FAR-2 Financial Statement Flashcards
Other Comprehensive Income
Unrealized holding loss on available-for-sale securities
Single Step Income Statement
One group for Revenues and Gains
One group for Expenses and Losses
Revenues include all sales of goods, services, and rentals.
Purchase discounts reduce net purchases and then COGS
Recovery of accounts written off is accounted for first by reversing the write off and second receipt of cash. Purchase discounts and collection of written off accounts do not affect revenues
Net Income Calculation
Net sales
- COGS
Gross Profit
- Selling and Administrative
Income from operation
\+ Gain on sale of available for sale securities
Income from continuing operation before taxes
- Income taxes
Income from continuing operations
-/+ Discontinued operations:
Gain on disposal x income tax rate
Net IncomeNoncurrent asset
Cash surrender value of life insurance
Cash basis accounting
Revenue is recognized when cash received
Accumulated other comprehensive income
Is an equity account and reported on the statement of financial position (balance sheet)
Other comprehensive income includes all items of comprehensive income not included in net income
Gains and losses on derivatives designated, qualifying, and effective as cash flow hedges
Foreign currency translations gains and losses
Prior service costs not recognized in net periodic pension cost
Total Equity
Common stock @par
Additional paid in capital
Retained earning
Treasury stock @ cost (purchased) and loss on available for sale are subtracted from Equity
Material Event that is unusual in nature or infrequent in occurrence
Should be reported separately on the income statement as a component of Income from Continuing Operation and No net of income taxes
Asset
Machinery even if it is idle
Cash surrender value of life insurance
A/R reported net of allowance for uncollectible accounts
Liabilities
Current: within a year
Deferred tax liability is noncurrent liability
US GAAP current liability classified as noncurrent if
- Intends to refinance on a noncurrent basis and
2. Demonstrates an ability to complete such refinancing
Current assets
Cash Certain trading: held-to-maturity and available for sale securities Receivables Inventory Prepaid expenses
Income from continuing operations
Gain on early retirement of bonds payable
Item separately stated in income from continuing operations: infrequent in occurrence
Retained earnings
Prior Period Adjustment
Such as Adjustment for Depreciation Errors
