F2 M5, M6, M7 Flashcards
OCBOA stands for
other comprehensive basis of accounting
T or F Keeping with the idea that financial statements need to be clear about the basis
they were prepared
T Keeping with the idea that financial statements need to be clear about the basis
they were prepared
Current Ratio
Current assets/current liabilities
If your numerator increase your ratio increases or decreases?
increases
If your denominator increases your ratio increases or decreases
decreases
Quick Ratio
Current Assets - Inventory - Prepaids/Current Liabilities
Is short term marketable security an asset or equity?
its an asset
Accounts receivable turnover formula
Sales(net)/AVERAGE accounts receivable (net) ex: 1,800,000/(300,000+390,000)/2=5.22 times - the balances that are being added are the beginning balances + ending balance/2
Days outstanding formula
ending accounts receivable (net)/Sales(net)/365
Days inventory formula
ending inventory (net)/COGS)/365
Accounts payable turnover formula
COGS/AVERAGE accounts payable ex: 1,000,000/(150,000+125,000)/2=7.27 times; the balances that are being added are the beginning balances + ending balance/2
Dupont return on assets
net income /sales (net)* sales(net)/average total assets
Return on Equity
Net Income/Average Total Equity
Return on Sales
EBIT/Sales(net)
Operating cash flow ratio
cash flow from operations/current liabilities
Total Debt Ratio
total liabilities/total assets
Equity multiplier
Total assets/total equity
Earnings per share
Income available to common shareholders/weight average common shares outstanding ex: $200,000/100,000 shares
Earnings per share
Net income-preferred stock dividends/weight avg # of outstanding commons shares
A weight average # of shares does not apply to what type of stock items?
stock dividend or stock split. these are treated as being outstanding the whole year so the weighting doesn’t apply
Weight average # of shares is also known as basic what>
earnings per share
What are the Other comprehensive income items 4 classifications?
Pension adjustments, unrealized gains and losses (available for sale debt securities and hedges), Foreign Currency Items, Instrument (specific credit risk)
T or False The relationship between net income and retained earnings is similar to the relationship between other comprehensive income and accumulated other comprehensive income
T
What is the purpose of reporting comphresenive income
To summarize all changes in equity from nonowner sources
T or F Market participants are buyers and sellers activating in their economic interest who are not related parties, who are knowledgeable about an asset or liability and willing to transact
T A nonmarket participant, is the government, related parties, judges and courts
T or F Fair Value includes transportation costs
T; fair value includes transportation costs but not transaction costs
The price in the principal market for an asset or liability will be
the fair value measurement
What level supports that is more reliable to go with a quoted price of an identical investment than a quote price for a similar investment
Level 2
Accumulated other comprehensive activity includes?
Other comprehensive income is closed at the end of the accounting period, all current and previous accounting periods other comprehensive income is included in, accumulated other comprehensive income is a component of stockholders equity
Prior period correction, loss from discontinued operations and unrealized loss on investments in no-current marketable equity securities is included in what type of income
comprehensive income
What are modifications included in cash basis financial statements?
capitalizing inventory, depreciation, accruing revenue and expenses
What SEC filings does not include a set of financial statements? Form 3, Form 11-k, Form 20-F, Form 10-k
Form 3
If your in accrual accounting and your looking at cash basis accounting; if accounts receivable is increased you would do what to the pretax net income (increase/decrease)?
decrease net income, because under cash basis your net income is when you receive cash and since you didn’t receive cash then net income needs to be decreased
Under Regulation S-X an entity’s annual financial statements must include a minimum of at least TWO of what financial statement?
balance sheets
Tags define the data is part of what feature for accounting REPORTING language
XBRL (extensible business reporting language) utilizes a taxonomy with tags that identify and define data found within the FINANCIAL STATMENTS AND SUPPROTING FOOTNOTES
