F8 Flashcards
What is the basic EPS Formula
Income avialable to common shareholders / Weighted Average number of common shares outstanding
What instruments could be potentially dilutive and thus affect dilutive EPS
Stock options and warrants
Bonds or preferred stock (convertible stocks)
Contracts that may be settled in cash and stock
Contingent issuable shares
What kind of capital structure is associated with basic EPS, what about for diluted EPS?
Basic EPS: Simple capital structure
Diluted EPS: Complex capital structure
What is the equation for the diluted EPS
Income avail. to common shareholders assuming the conversion of all dillutive securities DIVIDED BY Weighted Average Common Shares Outstanding after the conversion of all dillutive shares
Where is the basic EPS and diluted EPS listed on the financial statements
The face of the income statement
What are the three sections of the statements of cash flows and what components are included within each
Operating activities: Cash flows from income statement transactions and current assets/liabilities
Investing Activities: Cash Flows from non-current assets
Financing Activities: Cash flows from debt and equity
If you are using the direct method of cash flows, what additional item is included as a supplement
Reconciliation of net income to net cash provided by operations as a supplemental schedule (Not required under IFRS)
What are the most common classes of cash receipts and disbursements included in cash flows from operating activities using the DIRECT Method
Cash received from customers cash paid to suppliers/emplyees interest received and paid dividends received Purchases/sales of trading securities income taxes paid
Name the common adjustments made to cash flows from operating activities using the indirect method
CLAD
Current Assets and Liabilities
Losses and gains
Amortization and depreciation
Deferred Items
Identify the basis of accounting for not-fo-profit organizations
full accrual basis
Name the primary authoritative source for GAAP for not-for-profit orgs
FASB baby
What financial statements are prepared for NONGOVERNMENTAL Not For Profit orgs
Statement of financial position
statement of activities
statement of cash flows
Name the classifications of net assets
Net assets with or without donor restrictions
Can you define what a donor imposed restriction is
The represent donor stipulations that specify a use for a contribution, this specific use is more specific then the usual mission of the not-for profit
What are the two different types of donor imposed restrictions
temporary or perpetual
What are the three sections of the statement of activities for not-for-profit orgs
Change in total assets
Change in net assets without donor restrictions
change in net assets with donor restrictions
Name the classifications of the statement of cash flows for not-for profit orgs
operating, investing, and financing
Name the funcitonal classification of expenses commonly used in not for profit orgs
Program expenses
Support expenses: the following fall under support expenses- Fundraising, management and general, and membership development expenses
What is the recognition criteria for cash contributions
recognized as revenues or gains in the period which they are received, measured at FV at the date of gift
What is the recognition criteria for unconditional promises (pledges)
Pledge receivable and related contribution revenue are recognized at FV when received
What is the recognition criteria for conditional promises (pledges)
No recognition of receivable or revenue occurs until the condition (future event) is met
What is the recognition criteria for multi year pledges
pledge receivable and associated contribution revenue are recognized at net present value at the date of pledge, with future collections considered restricted
When are donated services displayed as a contribution and expense on the FS of a not for profit org at Fair Value of those service being performed
SOME
Recognized donated services must meet the following:
Specialized skill was required to deliver the service
Otherwise needed service (would have been purchased anyway)
Measured Easily
What criteria must be met in order to NOT RECORD the donation of works of art or historical treasures for both not for profit and governmental
if they are protected by the organization, held by the organization for display, and, if sold, the proceeds of the sale are designated for the aquisiton of other work
How are pledges accounted for
unconditional pledges to contribute in the future are reported as restricted support, at present value of future cash flow using a discount rate
For a university, identify common revenues without donor restrictions
student tuition and fees government aid gifts and private grants endowment income sales and servies of educational depts. revenue of auxilitary enterprises
If student tuition and fees are displayed at gross amount, what happens to scholarships and tuition waivers?
The waivers may be displayed as expenditures or as a contra revenue line item
What are the three revnue accounts for health care entities
patient services revenue
operating revenue such as tution from schools, donated supplies, and specific purpose grants
nonoperating revnue like gains and losses, investment activities and unrestricted grants
Describe the treatment of charity care in a health care organization, what is charity care
Charity care is not recognized as either revenue or expense on the FS of a health care org
Charity care represents serives for which the health care orgs. do not anticipate any cash flows
Describe the treatment of patient service revenue in a health care organization.
