Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FAR > Financial Statements > Flashcards

Financial Statements Flashcards

0
Q

Sample Income Statement

A 
ABX Company
Income Statement
For the Year Ended December 31, 20x0
\+ Net sales
-	Cost of goods sold
=	Gross margin
-	Operating expenses
\+	Miscellaneous revenues and gains
-	Miscellaneous expenses and losses
\+ or -	Unusual or infrequent items
=	Income from continuing operations before tax
-	Less income tax expense
=	Income from Continuing Operations
\+ or -	Income from Discontinued Operations (net of tax)
\+ or -	Extraordinary Items (net of tax)
=	Net income
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
1
Q

What are the steps of the accounting cycle?

A 
1 Analyze source documents
2 Post to ledger
3 Make adjusting entries
4 Prepare trial balance
5 Prepare income statement, balance sheet, and cash flow statements
6 Close temporary accounts
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define Accounting Income

A

Accounting income reflects recorded transactions, events and adjustments. Revenues less expenses plus gains less losses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define Economic Income

A

Economic income : The change in the net worth of a business enterprise during an accounting period.

\+ Market Value of Net Assets at Jan.
\+	Net Income for the Period (including increases in FMV)
\+	Owner Investments
-	Dividends and Stock Repurchases
=	Market Value at Dec. 31
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Where are prior period adjustments to the Income Statement reported?

A

Statement of Retained Earnings shows adjustments and corrections for prior years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

5 Items for which Interperiod Tax are applied

A
  1. Discontinued operations
  2. Extraordinary items
  3. Other comprehensive income items
  4. Adjustment for retroactive accounting principle changes
  5. Prior period adjustments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Define Comprehensive Income

A

Net Income
+ “Other” Comprehensive Income
= Comprehensive Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

5 Common Accounts/Events in OE

A
  1. Common Stock
  2. Contributed Capital in Excess of Par
  3. Accumulated Other Comprehensive Income (AOCI)
  4. Retained Earnings
  5. Treasury Stock
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

4 Items Other Comprehensive Income (OCI) Includes

2 Items OCI does not Include

A

Includes:

  1. Unrealized gains and losses on securities available for sale (AFS)
  2. Unrecognized pension and post-retirement benefit cost and gains
  3. Foreign currency translation adjustments
  4. Deferred gains and losses from derivatives.

Does not include:

  1. Retroactive effects of changes in accounting principle
  2. Prior period adjustments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

5 Additional accounts in OE

A
  1. Preferred stock
  2. Contributed capital in excess of par, preferred
  3. Contributed capital from treasury stock
  4. Equity attributable to non-controlling interests
  5. Equity attributable to the shareholders of the parent (the reporting company). The sum of this total and for non-controlling interest yields the total OE of the reporting company.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

4 Other Events Reported in OE

A
  1. Retrospective change in accounting policy affecting prior earnings (retained earnings and total OE)
  2. Restatement of income statement for an error affecting prior earnings - prior period adjustment (retained earnings and total OE)
  3. Contributed capital from conversion of bonds (contributed capital and total OE)
  4. Contributed capital from stock options and stock award plans (contributed capital and total OE)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

How many years are required by the SEC to be reported on Income Statement, Statement of Cash Flow, and Statement of OE?

A

3 Years - Current year and 2 previous years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q 
6 Activities Reported on the Statement of Cash Flows (SFC)
O
I
F
F
R
NCIF
A
  1. Net Cash inflow or outflow from Operating Activities
  2. Net Cash inflow or outflow from Investing Activities
  3. Net Cash inflow or outflow from Financing Activities
  4. Effects of Foreign Currency Translation
  5. Reconciliation of net cash inflows/outflows (sum of the items listed above) with the reported change in cash and cash equivalents on the Balance Sheet.
  6. Non-cash Investing and Financing Activities.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Formula to adjust accrual to cash accounting

A

^C = ^L + ^E - ^Other Assets (OA) - (for Net Income)

^C = -^L - ^E + ^Other Assets (for Expenses)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

8 Required footnotes and Disclosures

A
  1. Summary of Significant Accounting Policies
  2. Related Party Transactions
  3. Development Stage Enterprises
  4. Non-Current Liability Disclosures
  5. Capital Structure Disclosure
  6. Errors & Irregularities
  7. Illegal Acts
  8. Managements Discussion & Analysis
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

4 Rights of Shareholders

A
  1. Voting for Board of Directors (CS; not PS)
  2. Dividends (PS before CS)
  3. Preemptive Right (maintain same level of ownership)
  4. Liquidation Rights (PS before CS-last in line)

FAR (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions