External Financial Statements And Revenue Recognition Flashcards

1
Q

Two components of Discontinued Operations

A

1) Income or loss from operations of the division from the first day of the reporting period until the date of disposal
2) Gain or loss in the disposal of the divisions

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2
Q

Non cash investing activities on the statement of cash flows

A

1) Conversion of debt to equity
2) Acquisition of assets either by assuming directly related liabilities or by means of a capital lease
3) Exchange of a no cash asset or liability for another

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3
Q

Five step model for recognizing revenue from contracts with customers

A

1) Identify the contracts with a customer
2) Identify the performance obligations in the contract
3) Determine the transaction price
4) Allocate the transaction price to the performance obligations in the contract
5) Recognize the revenue when or as performance obligation is satisfied

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4
Q

Cost-to-cost input method to measure progress of completion on contract

A

Contract Price - Actual Cost - Estimated Remaining Cost

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5
Q

Operating Activities of Cash Flows

A

Principal revenue producing activities of the entity

Inflows:

1) Cash receipts from the sale of goods and services (AR) (Inventory)
2) Cash receipts from royalties, fees, commissions and other revenue
3) Cash received from interest or dividends

Outflows:

1) Cash payments to suppliers for goods and services (AP) (inventory)
2) Cash payment to employees
3) Cash payments for taxes, duties, fines, fees, penalties
4) Payments of interest on debt

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6
Q

Investing Activities of Cash Flows

A

Resources intended to generate future income and cash flows

1) Cash payments/receipts for property, plant, equipment, intangible assets, and other long-lived assets
2) Cash payments/receipts for equity and debt instruments of other entities for investing purposes
3) Cash advances and loans made to other parties

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7
Q

Financing Activities of Cash Flows

A

Issuance, settlement, or reacquisition of the entity’s debt and equity instruments

1) Cash proceeds from issuing shares and other equity instruments
2) Cash proceeds from issuing loans, notes, bonds, and other short term or long term borrowings

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8
Q

Operating Activities Added to Net Income

A

1) Increase in current operating liabilities
2) Decrease in current operating assets
3) Noncash losses and expenses included in net income (Depreciation)
4) Losses and expenses whose cash effects are related to investing or financing cash flows (ex Sale of Asset, securities)

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9
Q

Operating Activities Subtracted from Net Income

A

1) Decrease in current operating liabilities
2) Increase in current operating assets
3) Noncash gains and revenues included in net income (Depreciation)
4) Gains and revenues whose cash effects are related to investing or financing cash flows (ex Sale of Asset, securities)

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10
Q

Current Assets include:

A

1) Cash and cash equivalents
2) Certain individual trading, available for sale, and held to maturity debt securities
3) Receivables
4) Inventories
5) Prepaid expenses

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11
Q

Treasury stock at cost

A

1) Reported at its repurchase cost

2) Subtracted from the total of the other equity accounts

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12
Q

Ratio used in calculating income for progress to completion contract

A

1) Total costs incurred to date to total estimated costs

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13
Q

Cost of Goods Sold

A

1) Beg Inventory + Cost of Manufacturing - End Inventory

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14
Q

Transactions of Issuance of Stock

A

1) Cash is increased (debited)
2) Stock is increased (credited) for par value
3) Additional paid-in capital is increased (credited)

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15
Q

Transactions of Cash Dividend

A

1) Declaration of dividend decreases (debits) retained earnings

(Calculated using par value for preferred stock at dividend % declared)

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16
Q

Transactions of Property Dividend

A

1) Property remeasured to fair value as of date of declaration and gain/loss is recognized on the statement of income
2) Carrying amount of retained earnings is decreased
3) Property is distributed as a dividend

17
Q

Transaction of Stock Dividend

A

1) Issuance of shares less than 20-25%
2) Fair value of the additional shares issued is reclassified from retained earnings to common stock (at par value) and the difference to additional paid in capital

18
Q

Transaction of Stock Split

A

1) Issuance of shares more than 20-25%
2) Reduces the par value of each stock and increases the number of shares outstanding
3) No entry is made, no transfer from retained earnings

19
Q

Cost of Goods Sold Formula

A

Purchases + Beg Inventory - End Inventory

20
Q

Gross Profit Recognized in the last year of a contract using the cost-to-cost method

A

Contract Price - Actual Total Costs - Gross Profit previously recognized

21
Q

Changes in equity balances on the statement of changes in equity include

A

1) Net Income = Increase (decrease) retained earnings
2) Cash or property dividends paid = Decrease retained earnings
3) issuance of common stock = Increase common stock and additional paid in capital
4) Total change in other comprehensive income
5) Repurchase of one stock = Decrease in equity

22
Q

Statement of Changes in Equity

A

Presents a reconciliation for the accounting period of the beginning balance for each component of equity to the ending balance