General Purpose Financial statement Flashcards
What is the prepaid expense ?
This is the unexpired amount at year end.
Cash basis revenue
Cash basis revenue is the total cash collected. That includes cash collected for services that are yet to be performed (unearned revenue). Deduct AR as this is an accural basis revenue. If there is a decrease in AR, then decrease is cash.
Cash to Accural basis service revenue formula
Cash collected + End AR - Beginning AR + Begining UR - End UR
How to convert to accrual basis operating expenses
Use JE entry to see the effect of the transactions on operating expenses. Example- an increase in accrued liabilities will be - DR expenses and CR liability. Accrued expenses increases expenses. The general rule is that asset have opposite effect & liabilities have direct effect.
For prepaid- DR prepaid and CR cash.
Cash to Accrual
The general rule from cash to accrual is to add decreases in liabilities and deduct increases. And add increase to assets and deduct decreases to assets. The opposite is true for accrual to cash.
Accrual to cash basis income.
The rule is to add decreases in asset. Deduct increases in assets. This have opposite effect.
Deduct decreases in liabilities and add increases in liabilities. This have a direct effect.
Measurements base used in financial reporting
Market value, Historical costs, Discounted cash flow, Replacement cost, NRV.
Discounted cash flow used for asset capitalized under long term lease.
FV guidance by ASC 820
There is no FV guide for legal services received in exchange for an entity’s stocks.
Discontinued operation
Discontinued operations is reported separately in the income stmt for both s
Discontinued operation
Discontinued operations is reported the same for both single and multiple income statements
Comprehensive income
Applies only to full set of financial statements- Cash flow statement, BS, Income statement. Do not apply to NFP
Comprehensive income
Applies only to full set of financial statements- Cash flow
Cash flow direct method
Cash collected- Add decreases in AR & deduct increases in AR.
Cash flow direct method
Cash paid
Dr increase in Inventory & CR decreases
Cr AP increases & dr decrease
Cash flow direct method- CGS or Cash paid
Can be asked to adjust CGS/ Cash paid. If so, the JE entry is opposite of each other
Cash flow question
Pay attention to the question. They can ask for inflows, outflows, or the net amount
Discontinued operations
When committed to dispose, the loss/gain for the entire yr of operation plus the estimated loss to dispose is recognized. Only actual operating income or loss is recognized. Estimated operating loss or gain is NEVER RECOGNIZED. Only estimated disposal loss is recognized.
No estimated gain to dispose is recognized due to conservatism.
Discontinued operations
Must be approved sale and represents a strategic shift in operations
Group asset accounting
Depreciation for a group asset is for the entire asset group. The amount of depreciation related to an asset is unknown in the group method.
Involuntary conversation of asset
The Gain or loss is the difference between the proceeds received and
Involuntary conversation of asset
The Gain or loss is the difference between the proceeds received and
Involuntary conversation of asset
The Gain or loss is the difference between the proceeds received and
Involuntary conversation of asset
The Gain or loss is the difference between the proceeds received and NBV of the converted asset regardless of whether or not the preceed is reinvested
Involuntary conversation of asset
The Gain or loss is the difference between the proceeds received and
