FINANCIAL MODELING S1 Flashcards
1
Q
Income Statement reports :
A
- revenues : earned during a period of time
- expenses : incurred to produce those revenues
- net income : revenues - expenses
2
Q
Assets conditions :
A
- acquired at a measurable cost
- earned or controlled by the entity
- arises from a past transaction or event
- expected to produce future economic benefits
3
Q
Current Assets :
A
- cash
- cash equivalents
- short-term investments
- accounts receivable, net
- inventory
- prepaid expenses
4
Q
Non Current Assets :
A
- PPE, net
- long-term investments
- Intangible and other assets
5
Q
Liabilities conditions :
A
- it is an unavoidable condition for the company
- it must arise from a past transaction or event
6
Q
Current Liabilities
A
- accounts payable
- accrued liabilities
- unearned revenues
- short-term debt
- current maturities of long-term debt
7
Q
Non Current Liabilities
A
- long-term debt (bonds, notes, debentures, mortgages - interests due)
- other long-term liabilities (deffered taxes, pension liabilities…)
8
Q
Stockholders’ Equity represents investments :
A
- directly via the purchase of stock (common stock or share capital)
- indirectly in the form of retained earnings that reflect profits during a period of time that have been reinvested in the business and not paid out as dividends
9
Q
Book Value VS Market Value
A
- GAAP reports assets and liabilities at historical costs, whereas the market attempts to estimate faire values
- GAAP excludes assets that cannot be reliably measured
- market value adjusts for companies’ market characteristics
- GAAP does not consider expected future performance
10
Q
Revenue Recognition Principle
A
revenue is recognized when a performance obligation is satisfied by transferring to a customer a promised good or service
11
Q
Expense Recognition Principles - Matching concept
A
expenses is recorded in the same period in which any related revenues are earned
12
Q
3 Accounting Tools
A
- financial statement effects template or Accounting equation
- Journal entries
- T-accounts
13
Q
2 events change the retained earnings
A
- Net income
- Any dividend paid
14
Q
The payment of a dividend reduces
A
The Retained Earnings Account
