Final Exam Review Flashcards
What is a T-Account
Summary of all transactions in each account
-All T-Accounts are summarized in the General Ledger
EPS equation
(Net Income - Preferred Dividends) / Weighted Average # of Common Shares Outstanding
Is EPS required to be disclosed on the face of the Income Statement
Yes
Gross Sales
Sales before applying discounts
Net Sales formula
Gross Sales - Discounts
Discounts = Credit Card, Cash, Return
Allowance For Doubtful Accounts (AFDA) 2 equations?
1) Credit Sales x Bad Debt Rate
2) AFDA bb + Bad Debt Expense - Write Offs
What type of account is an AFDA Account
Permanent Contra Asset Account
Inventory/COGS full equation
Beginning Inventory + Purchases = Cost of goods available for sale - Ending Inventory = Cost of Goods Sold
What are the 4 Inventory Costing Methods?
1) Specific Identification
2) Average Cost
3) LIFO
4) FIFO
Formula for Average Cost Inventory Method
COGAS / Total Unites Available For Sale = Average Price
-Average Price x EI
What are the 3 depreciation methods?
1) Units of Production
2) Straight Line
3) Double Declining
Units of Production Depreciation Equation
((Cost - Salvage Value) / Estimated # of units produced ) x units actually produced
Intangible Assets
Assets with no physical features
-Either definite or indefinite life
Definite Life Intangible Asset
Will end at some point
-Amortized on a straight line bases
-Ex: Patent
Indefinite Life Intangible Asset
Will not end
-Not Amortized but tested for impairment yearly
-Ex: Goodwill
What are the 3 Current Liabilities
1) Accounts Payable
2) Accrued Liabilities
3) Unearned Revenue
AP Turnover Equation
COGS / Average AP
Average days to pay AP equation
365/ AP Turnover
Steps for Solving TVM Problems:
1) Solving for PV/FV of 1 or Annuity
2) Calculate I and N
3) Find PV/FV factor or use excel
4) Multiply invest $ x factor
Bond @ Premium
-Market Rate < Stated Rate
-We get more money
Bond @ Par
-Market Rate = Stated Rate
-Equal amount of money
Bond @ Discount
-Market Rate > Stated Rate
-We get less money
Premium Bond Issuance JE
Cash(+A)
Bonds Payable(+L)
Premium on BP (+L)
Stockholders Equity Equation
Contributed Capital + Retained Earnings Ending
Authorized Shares
Maximum number of shares a company is allowed to issue
Contributed Capital is made up of what?
Common Stock
Preferred Stock
Treasury Stock (Negative Number)
Outstanding Shares
Total number of shares held by stockholders
Treasury Shares
Shares of a stock that the company had re purchased
-decrease to CC
-XSE account
-No voting rights
Issued Shares Equation
Outstanding + Treasury
AICPA
Supports FASB with development of GAAP
PCAOB
Oversees Accounting Professionals who audit publicly traded companies
3 Conditions for fraud to occur
1) Incentive
2) Opportunity
3) Rationalization
Statement of Cash flows is made up of what?
Operating
Investing
Financing Activities
Operating Activities is what?
Net Income
Daily operations (AP, AR, Gains/Losses, Expenses)
Investing Activities is what?
Sale or purchase of PP&E
When we invest in others (ST or LT Investments)
Financing Activities are what?
When others invest in us
Quality of Income Ratio:
Cash flow from operating activities/ net income
Net Profit Margin Equation
Net Income / Net Sales
Return on Equity Equation
(Net Profit Margin x Total Asset TO x Financial Leverage)
(Net Income / Total SE)
Quick Ratio
(Cash/Cash Equiv + ST Investment + Net AR) / Current Liabilities
Debt to Equity Ratio
Total Liabilities / Total Stockholders Equity
JE of Prepaid Account
Prepaid Asset (+A)
Cash (-A)
Net AR equation
AReb - AFDAeb
JE of Depreciation Expense
Depreciation Expense (+E,-SE)
Accumulated Depreciation(+XA)
