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FAR Supplemental Cards > CPAexcel Notes > Flashcards

CPAexcel Notes Flashcards

1
Q

90+ day CD’s are never cash

A

True

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2
Q

Post-dated checks are not cash

A

True

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3
Q

Name Components of Comprehensive Income

A
  1. Unrealized gains and losses on AFS securities
  2. Gains or Losses in Pension Obligations
  3. Foreign Currency Translation Adjustments
  4. Derivative Hedging Positions

***All Net of Tax

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4
Q

Operating Activities in Cash Flow

A
  1. Cash flows from actual operations
  2. Interest Income or Dividend Income expense
  3. Sale of Trading Securities - NOT INVESTMENT SECURITIES or AFS
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5
Q

Investing Activities in Cash Flow

A
  1. Sale/Purchase of PPE

2. Sale/Purchase of Long Term External Investment Security

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6
Q

Financing Activities in Cash Flow

A
  1. Sale/Purchase of own equity securities
  2. Debt issued by the company
  3. Dividends
  4. Redemption of long term debt
  5. Loan principal
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7
Q

Indirect Method on CF Prep

A

Gives you cash flows from actual operations without illustrating the reconciliation.

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8
Q

Working Capital

A

Working Capital = Current Assets-Current Liabilities

Lets you know if you have enough assets on hand to meet your needs.

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9
Q

Current Ratio

A

Current Ratio=Current Assets/Current Liabilities

Provides comparison of liquidity as it relates to working capital.

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10
Q

Quick Ratio/Acid Test

A

Quick Ratio=(Current Assets-(Inventory+prepaids))/Liabilities

Finer version of current ratio.

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11
Q

Times Interest Earned

A

(Net Income+Interest Expense+Income Tax Expense)/Interest Expense

Measures ability of current earnings to cover interest cost.

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12
Q

AR Turnover

A

Net Credit Sales/((Beginning AR+Ending AR)/2)

  • Denominator is Avg AR Formula
  • Gives calculation for collection
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13
Q

of Days AR

A

365/AR Turnover

  • More intuitive calculation for collection
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14
Q

Inventory Turnover

A

COGS/((Beg. Inv. + End Inv.)/2)

  • Denominator is Avg Inventory Formula
  • Gives calculation for inventory turnover
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15
Q

Days inventory

A

Inventory Turnover/365

  • More intuitive calculation for comparison
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16
Q

Profit Margin

A

Net Income/Sales

17
Q

Return on Assets

A

Net Income/((Beg Assets+End Assets)/2))

18
Q

Return on Equity

A

Net Income/((Beg Equity+End Equity)/2))

19
Q

Earnings Per Share

A

Net Income-Preferred Dividends/Weighted Avg. Shares Outstanding

20
Q

P/E Ratio - Price to Earnings Ratio

A

Price Per Share/Earnings Per Share

  • Evaluates prospective future of the company
21
Q

Factor or Sale?

A
  1. Assets are isolated from the transferor
  2. Freedom of Transferor to pledge
  3. Requirement of the transferee to eliminate control.
22
Q

Accounting for a Sale

A

D: Cash
C: AR
Difference: Gain or Loss = typically a loss for cost of sale

23
Q

Factoring (Non-continuing involvement)

A

D: Cash
C: Note Payable

24
Q

IFRS Receivable Transfers

A

Less likely to be a sale, more likely to be factor. “substantially all the risk”

25
Q

Discounting A Note

A

Maturity of the Note= principal+(principalinterest ratex/12)
Less: Discount=MaturityDiscount Ratex/12
Equals: Discount

26
Q

Losses on Notes Receivable

A

Treated as Bad Debt Expense

27
Q

Costs in Inventory

A
  1. Purchase Returns is included
  2. Freight-in (NOT FREIGHT OUT - THIS IS A SELLING COST)
  3. INVENTORY INTEREST IS FINANCING, NOT COI
  4. Sales Tax is included
  5. Packaging for items purchasing - yes
  6. Insurance in transit is an inventory cost
28
Q

Weighted Average (periodic system)

A

Inventory and Purchases/Number of Units

29
Q

FIFO (periodic/perpetual system equal)

A
  1. Oldest Costs are COGS
  2. Most recent are ending inventory

If prices rise, FIFO has lowest COGS and highest net income. Highest ending net inventory.

30
Q

LIFO (periodic system/perpetual differs)

A

Most recent costs are COGS, oldest to inventory. Highest COGS, lowest NI. Has best possible tax outcome.

31
Q

You must disclose tapping into a LIFO band in the footnotes

A

True

32
Q

Dollar Cost LIFO Conversion Index

A

Ending Inventory in Current Year Dollars/Ending Inventory in Base Year Dollars

33
Q

Lower Cost or Market: Ceiling/Floor

A

Ceiling: Net Realizable Value=selling price-cost to complete
Floor: NRV-profit margin

If replacement cost is between, use the replacement cost.

FAR Supplemental Cards (1 decks)

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