MDS F4 Flashcards
What are the steps for % of completion contractor’s accouting?
Step 1 Compute GP on Total Contract = Total Contract Price - Estimated Total Costs
Step 2 Compute the % of the contract that is complete = Cost incurred to date / Total cost of contract
Step 3 Compute GP earned to date = Total gross profit MULTIPLIED BY % complete (Step 1 x Step 2)
What is the formula for book value per share?
Book value per common share=
Common stockholders’ equity/ common stock outstanding
What is required for an item to be considered extraordinary?
a Unusual in nature: Any income or loss that is unrelated to the normal operations of the company; and
b Infrequent in nature: Any item of income or loss that is almost never expected to occur.
How are accounting changes in estimates handled?
Accounted for prospectively.
They affect the current and future periods, not previous periods
Reported as part of continuing operations.
How are accounting changes in principle handled?
All presented statements be restated to reflect new principle.
Exception: Change in depreciation method, which is handled like a change in estimate, in current and future periods.
How are accounting changes in entity handled?
All previous F/S be restated to include component companies included in the current year’s F/S
All differences between beg. retained earnings and end. retained earnings go through the income statement except,
1 Prior period adjustments
2 Items of “OCI”, and
3 Dividends declared
What is the formula to calculate basic EPS?
Net Income - Pref. Div./ Weighted Avg. Common Shareholders Outstanding
What is the purpose of other comprehensive income and what is included?
General: Provide info about sources and uses of funds from transactions with nonowners other than those which appear on the income statement. OCI is not reported for not-for-profit entities.
What is the formula to calculate diluted EPS?
Net Income - Pref. Divs / Weighted Avg. Commons Shares assuming all dilutive securities are converted
What is included in the operating activities section of the cash flow statement?
Operating Activities Net income G Gains are subtracted L Losses are added A Amortization expense is added D Depreciation expenses is added C Credit changes in Current and Deferred Accts are added D Debit changes in Current and Deferred Accts are subtracted
What is included in the financing activities section of the cash flow statement?
Proceeds from debt (borrowing or pay it back)
Proceeds from sale or purchase of your own company stock (treasury stock)
What is included in the investing activities section of the cash flow statement?
Investing Activities
Proceeds from the sale or purchase of fixed assets
Proceeds from the sale or purchase of other companies stocks and bonds
What is included in the supplemental disclosures for the cash flow statement?
Supplemental Disclosures:
Interest and income taxes
“Exchange”
Accounting policies
