Chapter 5 : The Annual Report

Question 1

balance sheets can appear in 2 forms :

Answer 1

the account form and the report form

Question 2

the differences between the acount form and the report form in presenting the balance sheets

Answer 2

under the account form, assets items appear on the left, liabilities and owners’ equity appear on the right. meanwhile, the report form lists asset, liability, and owners’ equity accounts in order vertically.

(kalo account form itu dia kaya laporan, asset dikiri sisanya di kanan, kalu report form semuanya list lurus dari atas kebawah)

Question 3

the differences between single step statement of operations and multi step statement of operations

Answer 3

single step statement of operation : one step in substractiong total operating expenses from total revenues (cuma sekali step aja, jd jumlah revenue - expenses trs kelar)
multi step statement of operation : draws subtotals for each category of revenues and expenses (revenue sama expenses punya banyak subnya jd semuanya dijumlah dulu masing-masing trs baru dijumlah lagi seexpenses atau serevenue baru dikurang)

Question 4

the definition of gains and losses

Answer 4

gain is income obtained by a transaction other than a core business function (increases a company’s net income)
loss occurs when a company loses money on an activity that does not arise from normal business operations (decreases a company’s net income)

Question 5

keuntungan yang didapat dari melakukan kegiatan disamping kegiatan utama perusahaan dinamakan

Answer 5

gains

Question 6

why are gains and losses appear separately on the statement of operations?

Answer 6

because they are an income and losses of the company activities that are independent of the company’s core business function like selling insurance policies and annuities and investing premium income. because they are independent thats why the gains and losses appear separately on the statement of operations

Question 7

definition of extraordinary items

Answer 7

a non-core business transaction that is unusual, rare in occurrence, and not based primarily on management decisions.

Question 8

examples of extraordinary items

Answer 8

losses from natural disaster, losses from the enactment of a new law, and gains from the expropriation of a company’s land and buildings for a highway

Question 9

gains and losses that are not considered extraordinary

Answer 9

1. disposal of a business management
2. changes in the value of a foreign country
3. sale or disposal of a fixed asset
4. effects of a labor strike

Question 10

the formula of net incomes/loss if there is gains and losses

Answer 10

net income/loss = revenus - expenses + gains - losses

Question 11

definition of statement of cashflows or cashflow statement

Answer 11

it’s an information about a company’s cash receipts (inflows) and cash disbursements (outflows) during a given accounting period

Question 12

the function of statement of cash inflows

Answer 12

reconciles the cash the company has on hand at the beginning and at the end of the accounting period.

Question 13

in accounting terminology, a cash flows is

Answer 13

a source of funds

Question 14

in accounting terminology, a cash outflows is

Answer 14

a use of funds

Question 15

yg menyebabkan cash inflows bertambah

Answer 15

1. a decrease in an asset account (selling an assets for cash)
2. an increase in a liability account (taking out a loan)
3. an increase in stockholders’ equity (issuing common stock)
4. a receipt of revenue (selling policies)
5. net income

Question 16

yang menyebabkan outflows bertambah

Answer 16

1. an increase in an asset account (purchasing an asset)
2. a decrease in a liability account (paying off a loan)
3. a decrease in stockholders’ equity (retiring or repurchasing a company’s own common stock)
4. a payment of expenses
5. a net loss

Question 17

formula for net cash inflows/outflows

Answer 17

net cash inflows/outflows = cash inflows - cash outflows or
net cash inflows/outflows = sources of funds - uses of funds

Question 18

the net icash inflow or outflow represents

Answer 18

the net increase or decrease in cash for the accounting period

Question 19

what is a net change in cash

Answer 19

the difference between the cash balance (as shown on the balance sheets) at the beginning of the period and the cash balance at the end of the period

Question 20

2 method of calculating the cash flows

Answer 20

the direct method and the indirect method

Question 21

perbedaan the direct and indirect method

Answer 21

direct tuh ditulis cashflowsnya semuanya trs baru dikurang/ditambah sama cash di awal kalau indirect, cashflowsnya digrupin dulu di jumlah dulu nnti kalo udh baru masuk dikurangin sama cash di awal

Question 22

changes in a company’s cash flows occur as a result of three activities :

Answer 22

1. operating activities
2. investing activities
3. financing activities

Question 23

definition of operating activities

Answer 23

are those activities associated with a company’s major lines of business and involve transactions that directly determine a company’s net income. (in insurance company its associated with the sale and maintenance of insurance products and services)

Question 24

activities in operating activities in insurance company

Answer 24

1. selling insurance and annuity products
2. paying claims
3. receiving investment income (such as bond interest and dividend income on stocks)
4. increasing or decreasing the liability for future policy benefits
5. paying expenses

Question 25

definition of investing activities

Answer 25

transactions that involve the purchase or sale of long-term assets and the lending of funds to another entity

Question 26

insurance company investing activities include :

Answer 26

1. purchasing and selling bonds, mortgage loans, stocks, real estate, equipment, and other long-term assets
2. making loans and collecting the principal and interest on those loans

Question 27

definition of financing activities

Answer 27

transactions involving borrowed funds and cash payments to or from owners of the company

Question 28

financing activities of insurance company include :

Answer 28

1. issuing, repurchasing, or retiring common stocks
2. paying cash dividends to stockholders
3. borrowing and repaying funds loaned by creditors

Question 29

operating activities transactions resulting in cash inflows

Answer 29

• cash sales to customers
• receipt of securities interest and dividends
• increases in current abilities

Question 30

operating activities transactions resulting in cash outflows

Answer 30

• payment to employees and suppliers
• interest payment to bondholders
• decreases in current liabilities

Question 31

investing activities transactions resulting in cash inflows

Answer 31

• sales of bonds, mortgage loans, stocks, property, buildings and other long-term assets
• receipt of principal and interest of loan repayments

Question 32

investing activities transactions resulting in cash outflows

Answer 32

• purchase of bonds, mortgage loans, stocks, property, buildings, and other long-term assets
• making loans to other

Question 33

financial activities transactions resulting in cash inflows

Answer 33

• issuance of common stocks
• issuance of bonds and notes
• loans from creditors

Question 34

financial activities transactions resulting in cash outflows

Answer 34

• dividend payments to stockholders

- payment of principal and interest on bonds, loans, notes, and other debt

Question 35

events that cause owners’ equity accounts to change :

Answer 35

1. issuance of stock
2. purchase of treasury stocks
3. retention of net income
4. payment of cash dividends on stock

Question 36

Stocks that has been issued is called

Answer 36

outstanding stocks

Question 37

what is a dividends

Answer 37

distribution of earnings that the company pays to stockholders

Question 38

the differences between the common stocks and preferred stocks

Answer 38

• common stocks : pemegang stock punya hak voting untuk pmeilihan direktur dan di pemilihan penting lain, serta mendapatkan dividen ( tp company gak wajib, dan dividennya bisa beda-beda)
• preferred stocks : gaada hak voting tapi punya prioritas dapet dividen sblm common stocks (dapet dividen diduluin preferred stocks)

Question 39

what is treasury stocks

Answer 39

issued stocks that is no longer outstanding / represents an insurer’s purchase of its own outstanding stocks

Question 40

reasons why company repurchasing its stocks

Answer 40

1. to have stocks available for its employees’ stocks option program
2. to prevent or reduce the possibility of a hostile takeover by another company
3. to maintain a favorable market for its stock by creating an apparent demand and buoying the price per share
4. to improve its earnings per share, a key financial ratio often used by potential investors

Question 41

a treasury stock purchase reduce……..

Answer 41

the balance of assets (cash) and owners equity