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Financial Statement Applications Illinois Tech > Ch. 4 (IFSA) Summary > Flashcards

Ch. 4 (IFSA) Summary Flashcards

1
Q

___ presents revenue, expenses, and net income.

A

The income statement

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2
Q

The income statement presents ___, expenses, and net income.

A

revenue

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3
Q

The income statement presents revenue, ___, and net income.

A

expenses

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4
Q

The income statement presents revenue, expenses, and ___.

A

net income

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5
Q

The components of ___ include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

A

the income statement

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6
Q

The components of the income statement include:
- ___
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

A

revenue

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7
Q

The components of the income statement include:
- revenue
- ___
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

A

cost of sales

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8
Q

The components of the income statement include:
- revenue
- cost of sales
- ___
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

A

sales, general, and administrative expenses

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9
Q

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- ___
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- EPS

A

other operating expenses

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10
Q

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- ___
- gains and losses
- nonrecurring items
- net income
- EPS

A

nonoperating income and expenses

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11
Q

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- ___
- nonrecurring items
- net income
- EPS

A

gains and losses

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12
Q

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- ___
- net income
- EPS

A

nonrecurring items

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13
Q

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- ___
- EPS

A

net income

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14
Q

The components of the income statement include:
- revenue
- cost of sales
- sales, general, and administrative expenses
- other operating expenses
- nonoperating income and expenses
- gains and losses
- nonrecurring items
- net income
- ___

A

EPS

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15
Q

___ that presents a subtotal for gross profit (revenue minus cost of goods sold) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in a single-step format.

A

An income statement

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16
Q

An income statement that presents a subtotal for ___ (revenue minus cost of goods sold) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in a single-step format.

A

gross profit

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17
Q

An income statement that presents a subtotal for gross profit (___) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in a single-step format.

A

revenue minus cost of goods sold

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18
Q

An income statement that presents a subtotal for gross profit (revenue minus cost of goods sold) is said to be presented in ___ format. One that does not present this subtotal is said to be presented in a single-step format.

A

a multi-step

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19
Q

An income statement that presents a subtotal for gross profit (revenue minus cost of goods sold) is said to be presented in a multi-step format. One that does not present this subtotal is said to be presented in ___ format.

A

a single-step

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20
Q

___ is recognized in the period it is earned, which may or may not be in the same period as the related cash collection. Recognition of revenue when earned is a fundamental principal of accrual accounting.

A

Revenue

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21
Q

Revenue is recognized in ___, which may or may not be in the same period as the related cash collection. Recognition of revenue when earned is a fundamental principal of accrual accounting.

A

the period it is earned

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22
Q

Revenue is recognized in the period it is earned, which ___. Recognition of revenue when earned is a fundamental principal of accrual accounting.

A

may or may not be in the same period as the related cash collection

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23
Q

Revenue is recognized in the period it is earned, which may or may not be in the same period as the related cash collection. Recognition of revenue when earned is a fundamental principal of ___.

A

accrual accounting

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24
Q

In limited circumstances, ___ may be applicable, including:
- percentage of completion
- completed contract
- installment sales
- cost recovery.

A

specific revenue recognition methods

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25
Q

In limited circumstances, specific revenue recognition methods may be applicable, including:
- ___
- completed contract
- installment sales
- cost recovery.

A

percentage of completion

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26
Q

In limited circumstances, specific revenue recognition methods may be applicable, including:
- percentage of completion
- ___
- installment sales
- cost recovery.

A

completed contract

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27
Q

In limited circumstances, specific revenue recognition methods may be applicable, including:
- percentage of completion
- completed contract
- ___
- cost recovery.

A

installment sales

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28
Q

In limited circumstances, specific revenue recognition methods may be applicable, including:
- percentage of completion
- completed contract
- installment sales
- ___.

A

cost recovery

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29
Q

An analyst should ___ and adjust reported revenue where possible to facilitate comparability. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as more or less conservative and thus qualitatively assess how differences in policies might affect financial ratios and judgments about profitability.

A

identify differences in companies’ revenue recognition methods

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30
Q

An analyst should identify differences in companies’ revenue recognition methods and ___. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as more or less conservative and thus qualitatively assess how differences in policies might affect financial ratios and judgments about profitability.

A

adjust reported revenue where possible to facilitate comparability

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31
Q

An analyst should identify differences in companies’ revenue recognition methods and adjust reported revenue where possible to facilitate comparability. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as ___ and thus qualitatively assess how differences in policies might affect financial ratios and judgments about profitability.

A

more or less conservative

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32
Q

An analyst should identify differences in companies’ revenue recognition methods and adjust reported revenue where possible to facilitate comparability. Where the available information does not permit adjustment, an analyst can characterize the revenue recognition as more or less conservative and thus qualitatively assess how differences in policies might affect ___.

