Financial Statements Flashcards
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Which personal financial statements are required?
Statement of Financial Condition
Statement of Changes in Net Worth
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How are assets and liabilities valued in a personal financial statement?
Estimated current value
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How are estimated taxes that would be paid if all assets were converted into cash and all liabilities paid presented on a personal financial statement?
Presented on Statement of Financial Condition between Liabilities and Net Worth
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What is the general presentation on a statement of financial condition?
Assets
- Liabilities
- Estimated taxes on assets sold
= Net Worth
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How is life insurance presented on a personal financial statement?
Only shown if there is cash surrender value
It is shown net of loans against the policy
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How are business interests shown on a personal financial statement?
Business Interests that constitute a large percentage of total assets should be separated from other investments
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What is the discreet view in an interim financial statement?
Interim period is a separate accounting period - not GAAP
Same accounting principles used for annual reporting should be used.
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What is the integral view in an interim financial statement?
Interim period is a part of the annual period - GAAP
Gross profit method may be used to estimate COGS and inventory
Temporary declines in inventory aren’t recognized
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How are discontinued operations & extraordinary items reported in interim financial statements?
Aren’t prorated
Fully recognized in Interim Period as incurred
If it occurs in Q3- it’s recognized in Q3
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How are cumulative gains and losses reported in interim financials?
Reported as if they occurred in the first quarter
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How is inventory valuation handled in interim financials?
If inventory experiences a decline in value during an interim period- the loss is recognized in the interim period
If the loss is expected to be only temporary- no loss is recognized
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What is one of the primary problems with interim reporting?
The matching principle gets messed up – Expenses incurred in one period may benefit future periods
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For whom is segment reporting required?
Publicly traded companies
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What factors cause a segment to be significant and therefore to be reported separately?
Revenue of segment is 10% or more of total
Profit is 10% or more of total
Segment assets are 10% or more of total
75% Test - All segment revenues must equal 75% of total external revenues
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What is the disclosure requirement regarding sales of 10% or more for one customer?
If 10% or more of enterprise revenue comes from one customer- the segment making the sales must be disclosed
