exam 2 Flashcards
income statement
gross profit
operating income
income before taxes
net income
gross profit
sales/revenue
-COGS
operating income
-operating expenses
consolidated balance sheet
pr
how to record gain/loss
debit loss
credit gain
intangible assets
trademarks patents research loyallty innovation
simple interest loan
interest is based off initial loan
compounding interest
every second
Annual Interest rate:
that the loan is outstanding, there is
some new interest that is being accrued that you now owe,
based on ANNUAL RATE, divide /12 for monthly
On January 1, 2015, you borrow $10,000 with an annual interest rate
of 10%
How much interest do you owe after 1 month?
12%/12= 1%
1% x 1 month x 10000=$100
Annual interest rate equation
(rate/12) x months passed x $$
ammortizing loan
fixed monthly payments to pay off interest and loan
operating cash flows
- short term assets ( negative increase, positive decrease)
- depreciation (+)
- losses (+)
- gains (-)
- st liabilities (+ increase, negative decrease
cash flows- investing
long term assets:
(-) purchase
(+)sale
cash flows- financing
long term liabilities: - notes payable Equity: (+) increase (-) decrease
Company A:
Cash balance went up between 2014 and 2015
Cash Flow from Operations was positive
Cash Flow from Investing was negative
Cash Flow from Financing was negative
HEALTHY?
- operations are profitable
- investing in company
- not diluting assets
- healthy/mature
Company C:
Cash balance went up between 2014 and 2015
Cash Flow from Operations was negative
Cash Flow from Investing was positive
Cash Flow from Financing was positive
- operations are not profitable
- liquidating assets
- raising money
_going bankrupt
income statement
revenue,
cogs
expenses
income tax
balance sheet
assets
liabilities
Equity + retained earnings
statement of cash flows
operating
investing
financing
when u buy a company, price =
FAIR VALUE PURCHASE CONSIDERATION
tangible assets - liabilities assumed + intangible assets (aka goodwill)
4. Which of the following is/are true about Goodwill? A) It is an asset. B) It is a liability C) It is an equity account D) None of the above
A) It is an asset.
13. Fickle, Inc. purchased equipment for $1,200 on January 1, 2013, and uses straight-line depreciation. The equipment is expected to have a six-year life, with no residual value. The net book value at December 31, 2013 would be: A) $1,000 B) $1,200 C) $200 D) $100
1200/6 = 200 p/yr
1200-200=1000
A) 1000
- In 2017, Big Company purchased Small Company for $100,000 cash. At the time of purchase, Small Company’s assets had a fair value of $25,000 and the liabilities had a fair value of $20,000. What amount of goodwill should Big Company record?
A) $100,000
B) $55,000
C) $95,000
C) $95,000
- If a company determines that an asset is impaired, income will:
A) decrease
B) increase
C) not change
A) decrease