A

financial ratios and judgments about profitability

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33
Q

___ include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

A

The general principles of expense recognition

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34
Q

The general principles of expense recognition include ___. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

A

the matching principle

35
Q

The general principles of expense recognition include the matching principle. Expenses are matched either to ___ or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

A

revenue

36
Q

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or ___ (period costs) or to the time period of expected benefits of the expenditures (e.g. depreciation).

A

to the time period in which the expenditure occurs

37
Q

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (___) or to the time period of expected benefits of the expenditures (e.g. depreciation).

A

period costs

38
Q

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or ___ (e.g. depreciation).

A

to the time period of expected benefits of the expenditures

39
Q

The general principles of expense recognition include the matching principle. Expenses are matched either to revenue or to the time period in which the expenditure occurs (period costs) or to the time period of expected benefits of the expenditures (e.g. ___).

A

depreciation

40
Q

In ___, choice of method (i.e., depreciation method and inventory cost method), as well as estimates (i.e., uncollectible accounts, warranty expenses, assets’ useful life, and salvage value) affect a company’s reported income.

A

expense recognition

41
Q

In expense recognition, ___ (i.e., depreciation method and inventory cost method), as well as estimates (i.e., uncollectible accounts, warranty expenses, assets’ useful life, and salvage value) affect a company’s reported income.

A

choice of method

42
Q

In expense recognition, choice of method (i.e., ___), as well as estimates (i.e., uncollectible accounts, warranty expenses, assets’ useful life, and salvage value) affect a company’s reported income.

A

depreciation method and inventory cost method

43
Q

In expense recognition, choice of method (i.e., depreciation method and inventory cost method), as well as ___ (i.e., uncollectible accounts, warranty expenses, assets’ useful life, and salvage value) affect a company’s reported income.

A

estimates

44
Q

In expense recognition, choice of method (i.e., depreciation method and inventory cost method), as well as estimates (i.e., ___) affect a company’s reported income.

A

uncollectible accounts, warranty expenses, assets’ useful life, and salvage value

45
Q

In expense recognition, choice of method (i.e., depreciation method and inventory cost method), as well as estimates (i.e., uncollectible accounts, warranty expenses, assets’ useful life, and salvage value) affect a company’s ___.

A

reported income

46
Q

To assess a company’s ___, it is helpful to separate those prior years’ items of income and expense that are likely to continue in the future from those items that are less likely to continue.

A

future earnings

47
Q

To assess a company’s future earnings, it is helpful to separate ___ that are likely to continue in the future from those items that are less likely to continue.

A

those prior years’ items of income and expense

48
Q

Some items from prior years clearly are not expected to continue in future periods and are ___. Two such items are (1) discontinued operations and (2) extraordinary items. Both of these items are required to be reported separately from continuing operations.

A

separately disclosed on a company’s income statement

49
Q

Some items from prior years clearly are not expected to continue in future periods and are separately disclosed on a company’s income statement. Two such items are (1) ___ and (2) extraordinary items. Both of these items are required to be reported separately from continuing operations.

A

discontinued operations

50
Q

Some items from prior years clearly are not expected to continue in future periods and are separately disclosed on a company’s income statement. Two such items are (1) discontinued operations and (2) ___. Both of these items are required to be reported separately from continuing operations.

A

extraordinary items

51
Q

Some items from prior years clearly are not expected to continue in future periods and are separately disclosed on a company’s income statement. Two such items are (1) discontinued operations and (2) extraordinary items. Both of these items are required to be reported separately from ___.

A

continuing operations

52
Q

For other items on a company’s income statement, such as ___ and accounting changes, the likelihood of their continuing in the future is somewhat less clear and requires the analyst to make some judgments.

A

unusual items

53
Q

For other items on a company’s income statement, such as unusual items and ___, the likelihood of their continuing in the future is somewhat less clear and requires the analyst to make some judgments.

A

accounting changes

54
Q

___ items are reported separately from operating items. For example, if a nonfinancial service company invests in equity or debt securities issued by another company, any interest, dividends, or profits from sales of these securities will be shown as nonoperating income.

A

Nonoperating

55
Q

Nonoperating items are reported separately from operating items. For example, if a nonfinancial service company invests in equity or debt securities issued by another company, any interest, dividends, or profits from sales of these securities will be shown as ___.

A

nonoperating income

56
Q

___ is the amount of income available to common shareholders divided by the weighted average number of common shares outstanding over a period. The amount of income available to common shareholders is the amount of net income remaining after preferred dividends (if any) have been paid.

