FAR set 1 Flashcards
Deferred tax liability classification
always considered a long-term liability
what is included in selling expenses (multi-step income statement)?
sales salaries, commissions, advertising, freight out
what is included in general and admin expenses?
officer’s salaries, accounting and legal, and insurance
what is included in non-operating items on the multi-step income statement?
-interest income and expense
- dividend income
-gains and losses on sale of assets or debt extinguishment
- foreign currency transactional gains and losses
- unrealized gains and losses - unusual and infrequent items
Price -to-earnings ratio
p/e ratio = price per share/ EPS
EPS= NI- preferred dividends/ WA number of common shares
Dividend payout
cash dividends/net income
Level 3 pricing
level 3 prices are based on unobservable inputs that reflect the entity’s assumptions to determine fair value
times interest earned ratio
income before interest expense and taxes/interest expense
(inventory)
weighted average cost calculations
1: calculate average cost per unit
avg cost per unit = cost of beg inv+ cost of purchases/ beg inv units + units purchased
2: COGS= number of units sold * avg cost per unit
Ending Inventory = number of units remaining at the end of period * avg cost per unit
(inventory) calculation of new moving average unit cost
new average unit cost = cost of units purchased + costs of units in inventory / new total number of units
If LIFO or the retail inventory method is used…
lower of cost or market is applied
how do you calculate NRV?
sales price - costs required to complete the inventory and any disposal costs
ceiling and floor limitations
ceiling (NRV)
replacement value –> market value
floor (NRV - profit margin)
LIFO v FIFO
LIFO (retail inventory method) : lower of cost or market
FIFO: lower of cost or NRV
