Accounting Formulas

Question 1

What is Inventory Equation?

Answer 1

Beginning Inventory + Net Purchases - COGS = Ending Inventory

Question 2

What is Retained Earnings Equation?

Answer 2

Beginning RE + Net Income - Dividends = Ending RE

Question 3

What is Comprehensive Income?

Answer 3

Net Income + OCI = Comprehensive Income

Question 4

What is Basic Earnings Per Share Formula?

Answer 4

( Net Income - Preferred Dividend ) / Weighted Average CS

Preferred Dividend = Number of PS shares x PS Par x Dividend %

Question 5

How do you calculate effect of Stock Options on DEPS?

Answer 5

0 / Incremental Effect if All Options Exercised

Incremental Effect = Total Number of Options - [( Total Number of Options x Exercise Price ) / Market Price when Exercised )]

Question 6

How do you calculate effect of Convertible Bonds on DEPS?

Answer 6

[Total Bonds x Par Value x Interest % x (1 - tax rate)] / ( Total Bonds x Shares of CS per Bond Converted )