term receivables (E)

2. Available for sale securities (C)

3. Equipment (A)

4. Warranty obligations (D)

5. Short-term payables (A)

6. Accounts receivable (D)

7. Bonds payable, due in ten years (E)

8. Trading securities (C)

________________________________________________________________________________________________

SIM 2

This question consists of ten items that represent descriptions or definitions of the various elements of the FASB’s Statements of Financial Accounting Concepts. Select the best answer for each item from the terms listed in A – L. A term may be used once, more than once, or not at all.

A. Recognition G. Gains

B. Comprehensive Income H. Net Income

C. Faithful representation I. Earnings

D. Revenues J. Realization

E. Predictive Value K. Replacement Cost

F. Comparability L. Market Value

Concept statement definitions:

1. Component of relevance. (E)

2. Increases in net assets from incidental or peripheral transactions affecting an entity. (G)

3. The process of converting noncash resources and rights into cash or claims to cash. (J)

4. Enhancing qualitative characteristic of relevance and faithful representation. (F)

5. The process of formally recording an item in the financial statements of an entity after it has met existing criteria and been subject to cost-benefit constraints and materiality thresholds. (A)

6. All changes in net assets of an entity during a period except those resulting from investments by owners and distributions to owners. (B)

7. Inflows or other enhancements of assets of an entity or settlements of its liabilities from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing operations. (D)

8. The amount of cash, or its equivalent, that could be obtained by selling an asset in orderly liquidation. (L)

9. The quality of information that helps users to increase the likelihood of correctly forecasting the outcome of past or present events. (E)

10. A performance measure concerned primarily with cash-to- cash cycles. (I)

[musicamor]

The ASC will cross-reference current codified standards back to things SFAC. Get experienced with Codification searching by using the “search within” function. You'll see references to SFAC, EITFs, etc.

Texas CPA - licensed in 2012!!!

[Author]

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