I. Conceptual Framework & Financial Reporting Flashcards
The enhancing qualitative characteristics of financial reporting are…
comparability (including consistency), verifiability, timeliness, and understandability
What do the characteristics of Relevance include?
the components of predictive value, confirmatory value, and materiality
Per SFAC 5, what are the five different attributes are used to measure assets and liabilities in present practice?
(1) historical cost, (2) current (replacement) cost, (3) current market value, (4) net realizable value, and (5) present value of future cash flows. Historical cost, replacement cost, and net realizable value are used in measuring inventory at lower of cost or market. Present value of future cash flows is not used to measure inventory.
What are the three Level factors for determining fair value and what are their specifications?
Level 1: Observable inputs in active markets
Level 2: Observable inputs in inactive markets
Level 3: Unobservable inputs
What are “investing activities”?
Investing activities include cash flows involving assets other than operating items – For example:
- Purchasing/Selling real estate
- Purchasing/Selling AFS
- Purchasing/Selling machinery & equipment
What is the Inventory Turnover Ratio formula?
COGS / Avg Inventory
What are the rules for calculating income in the case of cumulative preferred stock dividends and noncumulative preferred stock dividends?
For cumulative preferred stock dividends:
IF DECLARED: Dividends are subtracted from net profit or added to a net loss for the current year & years in arrears.
IF NOT DECLARED: Only current year dividends are subtracted from net profit or added to net loss.
For noncumulative preferred stock dividends:
Dividends are ONLY subtracted from a net profit or added to a net loss IF DECLARED
What are the enhancing qualitative characteristics of financial reporting?
The enhancing qualitative characteristics of financial reporting are comparability (including consistency), verifiability, timeliness, and understandability.
What is the COGM formula (both original and Cost of Sales indirect version)?
Cost of Good Manufactured formula: Beginning work in process \+ Direct materials used \+ Direct labor \+ Factory overhead − Ending work in process = Cost of goods manufactured
Cost of Sales Formula: Beginning finished goods \+ Cost of goods manufactured − Ending finished goods = Cost of sales
What are the areas that require disclosures according to ASC Topic 275 Risks and Uncertainties?
- Nature of Operations
- Use of Estimates in Preparation of Financial Statements
- Current Vulnerability Due to Concentrations
What is the formula for Number of Days’ Sales in Avg Inventory?
of Days in Year / Avg Inventory Ratio
What is the formula for Basic Earnings per Share?
(Net Income - Preferred Dividends) / Common Shares Outstanding
How do you calculate the average issue price of common stock?
Par Value + Add’l Paid-In Capital (per share)
What’s the formula in the cash basis for the AR account?
Beginning balance + sales − collections − write-offs = ending balance
What are the components of other comprehensive income (OCI)?
Comprehensive income disclosures include the changes during a period of the following components of other comprehensive income: unrealized gains and losses on available-for-sale debt investments and foreign currency items, including any reclassification adjustments, and the pension liability adjustment required to recognize the funded status of the plan.
