Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Financial Statement Analysis G. Bern ND > Chap 4 > Flashcards

Chap 4 Flashcards

1
Q

Revenues - X = Net Income

A

Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

X - Expenses = Net Income

A

Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Net Income =

A

Revenue - Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Income Statement is called

A

Statement of Earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Statement of ? = Income Statement

A

Earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

R.O.G.E.L = Net Income

A

Revenue + Other Income + Gains -Expenses -Losses = Net Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

X + Other Income + Gains - Expenses - Losses = Y

A

X=Revenue

Y=Net Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Revenue + Other Income + Gains - X-Y= Net Income

A 
X = Expenses
Y = Losses
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Revenue defined

A

Amounts charged/expected to receive for delivery of goods/services thru ordinary business activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Amounts charged/expected to receive for delivery of goods/services thru ordinary business activities

A

Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Net Revenue

A

Revenue after adjustments; cash / volume discounts or estimated returns

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Revenue after adjustments; cash / volume discounts or estimated returns

A

Net Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Revenue

A

Sales or turnover

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Sales vs. Revenue

A

Sale of goods vs. included in Sale of goods but used interchangeably

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Expenses

A

Outflows, depletions of assets, incurrences of liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Outflows, depletions of assets, incurrences of liabilities

A

Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Gains and losses are included in

A

Net Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Gains and losses are

A

economic benefits indirectly related to the core business; sale of land, sale of investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Gains/Losses calculated by

A

Carrying Value - Price Sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Income includes both

A

Revenue and gains

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Net Income includes

A

Gains and losses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Net Income (Profit or loss) defined

A

(a) income - expenses (b) revenue + other income + gains - expenses - losses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Non-Controlling Interests

A

entities owned by less than 100%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Minority Interest

A

portion of income that belongs to minority shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

portion of income that belongs to minority shareholders

A

Minority Interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

entities owned by less than 100%

A

Non-Controlling Interests

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Gross Profit

A

Revenue - Cost of Sales (COGS)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

MultiStep income statement

A

Income statement with gross profit subtotals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Single Step

A

Income statement excludes gross profit subtotal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

IS with no GP subtotal

A

Single Step

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

IS with GP subtotal

A

Multi Step

32
Q

Revenue (Sales) - Cost of Sales (COGS)

A

Gross Profit

33
Q

Operating Profit (Margin)

A

Revenue - ALL operating expenses

34
Q

Revenue - COGS - SG&A

A

Operating Profit (Margin)

35
Q

Operating Profit (Margin)

A

Profits before deducting taxes, interest expense & non-operating expenses

36
Q

Operating Profit = EBIT

A

NO

37
Q

Gross Profit = Gross Margin

A

YES

38
Q

Operating Income =

A

Operating Profit

39
Q

Operating Expense - SGA - RD - Gross Profit =

A

Operating Profit

40
Q

Operating Profit defined

A

Reflects company profits on usual business activities before taxes & interest expense

41
Q

EBIT

A

Earnings before Interest Expense and Taxes

42
Q

Operating Profit = EBIT

A

YES

43
Q

Revenue Recognition

A

Idendent of cash receipt/movements

44
Q

Accrual Accounting

A

Revenue is recognized (reported on income statement) in the period in which it is earned

45
Q

Revenue is recognized (reported on income statement) in the period in which it is earned

A

Accrual Accounting; Matching Concept

46
Q

Cash received in advance of delivery or service performed =

A

Unearned Revenue

47
Q

Unearned Revenue

A

Cash received in advance of delivery or service performed

48
Q

IFRS Revenue Recognition Rule

A
  1. Transfer of significant risks/rewards have been passed to buyer
  2. Management involvement, effective control over goods no longer applies
  3. Revenue can be measured
  4. Economic benefit is likely to occur
  5. Costs incurred can be measured
49
Q

