F4 Flashcards
What is the formula for Working Capital?
CA-CL
What is the formula for the current ratio?
CA/CL
What is the formula for the quick ratio?
Cash + A/R + MS (CA – Inv) / CL
What are current assets?
less than the longer of one operating cycle or 1 year
What are the criteria under GAAP for reclassification of ST liabilities expected to be refinanced?
include in LT liabilities if intent and ability
How is ST liabilities reclassified under IFRS?
not allowed until refinance occurs
What are cash and cash equivalents?
highly liquid assets with original maturity of <= 90 day
How is the adjusted bank balance calculated?
bank balance + deposits in transit – outstanding checks +/- errors
How is the adjusted book balance calculated?
book balance – service charges + bank collections – NSF + interest income +/- errors
What is the T account for A/R?
Beg Balance + Credit Sales – W/o – Convert to note – collections = End Balance
What is A/R NRV?
A/R – uncollectibles, discounts, and sales returns & allowances
What is the Gross Method for discounts?
assume discount not taken. If is taken, use Sales Discount taken account (Contra-revenue)
What is the Net Method for discounts?
assume discount is taken. If is not taken, use Sales Discount not taken account (Revenue)
How are trade discounts applied?
net and sequentially
For sales returns and allowances, what is the general rule?
wait until actual
For sales returns and allowances, what is the exception?
if material %, estimate and accrue
What is the T account for Allowance for Uncollectible A/R?
Beg Balance + recovery + C/Y BDE – W/o = End Balance
What is the % of sales allowance method?
C/Y BDE = % of sales, plug ending balance
What is the % of end A/R allowance method?
End Allowance = % of end A/R, plug C/Y BDE
What is the Aging A/R allowance method?
End Allowance = aging A/R, plug C/Y BDE
How do you record pledging (assignment) of A/R?
footnote disclosure
What is factoring without recourse?
true sale, factor assumes risk of loss
What is factoring with recourse?
sale or loan, factor can sell any back to seller
What are the conditions of a sale?
Seller’s obligation for uncollectible accounts can be estimated. Seller surrenders control to buyer. AND Transfer is not required to repurchase A/R, but may replace.
Compare A/R to N/R?
N/R is written, valued at PVFCF. A/R is oral, valued at NRV
What are the steps in discounting N/R (selling to a bank)?
FV * Interest % = Maturity Value * bank % * time remaining = bank income
What is the general rule for sales with right to return?
no sale yet if returns cannot be reasonably estimated
What is the exception for sales with right to return?
if returns can be reasonably estimated, record as sale w allowance (if conditions of a sale exist)
What are the conditions of a sale?
SP is fixed, Buyer assumes risk of loss, buyer paid consideration, product is substantially complete, returns can be estimated
What is the general rule for valuing inventory?
value at cost if sold at profit
What is the exception for valuing inventory?
value at LCM if sold at loss
How are precious metals and farm products valued?
at NRV= SP-disposal costs
What is “market” in LCM?
middle value of ceiling (NRV), replacement cost, and floor (NRV – PM)
How do you record LCM?
write down in COGS, if material then I/S
IFRS uses LC(NRV), what is the difference from LCM?
reversal allowed up to amount of write-down
Compare periodic vs. perpetual inventory.
Periodic (uses purchases), Perpetual (uses inventory)
Compare the cost of the land vs. building.
cost of land is up to digging hole. Building costs are after
