F1 M1 - Balance Sheet, Income Statement, and Comprehensive Income Flashcards
What should a full set of financial statements include?
Statement of Financial Position (balance sheet)
Statement of Earnings (Income statements)
Statement of Comperensive Income
Statement of Cash Flows
Statement of changes in Owner’s Equity
What is meant by a “classified” balance sheet?
A classified balance sheet distinguishes current and non-current assets and liabilities.
The gain (loss) from discontinued operations can consist of …
An impairment loss, a gain (loss) from actual operations, and a gain (loss) on disposal
How do we account for subsequent increases in the fair value of a discontinued component?
A gain is recognized for the subsequent increase in fair value minus costs to sell (but not in excess of the previously recognized cumulative loss). The gain is reported in the period of increase.
State two types of foreign currency transactions.
Operating transactions such as importing, exporting, borrowing, lending, and investing transactions.
Foward exchange contracts, which are argeemerits to exchange two different currencies at a specific future date and at a specific rate.
Where are foreign currency transaction gains or losses reported in the financial statements?
Foreign currency transaction gains or losses are included in determining net income for the period.
For operating transactions in foreign currency, detail the recording process.
Record original transaction at exchange or spot rate on date of transaction.
At the balance sheet date, compute gain/ loss on the transaction by recalculating using the current exchange or spot rate.
on the payment date, compute gain/ loss on the transaction by using the exchange rate on the payment date.
List the two forms acceptable for reporting compensive income.
Statement of comprehensive income (single-statement approach)
Statement of income followed by separate statement of comprehensive income (two-statement approach)
Identify four items included in other comprehensive income. PUFI
Pension Adjustments
Unrealized gains and losses on available for sale debt securities and hedges
Foreign currency translation adjustments and gains/losses on certain foreign currency transactions
Instruments-specfic credit risk for liabilities (using FV ) and their changes in FV
Define comprehensive income.
Change in equity (net assets) that results from transactions and other events and circumstances from non-owner sources.
List some disclosure requirements for comprehensive income.
Tax effects of each component included in current “other comprehensive income”
Changes in the accumulated balances of components of “other comprehensive income”
Total accumulated other comprehensive income
Reclassification adjustments between other comprehensive income and net income
What conditions must be present for a disposal to be reported in discontinued operations?
A disposal of a component, group of components, business activity, or nonprofit activing is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on a entity’s operations and financial results.
Name the expense that each of the following unexpired costs turn into as they expire:
- Inventory
- Unexpired (prepaid) costs of insurance
- Netbook value of fixed assets
- Unexpired cost of patents
- COGS
- Insurance expense
- Depreciation expense
- Amortization expense
Are gains and losses on the disposal assets shown on a gross basis or on the net basis?
Gains and losses are reported at their net amounts
How does a “multiple-step” income statement differ from a “single step” income statement?
A multiple-step income statement reports operating revenues and expenses separately from nonoperating revenues and expenses and other gains and losses.
On a single-step income statement’s presentation of income from continuing operations, total expenses are subtracted from total revenues without separation between operating and nonoperating revenues and expenses.
