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Acct 3110 > Final Exam > Flashcards

Final Exam Flashcards

1
Q

FASB Conceptual Framework Qualitative

A

Relevance- More useful for decisions being made
Predictive Value- helps predict future performance
Confirmatory Value- Information helps confirm prior expectations
Materiality- Information large enough to influence decision makin

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2
Q

Quantitative Materiality

A

Dollar Amount.

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3
Q

Quality Materiality

A

Importance of information regardless of dollar amount.

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4
Q

Faithful Representation

A

Information should be complete, neutral, and free from error

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5
Q

Conservatism

A

Report bad news more often then good news. Managers have too much incentive to report good news.

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6
Q

Enhancing Characteristics

A

Comparability, Consistency, Verifiable, Timely, and understandable

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7
Q

Constraint on FASB CF

A

Cost effectiveness: The cost to implement ta standard should not exceed its benefits.

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8
Q

Owner’s Equity

A

Paid-in-Capital (C/S and P/S)+ RE

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9
Q

3 Adjusting Entries

A

Prepayments, Accruals, and Estimates

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10
Q

Balance Sheet

A

Current Asset + PPE - Depreciation

Current Liabilities + Long term Liabilities + Share holder’s Equity

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11
Q

Temporary Accounts to Close out

A

Cause changes in RE. Income Statement + Dividends

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12
Q

Title of Balance Sheet

A

As of …..

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13
Q

Current Ratio

A

CA/CL

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14
Q

Working Capital

A

Current Assets- Current Liabilities

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15
Q

Quick Assets

A

Excludes Inventory, prepaid expense, deferred taxes, and restricted Cash. Higher Liquidity

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16
Q

Quick Ratio

A

Quick Asset/ Current Liability

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17
Q

Debt to Equity Ratio

A

Total Liabilities/ Total Owner’s Equity

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18
Q

Interest Coverage

A

EBIT/Interest Expense

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19
Q

EBIT

A

Earnings before interest and taxes.

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20
Q

Market Capitalization

A

Stock Prices x Shares Outstanding

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21
Q

Gross Profit

A

Step 1 IS = Sales Revenue- COGS

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22
Q

Operating Income

A

Step 2 IS = GP-Operating Expenses

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23
Q

Operating Expenses

A

Bad Debt, Rent, Ads, Losses on impairment, depreciation.

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24
Q 
Other Income (Income from 
continuing Operation before taxes)
A

Step 3 IS: Operating income + Other income (interest expense and revenue/Gain or loss on sale of asset)

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25
Q

Income From continuing Operations`

A

Step 4: Deduct income taxes

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26
Q

Net Income

A

Step 5: Income from discontinued Operation

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27
Q

Income Statement Title

A

For a period of time

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28
Q

Balance Sheet Method

A

Use A/R to estimate ending allowance for bad debts

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29
Q

Income Statement Method

A

Use credit sales revenue to estimate bad debt expense.

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30
Q

COGS

A

=Beg inv. +Net Purchases - Ending Inventory

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31
Q

Net Purchases

A

Purchases + Freight-in - Purchase Discounts - Purchase Returns

32
Q

Freight - In

A

Pay to have inventory that are being shipped to us
Perp: Costs are added to inv
Period= Freight-in temp account

33
Q

Purchase Returns

A

Company purchases inventory and returns
Perp: Credit Inv
Period: Temporary Account

34
Q

Net Method

A

Buyer does not take discount then it is booked to Purchase Discounts lost

35
Q

Good in Transit

A

Should wait to recognize inventory and revenue when the goods arrive at buyer

36
Q

Goods on Consignment

A

Consignor does not recognize rev until sale to a third party occurs

37
Q

LIFO

A

US GAAP is ok with LIFO but IFRS does not

38
Q

Cost index in layer year

A

Costin layer year/ cost in base year

39
Q

Gross Profit Method

A

Beg inv + Net Purchases = Goods Available for sale

GAFS-COGS= Ending Inv

40
Q

GP%

A

GP/Net sales
or
1-GP% = COGS/ Net Sales

41
Q

Retail Inventory Method

A

High Volume, low unit price

  1. Estimate Cost to retail percentage
  2. Estimate Ending inventory @ retail
  3. Multiply ending inventory at cost by multiplying by ratio
42
Q

