Acc 340 Exam 1 Flashcards
Accounting assumptions
Economic entity
Going concern
Monetary unit
Periodicity
Accounting principles
Measurement
Revenue recognition
Expense recognition
Full disclosure
Qualitative characteristics
Relevance
Faithful representation
Enhancing
Relevance qualities
Predictive value
Confirmatory value
Materiality
Faithful representation qualities
Completeness
Neutrality
Free from error
Enhancing qualities
Comparability
Verifiability
Timeliness
Understandability
Assets
Resources owned that will generate future economic benefits
Liabilities
Future sacrifices to settle on obligations from past transactions
Equity
Residual claims of owners
Investments by owners
Increases in equity due to dividends
Distributions to owners
Decreases in equity due to dividends
Comprehensive income
All changes in equity other than investments by owners
Measurement principle
Reports assets at historical cost or fair value
Accruals
Entries where cash is received or paid after the revenue or expense has been earned or incurred
Deferrals
Cash is received or paid before revenue has been earned or used up
Converting revenue to cash received from customers
Revenues
+- change in accounts receivable
+- change in unearned revenue
= cash received from customers
Converting COGS to cash paid to suppliers
COGS
+- change in inventory
+- change in accounts payable
= cash paid to suppliers
Multi step income statement:
Income from operations
Net revenue - COGS = gross profit - operating expenses = income from operations
Multistep income statement:
Income from continuing operations
Income from operations \+- interest, dividend revenue \+- gain/loss on sale of LT assets \+- gain/loss on unusual events = income before taxes - income tax expense = income from continuing operations
Multi step income statement:
Discontinued operations
Income from continuing operations - loss on operations - impairment loss - loss on disposal = net income
Retained earnings statement
Beg RE \+- change in principle net of tax \+- prior period adjustment = Beg RE restated \+ NEt income - dividends = End RE
Net realised value
Fair value - disposal cost
Impairment loss
Net realised value - book value
Stockholders equity accounts
Capital stock Additional paid in capital Retained earnings - treasury stock Accumulated other comprehensive income Non controlling interest
Cash flows from Operating activities
Net income \+ depreciation/ amortisation \+ loss on sale of PPE \+ decreases in current assets \+ increases in current liabilities - gain on sale of PPE - decreases in all current liabilities - increases in all current assets
