Brainscape's Knowledge GenomeTM

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


See full index

FAR > M1 > Flashcards

M1 Flashcards

1
Q

What is Comprehensive Income

A

NI + OCI

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

What is Solvency & Liquidity

A

Liquidity = Current Assets/Current Liabilities
Solvency = Debt/Equity

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

What is the difference between Contributed Capital & Earned Capital

A

Contributed Capital - Equity is increased via Issuance of stock or debt
Earned Capital - Equity is increased via retained earnings

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

What is the purpose of the Balance Sheet? (List 3)

A
  1. Shows Assets & Liabilities
  2. Show the types of Assets & Liabilities (short-term vs. long-term) Tangible vs. intangible
  3. Used to evaluate liquidity & solvency
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is an Asset?

A

An asset is a resource with probable future economic benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are some limitations of the balance sheet? (List 3)

A
  1. balance sheet amounts do not represent the market value
  2. Measurements are subjective (valuation & depreciation methods)
  3. Estimates may be used (useful life)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the purpose of the income statement? (List 3)

A
  1. Indicates performance for a period of time
  2. Helps determine operating risk
  3. Provides information on REGL
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Who are the users of the income statement & what do they look at? (List 3)

A
  1. External users (investors & shareholders), EPS & ROE
  2. Lenders, profit margin & EBIT
  3. Internal users, ROA
    *All users are concerned with risk
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what are Unexpired Costs? (give 3 examples) and what are period costs

A

Costs that are capitalized as assets, they appear on the balance sheet and are expensed in future periods based on the matching principle (Prepaid insurance, inventory, PP&E, Patents

Period Costs - SG&A costs expensed immediately

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is a Nonoperating Expense? (List 3) & where is it disclosed

A

An expense unrelated to core business operations. Such as Write downs, write-offs, sale of PP&E, sale of an investment in another company, unusual operating expenses. Interest Revenue & expense are nonoperating unless the business is a bank)

disclosed on the face or in the footnotes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

List the steps in a multi-step income statement & the benefits of a multi-step income statement (List 3)

A

Sales
-Cogs
=Gross Profit
-Operating Expenses
=Operating Income
-Nonoperating gain or loss
=Pretax Income
-Income tax Expense
=Net Income
+/- Discontinued Ops

Benefits
1. Enhances user info
2. Separates operating business from nonoperating
3. Provides readily available info for ratio analysis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference between Freight In & Freight Out?

A

Freight Out - selling expense
Freight In - Materials cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Gross Profit Margin

A

Gross Profit/Sales

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

Operating Margin

A

Operating Income/Net Sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

When are discontinued operations reported?

A

a. It has been disposed of during that year
b. It Is classified as held for sale in that year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Impairment Loss (Discontinued Ops)

A

When an asset is carried at more than its recoverable amount.
The impairment loss cannot be reversed more than the amount written down

17
Q

If a discontinued operation has a carrying value of 4M & a NBV of 2.2 what is the impairment loss after a 40% tax rate?

A

2.2-4 = 1.8 * (1-40%) = 1.08M

18
Q

What is the direct method

A

The domestic price of one unit of another currency. Example one-euro costs $1.47

19
Q

What is the Indirect Method

A

The foreign price of one unit of the domestic currency. For example, 0.68 euro buys $1.00

20
Q

foreign currency transactions not settled at balance sheet date are recorded as

A

Unrealized gain/loss recorded in net income

21
Q

PUFI

A

Items not included on the income statement (OCI) include
1. Pension Adjustments
2. unrealized gains or losses
3. Foreign currency
4. Instrument specific credit risk

22
Q

What is a reclassification adjustment

A

Reclassification adjustments move other comprehensive income items from AOCI to the IS

23
Q

Accumulated other comprehensive income

A

includes the other comprehensive income for the current period as well as previous periods

prior year +/- current year +/- reclassification adjustments

24
Q

What ways can the statement of comprehensive Income be displayed

A
  1. A single statement
  2. An income statement followed by a separate statement of comprehensive income beginning with net income
25
Q

What effect do purchase discounts have on the income statement

A

They reduce cost of goods sold

26
Q

Comprehensive Income includes all changes in equity except

A

those resulting from owners’ investments & distributions (dividends paid to Shareholders)

27
Q

Discounts on bonds payable reduces

A

current liabilities

28
Q

Advertising, freight out, sales, salaries and commissions

A

Selling expenses

29
Q

The current exchange rate is 1.59 U.S. dollars per British pound. If a retailer in Great Britain were to quote the exchange rate using the direct method, he would say:

A

0.63 British pounds are equal to 1 U.S. dollar.

30
Q

In a foreign exchange payable the borrower books a gain if

A

the borrower’s currency appreciates vs. the lender

31
Q

Translate a 0.79 Euro to dollar exchange rate

A

1 / 0.79 = $1.27

32
Q

What effect does prior service costs not recognized in net periodic pension costs have on OCI

A

OCI is decreased by prior service costs not recognized in net periodic pension costs

33
Q

What type of debt securities are recorded in other comprehensive income

A

Debt securities classified as for sale

34
Q

Which of the following is an accurate statement regarding tax reporting issues pertaining to OCI

A

The individual components of other comprehensive income may be either reported after these items or individually on a net of tax basis

35
Q

What are the 3 JE’s for foreign currency translation?

A
  1. Record the payable
    DR Purchases
    CR A/P
  2. Record the end of year adjustment
    DR A/P
    CR FX transaction gain
  3. Settlement of payables
    Dr A/P
    DR FX transaction loss
    CR Cash
36
Q

What is included in Revenue?

A

Sales of good, services and rentals. Does not include recoveries

FAR (9 decks)

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