FAR 5 Flashcards
What is in Current Assets
- Cash and cash equiv
- Trading Securities
- Receivables at NRV
- Inventories at LCM
- Prepaid expenses - insurance and rent
What is captured inside Receivables
- Receivables that are tax refunds
- Receivables that are over payments to creditors
- A/R - which are net of Allowance for bad debt
- current portion of installments receivable
- current portion of notes receivable
What is captured in Non Current Assets on the B/S
- Equity method securities (nonmarketable securities)
- Long Term investments (HTM, AFS)
- PPE (fixed assets less acc deeper.)
- Intangible assets (net of amortization)
- Other assets
What is captured in Other Asset on the B/S
- deposits
- Noncurrent Receivables (including concurrent portions of installments receivables and notes receivables)
- Noncurrent Deferred Tax Asset
- Equipment to be disposed of
What is captured in current Liabilities on the B/S
- Short term notes payable
- Accounts Payable
- Accrued expenses
- Estimated current Liabilities ( warranty expenses)
- Taxes payable ( income taxes payable, collected sales tax, withheld payroll tax)
- Dividends Payable
- Current portion of long term Debt
What are examples of accrued expenses
- salaries payable
- wages payable
- interest payable
- utilities payable
What are examples of taxes payable
- income tax payable
- collect sales taxes
- withheld payroll tax
What are examples of unearned revenue
- rents collected in advance
- fees collected in advance
What are examples of current portion of long term debt
- non current portions of capital lease obligations
- Notes payable
- Loan payables
What is captured inside non-current liabilities
- Notes payable ( net of current portion)
- Noncurrent deferred tax liability
- Deferred Tax Liability
- Other concurrent Liabilities (concurrent portions of capital lease obligations and warranty obligations)
What are examples of Other concurrent liabilities
- noncurrent portion of capital lease obligations and warranties
What is Captured in Stock Holder’s equity Section of the Balance Sheet
Contributed Capital (APIC)
- Preferred Stock - Common Stock ( net of Treasury Stock at par) - Additional Paid In Capital
Noncontrolling interest
Earned Capital
- Retained Earnings (appropriated and unappropriated) - AOCI (DENT)
Subtract (-) Treasury Stock at Cost
How do you calculate tax rate
Earnings (-) Expenses = income
income * tax rate = tax expense
Example earnings of $6680 - expenses of $5180 = 1,500 = income
1,500 * 30% = 450 = tax
if you have prepaid taxes of 500 then 450 would be reclassified as income tax expense and 50 would stay as a prepaid asset
When are bonds payable a current liability
They are current when they are due in a year ( reclassified ) and they are net of the bond discount
Example 32K - 2K discount =30K
How do you calculate Retained Earnings
Net Income = Total Earnings - Total costs and expense
Then you calculate and subtract tax = net income
Net income is then added to unappropriated RE and Appropriated RE
Earnings - 6,680 costs and expenses - 5180 6680 - 5180 = 1500 Unappropriated RE = 900 Appropriated RE = 160
Total RE = 1500 + 900 + 160 = 2110
When do you recognize loss
you recognize the loss in the earliest period in which it is determined that the loss will be incurred
What are and are not considered cash/cash equivalents on B/S date
- Cash in a bank account (restricted and unrestricted)
- Petty Cash- coin or currency on hand
- commercial paper ( matures in 2 months
- Money Market acts
- Savings accts
-Negotiable paper - bank checks,travelers checks, money orders)
Not Cash:
- Cash in a bond sinking fund - is considered an investment
- A post dated customer check is a receivable
Wha is considered a cash equivalent
any security converted to cash within 90 days.
A security with an original maturity of 90 days or less from date of purchase
Examples:
- Treasury Bills, commercial paper, and money market acts.
What is cash in a bond sinking fund considered
it is considered an investment
How do you classify a post dated check from a customer considered?
It is a receivable
What are NOT considered cash?
- Compensating Balances
- post dated checks
- Non Sufficient Fund
- Overdraft protection
- Restricted Cash - current or concurrent
- Postage stamps
How do you classify an investment that with a total term that exceeds 3 months (US 5 year Treasury Bill)
- If you acquire it on the open market when its remaining time to maturity is less than 3 months - Cash Equiv
- If you acquired it sooner - then you do not include it in cash equiv even as you approach the maturity date because ether is no even that would justify the JE
