Chapter 3 Flashcards

(36 cards)

1
Q

Main formula of the Income statement?

A

Revenue- expenses = Net Income

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2
Q

Altra formula per il Net Income

A

Revenue + OI + Gains - Expenses - Losses

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3
Q

Formula Gross Profit

A

Revenue- Cost of sales

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4
Q

Gross profit: Multi step- single ste

A
  • Multi step: income statement shows gross profit subtotal
  • Single step: I.S excludes gross profit subtotal
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5
Q

Formula Operating Profit

A

Revenue- operating expenses

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6
Q

Cosa è Operating Profit

A

Profits before deducting taxes and interest expense and before any other non operating items

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7
Q

Ebit is equal to Operating profit?

A

NO, not necessary

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8
Q

Accrual accounting principle

A

revenue is recognized in the period in which it is earned

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9
Q

Five-step model for recognise revenue

A

-Identify the contract with a customer
-Identify the separate or distinct performance obligations in the contract
-Determine the transaction price
-Allocate the transaction price to the performance obligations within the contract
- Revenue recognise when the entity satisfies a performance obligation

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10
Q

Factors to consider in assessing whether a customer has obtained control at a point in time include

A
  • the entity bas a present right to payment
  • the customer has legal title
  • Customer has physical possession
  • Significant risk and rewards of ownership have passed
    -Customer has accepted the test
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11
Q

When an entity recognises a revenue?

A

When it is able t satisfy perorfamnce obligations by transferring control to the customer

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12
Q

What happen for performance obligations satisfied over time?

A

Revenue is recognises over time by measuring progress towards satysfing the obligation. devi fare la % of completion

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13
Q

Gross vs Net reporting for GAAP

A

-Report revenues gross if the company is the primary obligor under the contract
- otherwise report revenues net

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14
Q

Expense recognition

A

A company recognises expenses in the period in which it consumes the economic benefits associated with the expenditure

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15
Q

Matching principle

A

cost are matched with revenues

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16
Q

COGS

A

beginning inventory + purchases - ending inventory

17
Q

Weighted average cost of capital process

A
  • revenue =P*Q
  • Avg cost =prendi unit a total cost e lo dividi per il numero di unità vendute
  • Cogs= sale * avg cost
  • End invetory= (Total unit - Cogs)*AVG Cost
18
Q

income statement by nature

A

by type of expenses, like row materials, transport costs, depreciation, staff cost

19
Q

income statement by function

A

cost of good sld, administrative so by AREA

20
Q

Income statement single step

A

it goes straight forward to the operating income

21
Q

Income statement multi step

A

with gross profit

22
Q

COGS when prices increases
Method:
- FIFO
-LIFO
-AVG.cost

A

-Lowest
-higher
-middle

23
Q

End inventory prices are rising
Method:
- FIFO
-LIFO
-AVG.cost

A
  • highest
    -lowest
    -middle
24
Q

Straight line method

A

AVG cost- residual value/useful life

25
Accelerate depreiciation method
1/n*acc factor
26
EPS
net earn gins available to common stockholders for the period divided by the weighted average number of common shares outstanding. If firm has a complex structure all report basic and diluted EPS
27
Basic EPS
Net income- pref.dividends/avg.of shares outstanding
28
Diluted EPS
Net income/avg.of shares outstanding + new shares issued at conversion
29
rule when calculating the eps diluted
EPS basic >= EPS diluted
30
Treasury stock method for stock options diluted eps
net income- preff. dividend/avg.shares outstanding + new shares issued at options price- (shares in plan* exercise price/mkt price) if the exercise price > mkt price shares are anti dilutive
31
Convertible bond EPS
net income- preff. dividfens + int.expens*(1-tax rate)/avg.shars outstanding + shares converted
32
Net profit margin
net income/revenue the amount of income that a company is able to generate for each dollar of revenue higher level = higher profitability
33
Profitability ratios
Gross profit margin and operating profit margin and pretax profit margin
34
Gross profit margin
gross profit/revenue
35
operating profit margin
operating profit /revenue
36
pretax profit
pretax profit/revenuue