A

Basic EPS

57
Q

Basic EPS is ___ divided by the weighted average number of common shares outstanding over a period. The amount of income available to common shareholders is the amount of net income remaining after preferred dividends (if any) have been paid.

A

the amount of income available to common shareholders

58
Q

Basic EPS is the amount of income available to common shareholders divided by ___. The amount of income available to common shareholders is the amount of net income remaining after preferred dividends (if any) have been paid.

A

the weighted average number of common shares outstanding over a period

59
Q

Basic EPS is the amount of income available to common shareholders divided by the weighted average number of common shares outstanding over a period. ___ is the amount of net income remaining after preferred dividends (if any) have been paid.

A

The amount of income available to common shareholders

60
Q

Basic EPS is the amount of income available to common shareholders divided by the weighted average number of common shares outstanding over a period. The amount of income available to common shareholders is ___.

A

the amount of net income remaining after preferred dividends (if any) have been paid

61
Q

If a company has ___ (i.e., one with no potentially dilutive securities), then its basic EPS is equal to its diluted EPS. If, however, a company has dilutive securities, its diluted EPS is lower than its basic EPS.

A

a simple capital structure

62
Q

If a company has a simple capital structure (i.e., ___), then its basic EPS is equal to its diluted EPS. If, however, a company has dilutive securities, its diluted EPS is lower than its basic EPS.

A

one with no potentially dilutive securities

63
Q

If a company has a simple capital structure (i.e., one with no potentially dilutive securities), then its ___ is equal to its diluted EPS. If, however, a company has dilutive securities, its diluted EPS is lower than its basic EPS.

A

basic EPS

64
Q

If a company has a simple capital structure (i.e., one with no potentially dilutive securities), then its basic EPS is equal to its ___. If, however, a company has dilutive securities, its diluted EPS is lower than its basic EPS.

A

diluted EPS

65
Q

If a company has a simple capital structure (i.e., one with no potentially dilutive securities), then its basic EPS is equal to its diluted EPS. If, however, a company has ___, its diluted EPS is lower than its basic EPS.

A

dilutive securities

66
Q

If a company has a simple capital structure (i.e., one with no potentially dilutive securities), then its basic EPS is equal to its diluted EPS. If, however, a company has dilutive securities, its ___ is lower than its basic EPS.

A

diluted EPS

67
Q

If a company has a simple capital structure (i.e., one with no potentially dilutive securities), then its basic EPS is equal to its diluted EPS. If, however, a company has dilutive securities, its diluted EPS is lower than its ___.

A

basic EPS

68
Q

___ is calculated using the if-converted method for convertible securities and the treasury stock method for options.

A

Diluted EPS

69
Q

Diluted EPS is calculated using ___ for convertible securities and the treasury stock method for options.

A

the if-converted method

70
Q

Diluted EPS is calculated using the if-converted method for ___ and the treasury stock method for options.

A

convertible securities

71
Q

Diluted EPS is calculated using the if-converted method for convertible securities and ___ for options.

A

the treasury stock method

72
Q

Diluted EPS is calculated using the if-converted method for convertible securities and the treasury stock method for ___.

A

options

73
Q

___ of the income statement involves stating each line item on the income statement as a percentage of sales. Common-size statements facilitate comparison across time periods and across companies of different sizes.

A

Common-size analysis

74
Q

Common-size analysis of ___ involves stating each line item on the income statement as a percentage of sales. Common-size statements facilitate comparison across time periods and across companies of different sizes.

A

the income statement

75
Q

Common-size analysis of the income statement involves stating each line item on the income statement as ___. Common-size statements facilitate comparison across time periods and across companies of different sizes.

A

a percentage of sales

76
Q

Common-size analysis of the income statement involves stating each line item on the income statement as a percentage of sales. Common-size statements facilitate comparison across ___ and across companies of different sizes.

A

time periods

77
Q

Common-size analysis of the income statement involves stating each line item on the income statement as a percentage of sales. Common-size statements facilitate comparison across time periods and across ___.

A

companies of different sizes

78
Q

Two income-statement-based indicators of ___ are net profit margin and gross profit margin.

A

profitability

79
Q

Two income-statement-based indicators of profitability are ___ and gross profit margin.

A

net profit margin

80
Q

Two income-statement-based indicators of profitability are net profit margin and ___.

A

gross profit margin

81
Q

___ includes both net income and other revenue and expense items that are excluded from the net income calculation.

A

Comprehensive income

82
Q

Comprehensive income includes both ___ and other revenue and expense items that are excluded from the net income calculation.

A

net income

83
Q

Comprehensive income includes both net income and ___.

A

other revenue and expense items that are excluded from the net income calculation

Financial Statement Applications Illinois Tech (18 decks)

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