1.21 Statement of Financial Position (Balance Sheet) Flashcards

1
Q

Name 2 sources of Equity Financing or Capital

A
  • Stockholders’ Equity
    • Paid-In Capital
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2
Q

Can the Statement of Financial position help you in assessing profitability?

A

No. Ddetermining profitability and assessing past performance can not be done via the balance sheet. It is a point in time and not a period of time.

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3
Q

Name three categories for Long-term or noncurrent assets

A
  • PPE - Property, Plant, Equipment
    ○ Tangible physical assets
    • Intangible Assets
      ○ Patent
    • Certain Investments
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4
Q

When can unearned revenue be earned?

A
  • Unearned Revenue
    ○ We owe the delivery or performance
    ○ Received money in advance
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5
Q

What value is used for Paid-In captial?

A

Par Value

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6
Q

What is included capital structure?

A

The capital structure consists of the amounts contributed by creditors (liabilities) and investors (stockholders’ equity).

Assets = Liabilities + Stockholders’ Equity

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7
Q

What is the Fund Theory?

A
  1. The basic equation can be derived to form the proprietary theory:
    Assets – Liabilities = Stockholders’ Equity
    1. According to this theory, equity in an enterprise is what remains after the economic obligations of the enterprise are deducted from its economic resources.
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8
Q

Is this a long-term or short-term liability?
“Deferred revenue”

A

Long Term

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9
Q

How is an intraperiod Tax Allocation displayed on the Income Statement?

A

Intraperiod tax allocation is an accounting method that allocates a company’s total income tax expense for a particular period to different parts of the income statement. The objective of intraperiod tax allocation is to associate tax effects with the specific items that directly affect them.
□ Continuing Operations
® Income Tax Expense
□ Discontinued Operations
® Income Tax Expense
□ Extraordinary items
® Income Tax Expense
□ Other Comprehensive Income
® Income Tax Expense

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10
Q

Is Treasury Stock on the balance sheet a contra account or a primary account in the owners’ equity section?

A

Contra Account
Common Stock
Treasury Stock (contra)

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11
Q

What value does PP&E, net represent on the balance sheet?

A

Historical Purchase Value - Depreciation and does not reflect current market value.

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12
Q

Name 4 limitation to the balance sheet usefulness.

*Time
*Value

A

*Single Point in time
*Long-term assets are recorded at historical value - depreciation
*Represents estimates and management judgment
* Items that can not be estimated and recorded on the books but can have a financial impact

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