Cost to retail Percentage

A

GAFS @ cost/ GAFS @ Retail

43
Q

Ending Inv @ Retail

A

= GAFS@ retail - Net Sales

44
Q

Conventional Retail Method

A

Ignores Net Markdowns

Net markdowns will be subtracted after ratio calculated

45
Q

LIFO Retail method

A

Excludes Beg Inv

46
Q

Gross Profit Retail Method

A

Not allowed in annual financial reports due to it’s assumptions

47
Q

Inventory Write Down

A

Sell inventory for less than its costs

Costs in relation to Benchmark

48
Q

Benchmarks for write down

A 
Fifo/Average= Net Realizable Value
LIFO/Retail = Market
49
Q

NRV Net Realizable Value

A

estimated selling price - costs of completion, disposal, and transportation
Ceiling

50
Q

“Floor” for inv WD

A

NRV- Normal profit margin

51
Q

What effects a company when choosing costing methods

A

Flow of inventory., net income, income taxes.

52
Q

Changing to LIFO

A

Prospective implementation

53
Q

Inventory Errors

A

Overstatement of Ending Inv = COGS is understated

Prior year adj to RE if not self corrected

54
Q

Costs to be Capitalized

A

Purchase Price + All expenditures necessary for asset to be used

55
Q

Capitalized costs

A

Contribute to future benefits`

56
Q

Developing NR Costs

A

Acquisition, Exploration, Development, and restoration

57
Q

ARO

A

Restore a Natural resources to original conditions. Asset Retirement Obligation
Accretion Expense

58
Q

Patents

A

20Ys Right to manufacture

59
Q

Copy Rights

A

70+ Ys life of creator

60
Q

Trademarks

A

10Ys

61
Q

R&D

A

Too difficult to tie to future benefits as GAPP says to not include. Expense as used.

62
Q

Software

A

Can capitalize software after technological Feasibility

63
Q

Good Will

A

Acquisition - FV of all Net assets

64
Q

Lump sum Purchases

A

If assets are identical, spread cost evenly

If assets different, Based on FV

65
Q

NonCash Aqcuisitions

A

Record the acquired asset at a measure of Fair Value

66
Q

Discount of Note payable

A

plugs between Fair value and Face Value. Contra Asset

67
Q

Exchanges of Nonmonetary Assets

A

FV New Equip= cash paid and FV
Plug to Gain = FV-BV
Debit New FV Equp and Accum Dep

68
Q

Interest Capitalization

A

Costs incurred due to construction should be capitalized

69
Q

3 step interest cap

A
  1. Determine Avg Accum Expenditures
  2. Calc amount of interest
  3. Amount capitalized <= interest incurred
70
Q

Depreciation Base

A

= Original Cost- Residual Value

71
Q

Cost Allocation

A

PPE-> Depreciation
Natural Resources -> Depletion
Intangibles -> Amortization

72
Q

Recoverability Test

A

If Undiscounted expected future cash flows are < Book Value, then it is impaired

73
Q

Measurement of impairment loss

A

=BV-FV

74
Q

IFRS Impairment

A

Test Annually, no recoverability test, no assessment, and allows reversal

75
Q

Subsequent Expenditures

A

Cost incurred after an assets initial acquisition
Cap if it is improved
Expense if it maintains benefits

76
Q

Disposition

A

Gain or loss recognized for the difference between the consideration received and book value of asset sold

77
Q

Retirements

A

Remove Asset from books and plug to a loss.

Acct 3110 (8 decks)

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