IFRS transfer of risks / rewards of ownership occur when

A

goods are delivered to buyer or legal title is transferred

50
Q

Sales

-Cost of Sales =

A

Gross Profit

51
Q

Gross Profit

-Operating Expenses =

A

Operating Profit / Margin

52
Q

US GAAP Revenue Recognition

A

When revenue is realized or realizable and earned

53
Q

When revenue is realized or realizable and earned

A

US GAAP Revenue Recognition

54
Q

GAAP Revenue Recognition/Realized

A
  1. Evidence of contract
  2. Product has been delivered or service performed
  3. Price is determined or determinable
  4. Payment is reasonably assurred or collectible
55
Q

Long - Term Contract

A

Spans a number of accounting periods

56
Q

Percentage of completion method used for

A

Long Term Contract Revenue Recognition

57
Q

Percentage of completion method

A
  1. Can be measured reliably
  2. Est of % complete is reported on income statement
  3. Contract costs are expensed revenue
  4. Net Income or profit is reported annual as work is performed
58
Q

% of Completion for LT contract

A
  1. When the outcome can be reliably measured

2. More certainty vs completed contract

59
Q

Completed Contract measure for LT contract

A

1 When outcome cannot be reliably measured

2. Less certainty vs. % of completion

60
Q

% Complete Example
$5MM BID; Est Cost $4MM
YR 1 $3MM Cost incurred
Revenue? Cost of Revenue? GP?

A

Year 1: 75% cost incurred;
Revenue =.75 x $5MM = $3.75MM
Cost = .75 x $4MM = $3MM
Gross Profit = $3.75MM -$3MM = $.75M

61
Q 
% Complete Example
$5MM BID; Est Cost $4MM 
YR 1: Revenue $3.75MM Cost $3MM Gross Profit $.75M
YR 2: $1MM cost incurred
Revenue? Cost? GP?
A

Year 2:
Revenue = $5MM - $3.75MM = $1.25MM
Cost = $1MM
Gross Profit = $.25M

62
Q

Error in % complete estimates

A

If final year:

63
Q

% completion is the preferred method under IFRS, GAAP or Both

A

Both

64
Q

Completed Contract is allowed under IFRS, GAAP or both

A

GAAP only

65
Q

Depreciation Methods

A
  1. Straight Line
  2. Accelerated
  3. Units of Production
66
Q

Straight Line Depreciation

A

Allocates costs of long lived assets less salvage value evenly across useful life

67
Q

Accelerated Depreciation

A

Allocates greater portion of expense in first years of asset life
Diminishing balance is an example

68
Q

Units of Production Depreciation

A

Allocation of cost corresponds to actual use of asset in a specific period

69
Q

Judgments needed for Depreciation

A
  1. Salvage Value

2. Useful Life (IRS determined)

70
Q

Accelerated Depreciation Calculation

A
  1. Determine straight line
  2. Determine acceleration factor
  3. Dep Rate = Straight line x accel factor
  4. Dep Expense = Net Book Value x Dep Rate
  5. Discontinue when NBV = Salvage Value
71
Q

Diminshing Balane Dep =

A

Accelerated Method

72
Q

Depreciation Expense offset

A

Accumulated Depreciation

73
Q

Depreciation is a cash neg, pos or non cash item

A

Non Cash Item

74
Q

Nonrecurring items =

A
  1. Discontinued Operations
    2 Extraordinary Items
  2. Unusual or Infrequent Items .
75
Q

Dicontinued Ops defined

A

Disposal or stoppage of business line

76
Q

Extraordinary Items defined

A
  1. Not permitted by IFRS
  2. Must be reported separately on Income State under GAAP
  3. Must be both unusual and infrequent
  4. Force Majour “ Acts of God”
77
Q

Unusual or Infrequent Items defined

A
  1. IFRS allowed
  2. GAAP allowed but can not also be extraordinary
  3. Under GAAP must be reported as a part of continuing operations

Financial Statement Analysis G. Bern ND (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions