Financial Statements Flashcards
Where in the cash flow statement (indirect) are bond discounts and premiums listed and how are they adjusted (addition or subtraction)
Operating section discount is added (Int exp exceeds cash) Dr Int Exp Cr Discount Cr Cash premium is subtracted (cash exceeds Int exp) Dr Int Exp Dr Premium Cr Cash
When can a ST liability be listed as a LT liability in the financials after YE but before the statements have been issued?
If the company shows the ability and intent to refinance.
What is the Dividends per share payout ratio and the Price earnings ratio?
- )Dividends per share/Earnings per share
2. )Market price share/Earnings per share
What is the Cost of sales formula?
COGS=COGM + FGBeg - FGEnd
Disclosures related to financial instruments, both derivative and nonderivative, that are used as hedging instruments must include…?
(1) objectives and the strategies for achieving them,
(2) context to understand the instrument,
(3) risk management policies, and
(4) a list of hedged instruments.
Disclosures must be separated by type of hedging
What are items that would be included in the investing section of the CF statement?
making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment
What are items that would be included in the financing section of the CF statement?
Sales of equity securities
Issuance of Debt
Payment of LT debt
What is an example of an accounting error and when does it require adjustment in the F/S?
Forgetting to record uncollectable accounts. The error would be fixed retrospectively by adjusting beg RE.
Does a self-correcting error need adjusting?
Yes, the prior year statements presented would have to be adjusted.
What is an example of a change in principle and how is it corrected in the F/S?
Changing from LIFO to FIFO (one GAAP principle to another). The is adjusted retrospectively, but prior-year statements are not adjusted.
What is an example of a change in estimate and how is it adjusted in the F/S?
Change in the useful life of an asset. This is adjusted prospectively only.
Does the double-declining method incorporate the salvage value?
No.
Ex: 500,000 equip with 50,000 salvage, 5-year life.
Yr1= 500,000/5= 100,000 x2 = 200,000 Depreciation
Yr2= 300,000/5= 60,000 x2= 120,000
What cost flow does the weighted average method use?
The periodic
In financial reporting of segment data, what must be considered in determining if an industry segment is a reportable segment?
Sales to unaffiliated customers and Intersegment sales
When should long-lived assets be reviewed for impairment?
When circumstances indicate that the carrying amount of an asset might not be recoverable.