F2 Financial Reporting And Disclosure Flashcards
Significant accounting policies is typically the first note provided after the Financial Statements and includes components such as
Measurement bases, Accounting policies , Method, Criteria, and policies such as basis of consolidation, depreciation methods and revenue recognition.
F2 M4
What is the rule if various components is presented and need to be classified as a deemed reportable segments?
Rule - segment meets size test if the absolute amount of it’s repoted profit or loss is 10% or more of the absolute amout
1 combined reported profit of all segments( no losses)
2 combined reported loss of all segments (that has losses)
How to convert Cash Basis Operating Expenses to accrual basis OperatingExpenses?
From Operating Expenses
To Accrual Basis Operating Expenses
Operating Expenses
+ Ending accrued expense or Liability
- Beginning accrued expense or Liability
- Ending Prepaid Expenses
+ Beginning Prepaid Expenses
= Accrual basis Operating Expenses
How to convert Cash Basis Purchases to Cost of Goods Sold?
From Purchase
To Cost of Goods Sold
Cash purchases
+ Ending Acct. Payable
- Beginning Acct. Payable
- Ending Inventory
+ Beginning Inventory
= Cost of Goods Sold
How to convert Cash Basis Revenue to Accrual Basis Revenue ?
From Revenue
To Accrual Basis Revenue
Revenue
+ Ending Acct. Receivable
- Beginning Acct. Receivable
- Ending Unearned Revenue
+ Beginning Unearned Revenue
= Accrual basis Revenue
Disclosure of vulnerability to concentration is required if all of the following criteria are met:
1- Concentration exists as of financial statement.
2- Concentration makes the entity vulnerable to the risk of a near-term server impact.
3- It is least resonable possible that the event that could cause a servere impact from vulnerability will occur in the near term.
Ratio fomula are: Current Ratio Quick Ratio Debt Ratio Time interest earned Operating cash flow ratio Debt-to-EBITDA ratio earnings before interest, taxes, depreciation and amortization Profit margin Gross profit margin
Current ratio
Current Assets / Current Liability
Quick Ratio
Cash & $ equivalent + shot term market security + Acct. Receivable / Current Liability
Debt Ratio
Total Liabilities / Total Assets
Time interest earned
EBIT / interest expense
Operating cash flow ratio
Cash flow from Operating/ ending current liability
Debt-to-EBITDA ratio
Interest bearing Liabilities/ EBITDA
Profit margin
Net income / net sales
Gross profit margin
Net Sales - COGS / Net Sales
How to calculate working capital?
= Current assets- Current liabilities
Financial Statement for special Purpose Framework are
Statement of Cash Equity
Statement of Cash Receipt and Distribution
Also, it is Cash Basis and Modified Cash Basis of Accounting.
What are the forms:
10-k 10-q 11-k 20-f and 40f 6-k 8-k 3,4 and 5
10-k = annual filing
10-q = quarterly filing
11-k = annual report employee benefits
20-f = annual filing for non us companies
40f = annual filig for canadian
6-k = semiannual filing
8-k = major corporate changes, like acquisition, disposal, changes in accounting firm, ect.
3,4 and 5 = information of the % of equity for the director, officer, owner
Comprehensive basis of accounting other than GAAP includes
1 Cash basis and modified cash basis
2 Tax basis
3 Prescribed regulatory basis
4 Other basis with subtantial support
Other Comprehensive Bases Of Accounting (OCBOA) general presentation guidelines
FS titles should differentiate OCBOA FS from accrual basis FS
Required FS are equivalent of accrual basis os BS & IS
FS should explain changes in equity account
Disclosure OCBOA is similar to GAAP FS
- summary of significant accounting policies
- informative Disclosure simila or same GAAP
What are tha Common modified Cash Basis Financial Statement
Capitalized and depreciation fixed asset Accrual income tax Record Liabilities Capitalized inventory Repoted investment at FV