Patient services revenue is recorded on the gross basis using established rates.
What does the term variance power mean in the context of not-for-profit accounting and reporting
the unilateral authoirty to redirect assets to another beneficiary
In considering transferring assets from a recipient organization to a beneficiary organization, when are the assets received recognized as revenue by the recipient organization
when assets are transferred with variance power, which gives the recipient organization the unilateral authoirty to redirect assets to another beneficiary, the transfer s recognized as revenue
How are marketable securities reported
Fair value
Where are gains and losses on investments reported for a not for profit org
reported in the statement of activites as increased or decreases in net assets without donor restrictions, unless the use of the investment is restricted by explicit donor stipulations or by law
is depreciation expense recorded in the FS of a not for profit
depreciation expense and accumulated depreciation are recorded in not-for-profit orgs in a manner consistent with recognition used in commercial enterprises
What is an endowment funds
its an established fund of assets to provide income for the maintenence of a not for profit entity, they are GENERALLY restricted to provide a source of income in perpetuity, or for a specified period
Can you tell me what an underwater endowment fund is
its a donor restricted endowment fund for which the FV of the fund at the reporting date is less than either the original gift amount or the amount required to be mainteained either by law or donor restriction
How are STOCK DIVIDENDS that happened in the middle of the year treated for the purpose of calculating EPS
Treated as if they existed all year, like as in Jan 1
What makes dilutive EPS ‘dilutive’ as it relates to the basic EPS
it’s dilutive if the security will produce an EPS less than the basic EPS
IF you have a stock split in year two, would you need to go back to year one and restate the EPS based on this new split
YUHHHHH
When finding diluted EPS, what could be added back to the numerator NET OF TAX?
You add interest expense for bond net of tax (meaning you subtract the tax implications)
What is the order of the Operating section of the statement of cash flows
Net Income \+Depreciation & Amortization \+Losses -Gains -Amortization of Bond Premium -Equity Earnings - (+/-) operating assets \+ (+/-+ operating liabilities
Under GAAP What is interest and/or dividends received classified under in the statement of cashflows? What about under IFRS
GAAP = CF Operating IFRS = CF Operating or Investing
Under GAAP What is interest and/or dividends paid classified under in the statement of cashflows? What about under IFRS
GAAP = CF Operating IFRS = CF Operating or Financing
For the statement of cash flows, what is the rule for the increase/decrease of CA and CL and if they are +/-
Increase CA –> Subtract
Decrease CA –> Add
Increase CL –> Add
Decrease CL –> Subtract
When you choose the indirect method, what do you have to disclose as a supplemental disclosure
interest and taxes
What are not included in financial statements for a not for profit
funds are excluded
What are some examples of natural classifications of expenses for a not for profit
stuff like salary, rent, utilities, that shit
What are the three components of the Statement of Financial Position as it relates to a not for profit
Assets, Liabilities, and Net Assets (equity)
Are internal board-designated funds for a not for profit considered restricted or unrestricted funds
unrestricted since the decision came from internal
How do you record the two entries for satisfying of a donor restriction and the use of resources for a not-for-profit
Satisfication:
DR: Satisfaction of program restriction - donor restriction
CR: Satisfaction of program restriction - W/O donor restriction
REsources :
DR: Program Expense
CR: Program Revenue
On the statement of cash flows, where do donor contributions without restrictions go, and where do donations with restrictions go
without restrictions: Operating
With restrictions: Financing
So you were given money for a not for profit to spend it on something specific (with restrictions), you do spend it, and on the right stuff (good job) it was sitting in Net Assets with restrictions, now where does it get reclassified to
as an increase to net assets without restrictions
What does charity care do to revenue
DECREASES IT YOU GOTTA SUBTRACT CHARITY CARE
When should a CONDITIONAL pledge made to a nongovernmental not for profit be recognized as revenue
NEVER, you gotta wait until it becomes unconditional/when the condition is met
