Far 1 Flashcards
How to calculate Weighted Average Accumulated Expenditures?
Interest is capitalized when with expendutiures have been made, construction is proceding, and interest in incurred. caluclate the AVERAGE by the months.
Which value is used between NYSE and the appraised value of land?
The NYSE is more clearly determinable so it should be used above other evaluations
How does the interest from preferred stock and bonds affect liabilities in terms of interest?
When bonds are issued, any interest that has not been paid will be accrued and accounted for as a current liability. In addition, cumulative preferred dividends are not considered liabilities until declared by the board of directors.
how should dividends be recorded in retained earnings?
AS Market value on the day of declaration because the board decided to call the dividend based on the market’s rate
When does Work in process get expensed?
When work in process is completed and sold, this part of the total cost of work in process will be expensed.
When deferred tax liability is not associated with an asset is it a current Liability?
No. The deferred tax liability is not related to an asset, so it must be related to another liability. The other liability could not be a current liability because the difference is not expected to reverse until Year 6. (Reversal would occur when the other liability is paid.)
Therefore, the deferred tax liability must be classified as noncurrent.
What is the differece between serial bonds and debenture bonds?
Serial bonds mature at regular intervals rather than on one single date. Debenture bonds are not secured but rather are backed only by the general credit of the issuing firm. Debenture bonds can be serial bonds.
The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest plus……
Plus the present value of all future interest payments at the market (effective) rate of interest
This answer is true if the bond is issued at face value, discount, or premium.
The issue or market price of a bond at date of issuance is the present value of all future payments using the market (effective, yield) rate. The interest payments are an important part of the total return to the investor. The present value of only the face value would often be 1/2 or less of the total present value of the bond.
What is the difference between expected return on assets and actual return on assets in reference to Pension expense? How do you calculated expected return?
Expected return on assets is used to calculate pension expense. It is calculated by multiplying “expected rate of return” by the Fair Value of the plan assets. The difference between expected return and actual return is a gain or loss and is recognized in OCI. This affects the pension liability account
How do you calculate Pension Liability?
PBO - Plan Assets
What are the three relevance qualitative characteristics? Mcp
Material confirmatory predictive
Three components of faithful representation? Cnf
Completeness neutral free from error
What are the four enhancing characteristics? Vcut
Verifiable, comparable, understanding, and timeliness
Gap addresses 3 main aspects of financial reporting
Recognition, measurement, and disclosure
What is the current ratio?
Current assets / current liabilities
Quick ratio
(Current assets-inventory-prepaids ) / current liabilities
What is the debt to equity ratio?
Total liabilities/ shareholders equity
Where do goods in consignment go on the balance sheet?
In the company’s inventory at cost
Where do gift certificates go?
They are deferred revenue until they are used or when they expire they become revenue
What is the formula for operating income?
Sales-cogs= gross income
GI- selling l, general, and admin expenses- depreciation =
Operating income
What is lumped together in a single set income statement?
Revenues plus gains
Expenses plus losses
Netting to net income
How to get from operating income to net income
Operating income
+ - misc rev gain loss expenses
= income before tax
- tax expense
= income from continuing operations
+- income from discontinued operations
=net income
How to calculate discontinue operations for an income statement
Discontinued operations are presented net of tAx
The gain or loss of the disposal of the business segment is reported in a separate line
What is the cogs formula
Beginning inventory
+ purchases
- ending inventory
What freight isnt included in COGS?
The only costs not included in the computation are the two freight-out costs. Freight-out is a distribution expense. This cost does not contribute to the process of placing the goods into salable condition.
how to calculate Stockholders equity
1/1/Y1 200,000 shares issued for $15 $3,000,000
Y1-Y4 Net income 750,000
Y1-Y4 Dividends (380,000)
1/5/Y4 Purchased 12,000 treasury shares at $12 (144,000)
12/31/Y4 Sell treasury shares at $8
Decrease in treasury stock account 96,000
Decrease in retained earnings (32,000)
12/31/Y4 Stockholders’ equity $3,290,000
how are loss live assets held for sale recalculated?
A loss shall be recognized for any initial or subsequent write-down to fair value less cost to sell. A gain shall be recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized (for a write-down to fair value less cost to sell
how to calculate the holding gain on units of merchandise?
A holding gain is recorded as an increase in an item’s value. At December 31, year 1, Vend Co. is holding merchandise which is currently valued at $10 per unit (replacement cost), while the original recorded value of the merchandise was $8 per unit (purchase price). Therefore, the holding gain is $2 per unit.
What is the inventory turnover formula?
Beginning inventory+purchases-ending inventory/average value of inventory
What are examples of investing activities?
Investing activities include cash flows involved in assets other than operating items, this includes real estate, debt securities, machinery and equipment
What is the acid test quick ratio?
Cash + Market securities + AR divided by current liabilities
How do you calculate the budgetary fund balance for government accounting
The budgetary fund balance is the difference between between estimated revenues (debit) and total appropriations and trasfers (credit)
What activity is dividends paid and dividends received on the cash flow statement?
Dividends received are an operating activity and dividends paid are a financing item
A firm commitment in edge accounting can use a Fair value hedge and a forecasted transaction can use a
cash flow hedge
When wouldn’t you dillute the earnings per share?
When the exercise price is higher than the market price
