Balance Sheet & Statement of Financial Position Part 1 Flashcards
an increase in expense decreases what?
assets and stockholders equity
what is stockholder’s equity comprised of?
Contributed (paid in) capital
preferred stock
common stock
addtional PIC (from various sources)
total PIC
noncontrolling interest in subsidiaries
RE (appropriated & unappropriated)
Accumulated other comprehensive income (loss)
LESS: TREASURY STOCK
Total stockholders equity
what is treasury stock
shares of stock repurchased by the company but not retired
what type of account is treasury stock?
contra account so you always deduct it
what is accumulated other comprehensive income (loss)?
the change in net assets that is a result of transactions that are not included in net income and don’t affect retained earnings
what is accumulated other comprehensive income (loss) made up of?
- derivate cash flow hedges
- excess adjustment for pension planned benefit obligations and fair value of plan assets
- net unrealized holding gain or loss on available for sale debit securities
- foreign currency translation adjustments
how is FV treated in relationship to available for sale (AFS) debt securities
if FV is lower than the original cost (due to market conditions) the difference is credited to AFS securities-unrealized
losses, a contra account to the investment
if FV is greater than the original cost, AFS securities-unrealized gain, an adjunct account is debited
the corresponding amount of the entry is debited or credited in OCI
what are current assets (CA)?
assets that can be converted into cash within one year or the operating cycle, whichever is longer
what are some types of current assets (CA)?
- cash
- receivables
- temporary investments (trading securities)
- inventory
- prepaid expenses
- WIP in excess of billings
what are current liabilities (CL)?
debts or obligations due within on year or the operating cycle, whichever is longer that can be settled with a CA or creation of another CL
what are some types of current liabilities (CL)?
- accounts payable
- unearned revenue
- short-term loans
- advances/deposits from customers
(security deposits, unearned rents, credits on account) - accured expenses
- notes payable
- dividends payable
- income tax payable
- current portion of long term debit
what are the 3 tips of legal forms of business?
- merger
- consolidation
- acquisition
what are assets?
economic resources with probably future benefits. they are controlled by the entity
what are liabilities?
unavoidable obligations that are settled with assets
what is equity?
ownerships interests that can be calculated as assets-liabilities
deposits/prepayments received for goods or services to be provided in the future are deferred revenues that are reported as….
liabilities
common stock has a ________ that is assigned by the board of directors
par value or stated value
preferred stock is a separate class of stock that has…
dividends and liquidation preferences over common stock
issue price > par (stated value)
excess is allocated to APIC common or preferred stock
if there is no par or stated value…
the entire amount is recorded in common stock
what is equity made up of?
contributed capital and retained earnings
net income or loss in an increase or decrease to…
retained earnings, affecting equity
if prepaid taxes approximately cover the tax liability for the year, they need to be…
reclassified as an expense and deducted from income cause the year has ended
what is net working capital (other than cash)?
CA - CL
what is the cause and effect principle
expenses that have a direct link with revenue and
provide benefits at specific points in time
ex. COGS
what is the systematic and rational allocation principle?
expenses that provide benefits over long periods of time
ex. Depreciation
what is the immediate recognition principle?
Expenses with no direct link to specific benefits
ex. Research and development
what is GAAP?
-general purpose accounting framework
-encompasses rules, conventions and procedures
-defines accounting practices at a specific time
-maintained and updated by FASB
TRUE OR FALSE:
non-mailed checks are considered cash because the entity has possession of the checks and the ability to send them or not
TRUE
TRUE OR FALSE:
cash overdraft is usually reported as a current liability or can be netted against other bank accounts at the same bank
TRUE
