External Financial Statements And Revenue Recognition Flashcards
Two components of Discontinued Operations
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
Non cash investing activities on the statement of cash flows
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
Five step model for recognizing revenue from contracts with customers
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
Cost-to-cost input method to measure progress of completion on contract
Contract Price - Actual Cost - Estimated Remaining Cost
Operating Activities of Cash Flows
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
Investing Activities of Cash Flows
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
Financing Activities of Cash Flows
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
Operating Activities Added to Net Income
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)
Operating Activities Subtracted from Net Income
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)
Current Assets include:
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
Treasury stock at cost
1) Reported at its repurchase cost
2) Subtracted from the total of the other equity accounts
Ratio used in calculating income for progress to completion contract
1) Total costs incurred to date to total estimated costs
Cost of Goods Sold
1) Beg Inventory + Cost of Manufacturing - End Inventory
Transactions of Issuance of Stock
1) Cash is increased (debited)
2) Stock is increased (credited) for par value
3) Additional paid-in capital is increased (credited)
Transactions of Cash Dividend
1) Declaration of dividend decreases (debits) retained earnings
(Calculated using par value for preferred stock at dividend % declared)