CMA Unit 1 Flashcards
Cash dividends are only paid on ______ .
Outstanding shares
Distributable stock dividends are reported in ______ .
Equity. They’re not current liabilities.
How to treat long-term obligations that are callable by the creditor due to the debtor’s violation of a provision?
Usually classified as current liabilities; unless -
1. if violation is cured w/in a specified grace period or 2. credit waives the right to demand repayment of more than 1 yr. In this case, the debt doesn’t need to be reclassified.
In which method of cash flow does it require that the net income be reconciled to net operating cash flow?
Both direct and indirect method of cash flows
Pronouncements covering the cash flow statement encourage the use of the _____ method.
direct method of cash flow is recommended
The presentation of the major classes of operating cash receipts (such as receipts from customers) minus the major classes of operating cash disbursements (such as cash paid for merchandise) is best described as the ___________
Direct method of calculating net cash provided or used by operating activities.
Direct method converts the accrual-basis amounts in the income statement to the cash basis. It then reports the separate categories of gross cash receipts and disbursements. Net cash flow from operating activities is the difference between total cash receipts and total cash disbursements.
AFS securities and prepaid expenses are _____ (a) but Treasury stock a(n) _______ (b)
(a) assets
(b) equity item
How should the following be treated; add or subtract:
b) APIC
c) Treasury stock
d) Net unrealized holding loss on AFS securities
e) R/E: appropriated losses
f) R/E unappropriateda) Common stock
a) Common stock (EQUITY : ADD)
b) APIC (EQUITY : ADD)
c) Treasury stock (EQUITY : SUBTRACT)
d) Net unrealized holding loss on AFS securities (Comprehensive Income)
e) R/E: appropriated losses (EQUITY : ADD)
f) R/E unappropriated (EQUITY : ADD)
What are the 4 forms of off-balance-sheet financing?
- Investment in unconsolidated subsidiaries
- Special purpose entities
- Operating leases
- Factoring receivables with recourse
When is income recognized on the installment method?
When receivable is collected
When is profit recognized under the cost-recovery method?
Only after collections exceeds the cost of the item sold
When a small stock dividend is declared (< 20-25% of outstanding common shares), which account is booked as a debit or credit?
RETAINED EARNINGS is reduced, therefore DEBITED for the FAIR VALUE of the stock
Beg. R/E \+ N/I for the year < Endg R/E> -------------------- \_\_\_\_\_\_\_\_?
Dividends declared during the year
Scenario:
company buying back their own stock; par $5, bought for $10, original issue price $13
1) If used Cost method, what’s the JE?
2) What’s the JE if used Par Value method?
Cost method:
Dr. Treasury stock $10
Cr. Cash $10
Par value method
Dr. T/S $5 (par value)
Cr. Cash $10 (purch. price - par v.)
Dr. APIC $5
Dr.APIC because purchase price of $10 is < original issue price $13
What’s the formula for COGS Manufactured?
Sales
------------------------------ COGS \+ Endg finished goods ------------------------------ Goods Avail. for sale
Cost of goods manufactured
