concept questions exam 2 Flashcards
what is reported net of tax in the income statement (4)
Discontinued operations
extraordinary items
changes in realizability of receivables
prior period adjustments
how to find earnings per share.
net income - preferred dividends/ weighted average shares outstanding
how to find weighted shares outstanding
multiple the amount of months (x/12) times the number of shares outstanding then add results together
What is the correct order to prepare financial statements? (left to right chronologically)
Income statement
Retained earnings
balance sheet
A change in accounting principle requires that the cumulative effect of the change for prior periods be shown as an adjustment to ..
Beginning retained earnings of the earliest period presented
What is true about accounting for changes in estimates
Changes in estimates are not carried back to adjust prior years
comprehensive income
All changes in equity during a period except those resulting from investments by owners and distributions to owners.
Intraperiod tax allocation
Relating tax expense to specific items on the income statement
T/F Companies can only restrict retained earnings to comply with contractual requirements or current necessity.
False
T/F Earnings management generally makes income statement information more useful for predicting future earnings and cash flows.
False
What are the components of other comprehensive income
Unrealized G/Ls on Available for sale debt investments
Unrealized G/Ls on cash flow hedges
Translation G/Ls on foreign currency
Certain adjustments to pension plans
paying dividends is a ______ activity but receiving dividends is a _______ activity
financing, operating
Available for sale securities is ______ activities
Investing
purchase/selling treasury stock is a ________ activity
financing
issuing/selling our stock is a _______ activity
Financing
selling other company stock is a _______ activity
investing
getting a loan from a bank is a _______ activity and an _____ flow
financing, In
free cash flow equation
net cash from op activities – capital expenditures – cash dividends
CURRENT cash debt coverage
Net cash from op activities/average CURRENT liabilities
Cash debt coverage
Net cash from op activities/average TOTAL liabilities
find average liability
(beg + end)/2
a change in accounting principle requires that the cumulative effect of the change for prior periods be shows as an adjustment to what?
Beg retained earnings of the earliest period presented
COGS equation
Beg inventory
+purchases
+frieght in
-Purchase returns
Where does treasury stock go on the balance sheet?
Stock holders equity (negative)
