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Intermediate Accounting I :!: > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

Increase in inventory by $2700.

A
  • $2700 or ($2700)
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2
Q

Decrease in prepaid rent by $320.

A

+ $320

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3
Q

Increase in accounts payable by $2000.

A

+ $2000

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4
Q

Increase in interest payable by $270.

A

+ $270

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5
Q

Increase in unearned service revenue by $370.

A

+ $370

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6
Q

Decrease in income taxes payable by $420.

A
  • $420 or ($420)
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7
Q

Purchase of equipment for $7400.

A
  • $7400 or ($7400)
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8
Q

Sale of equipment for $2200.

A

+ $2200

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9
Q

Proceeds from issuance of common stock for $140.

A

+ $140

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10
Q

Proceeds from note payable for $240.

A

+ $240

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11
Q

Payment of dividends for $1292.

A
  • $1292 or ($1292)
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12
Q

Increase in inventories by $11200.

A
  • $11,200 or ($11,200)
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13
Q

Increase in prepaid expenses by $10,500.

A
  • $10,500 or ($10,500)
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14
Q

Classify Interest Paid for U.S. GAAP and IFRS.

A

GAAP: Operating activities
IFRS: Financing activities

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15
Q

Classify Interest Received for U.S. GAAP and IFRS.

A

GAAP: Operating activities
IFRS: Investing activities

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16
Q

Classify Dividends Paid for U.S. GAAP and IFRS.

A

GAAP: Financing activities
IFRS: Financing activities

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17
Q

Classify Dividends Received for U.S. GAAP and IFRS.

A

GAAP: Operating activities
IFRS: Investing activities

18
Q

How do you calculate dividends?

A

Dividends = Beg. R/E + Net Income - Ending R/E

19
Q

What is the purpose of the income statement?

A

It displays a company’s operating performance that is, its net profit or loss, during the period

20
Q

What is the purpose of the statement of cash flows?

A

to provide information about the cash receipts and cash disbursements of an enterprise that occurred during a period.

21
Q

Income from continuing operations includes the:

A
  1. revenues
  2. expenses
  3. gains and losses that will probably continue in future periods
22
Q

__________ expense is shown as a separate expense in the income statement.

A

Income tax

23
Q

What is the difference between operating income and non-operating income?

A

Operating income includes revenues and expenses directly related to primary revenue-gathering activities of the company.

Non-operating income relates to peripheral or incidental activities of the company.

24
Q

What is a single-step income statement?

A

A single-step income statement format groups all revenues and gains together and al expenses and losses together.

25
Q

What is a multiple-step income statement?

A

A multiple-step income statement format includes a number of intermediate subtotals before arriving at income from continuing operations.

26
Q

What is earnings quality?

A

refers to the ability of reporting earnings (income) to predict a company’s future earnings.

27
Q

What is “channel stuffing”?

A

accelerates revenue recognition by persuading distributors to purchase more of your product than necessary near the end of a reporting period

28
Q

What is “big bath” accounting?

A

a reference to cleaning up company balance sheets

29
Q

How do managers manipulate income?

A
  1. Income shifting

2. Income statement classification

30
Q

What are restructuring costs?

A

Restructuring costs include costs associated with shutdown or relocation of facilities or downsizing of operations.

31
Q

GAAP requires that restructuring costs be recognized only in the ___________________.

A

period incurred

32
Q

What are pro forma earnings?

A

Many companies voluntarily provide pro forma earnings - management’s assessment of permanent earnings.

33
Q

There are two types of events that, if they have a material effect on the income statement, require separate reporting below income from continuing operations as well as separate disclosure:

A
  1. discontinued operations

2. extraordinary items

34
Q

What is intraperiod tax allocation?

A

associates income tax expense with each major component of income that causes it.

35
Q

What are extraordinary items?

A

are materials gains and losses that are both:

  1. unusual in nature
  2. infrequent in occurence
36
Q

The determination of whether an item is unusual and infrequent should consider:

A

the environment in which the company operates

37
Q

How do you calculate earnings per share (EPS)?

A

(Net income - Pref. Dividends)/Weighted average # of shares

38
Q

Increase in accounts receivable by $2000.

A
  • $2000 or ($2000)
39
Q

Companies must disclose per share amounts for:

A
  1. income before any separately reported items
  2. each separately reported item
  3. net income (loss)
40
Q

All corporations whose common stock is publicly traded must disclose __________.

A

EPS

41
Q

What is comprehensive income?

A

is the total change in equity for a reporting period other than from transactions with owners.

42
Q

Reporting comprehensive income can be accomplished with:

A
  1. a single, continuous statement

2. in two separate, but consecutive statements

Intermediate Accounting I :!: (6 decks)

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