Exam 3 Chapter 10 Flashcards
6 accounts associated with raising capital (READ)
Capital Stock
Paid in Capital
Dividends (if issued)
Bonds and Notes Payable
Interest Expense
Income Tax Expense and Deferred Taxes
8 Accounts associated with investment and mergers and acquisitions (READ)
Goodwill
Intangibles
Deferred Charges
Marketable Securities
Long Term Investments
Equity Method Investments
Gains and Losses
PPE
Is the valuation of Long Term Debt done through the Long Term Debt Account?
No, its instead in the carrying values of discounts and premiums on bonds
For Retained Earnings do you send out confirmations?
No
3 Aspects of the Finance and Investment Cycle (READ)
We’re concerned with transactions of organizations funds (investing) and sources of funds (financing)
Includes accounts and records across tangible and intangible assets
Accounts include some of the more complicated topics in accounting
3 Finance and Investment Functions
Financial Planning
Raising Capital
Investing Transactions
2 parts of Raising Capital
Record keeping for LT Liabilities
Periodic reconciliation
4 parts of Investing Transactions
Authorization
Custody
Record keeping for Investments
Periodic Reconciliation
4 Relevent Assertions of Investments and Long Term Debt
Existence/Occurrence
Completeness
Valuation
Presentation and Disclosure
2 Relevant Assertions of Capital Stock
Completeness
Presentation and Disclosure
Relevant Assertion for Retained Earnings
Completeness
What do common problems in the finance and investment cycle involve?
Failures to record transactions and appropriately adjust asset valuations
Why do problems occur for the finance and investment cycle?
Complex and infrequent transactions with a high amount of estimation and judgement
Why might there be a higher risk of RMM in this cycle? (READ)
Complex transactions
Fair market value
Related party transactions
Lease accounting
Loan covenants
Impairments
Presentation and disclosure
