Mics

Question 1

Forward rate

Answer 1

forward rate is used only in forward contract. When two parties agree to exchange an asset (ex foreign currency) at a future date on a fixed price .

Question 2

Spot rate

Answer 2

The rate of the currency the day off the transaction

Question 3

Intra-period income tax allocation

Answer 3

Are separately allocated in the income statement in a provision for income tax expense. Effective tax rate is used for net on the gross for the continued operation , separately listed as
- discontinued operation
-continued operation
- other comprehensive income

Question 4

Income statement - general and administrative expenses includes

Answer 4

Officers salaries expenses
Accounting and legal expenses
Insurance expenses
Rent for office space (not part of sale)

Question 5

To Find COGS formula

Answer 5

Sales X(100%-gross profit margin %)

Gives you COGS

Question 6

Find # of purchases in COGS -formula

Answer 6

COGS - net decrease in inventory

COGS + net increase in inventory

Question 7

Gross profit % formula - in COGS

Answer 7

1-Gross profit/sales
2- if gross profit % is known and solving for gros profit $- gross profit % * net sales to get gross profit

Question 8

Statement of changes in Equity

Answer 8

CPA RAT , “CPA NO rat”

Contributed Capital
Preferred & common stock
Additional Paid in Capital
Retained Earnings
Accumulated OCI
Treasure stock( contract equity) minus it

Question 9

Other comprehensive income (OCI) - think of C.U.P
OCI is a part of comprehensive income

Answer 9

C- think of currency( foreign currency translations) & Cash flow hedges
U- think of unrealized gains or losses investments in security-available-for sale (fair value to OCI)
P- think of pension cost adjustments

Question 10

Discontinue operations (in income statements) Impairment loss calc

Answer 10

Fair value minus the cost to sale (cost of disposal) is the NRV ( net realized value)
If NRV is less than BV- that’s a loss
If NRV is more than BV(book value) that’s a gain and recorded as the impairment loss or gain

BV- 10M
FV-8M
NRV < BV by 2M - an impairment loss x(1-Tax rate) = a (1,400,000)

Question 11

Discontinued operations included net of tax - calculation

Answer 11

The operating income - net of tax . $ x (1-tax rate)
Impairment loss -net of tax , NRV<BV $ x(1-tax rate)

Subtract both - that equals the $ of discontinued operations

Question 12

Foreign exchange transactions gain /loss calc

Answer 12

The the initial spot rate minus the spot rate to record for end of year income statement/date of sale and then multiply it by the #of units purchased . Purchased 10,000 units
Ex- initial purchase spot rate .55
Spot rate .70 on Dec 31. For recording this transaction, .55-.70 x 10,000=(1,500)
Date of sale use last spot rate used and do the same calculation

Question 13

Accumulated depreciation is a what type account and reported in where?

Answer 13

Is a contra account reported in balance sheet

Question 14

Non controlling interests appear in the balance sheet?

Answer 14

In stockholders equity

Question 15

Accumulated other comprehensive income is reported in which financial statement ?

Answer 15

In the statement of financial position. (Aka the balance sheet)

Question 16

Calculating transactions gains or losses recognized in a foreign currency is included in which statement

Answer 16

Component of income from continued operations in the income statement

Question 17

Which statement an investor will rely on for liquidity and financial flexibility ?

Answer 17

Balance sheet

Question 18

Realized and unrealized gains and losses for trading securities are reported in ?

Answer 18

In income from continuing operations

Question 19

Realized, but NOT “Unrealized” gains and losses on investments in available for sale securities are reported in ?

Answer 19

Income from continuing operations

Question 20

Accumulated other comprehensive income is where?

Answer 20

Owners equity account

Question 21

CPA RAT (cpa no rat) is for?

CUP is for ?

Answer 21

1- statement of changes in equity

2- other comprehensive income

Question 22

What is Note Payable?

Answer 22

Is a type of debt or loan, a company owes a lender, like a bank.

It’s like a written promise to pay a certain amount of money back at a specific date, and it includes interest.

Question 23

Foreign transaction
Vs
Foreign translation

Answer 23

Foreign transaction - reported in Net Income after the gain or loss is recognized for a transaction that occurred in foreign curreny

Foreign translation- when consolidating a F/S between a parent company and subsidiary company foreign currency is translated to the company currency, gain/loss is included in OCI

Question 24

Translation gain/losses are what and reported where?

Answer 24

They are the gain or loss that occurs after translating the F/S from its functional currency to its reporting currency.

It’s reported in other comprehensive income

Question 25

Consolidated balance sheet
Equity Method

Answer 25

Initial CV in Sub= cost
+ % share of sub NI=⬆️ CV
- % share of any excess of dep= ⬇️ CV
- % share of div=⬇️CV
🟰 Ending C.V of Sub that needs to be eliminated in the consolidated B/S

Question 26

Goodwill

Answer 26

Is the amount that is not identifiable in the investment of subsidiary
Purchase price ➖FMV of equity
Ex- purchase the Inv for $200k
The BVE -150k
The FV on equip- 100k
The BV on equip- 80k
The FV>BV = 20K. The FMV of the equity is 150k+20K= $170K

Calculation- 200k-170k= 30k in goodwill

Question 27

Concentration of credit risk

Answer 27

A note in the financial statement indicating there is risk to pay others and receive payment since customers and business are in the same industry due to an event or circumstance affecting them

Question 28

Concentration of market risk

Answer 28

A note in the financial statement indicating the entity has multiple assets that are valued on the basis of a similar market criteria - like interest rate. A change in the rate affects the value of such investments

Question 29

Is Net income is taxed before recording it into Retained Earnings?

Answer 29

Yes! Multiply it by its tax rate, and if it matches the prepaid expenses on the debit side, no extra liability is recorded on the credit side. NI is reduced by that amount and it gives you the new NI total to include in retained earnings

Question 30

On consolidation date, the consolidated stock holders equity will equal ?

Answer 30

Exactly the parents stockholders equity,

Common stock and retained earnings

Question 31

Cash flow in financing

Answer 31

Common stock
Preferred stock
Dividends paid to stock holders
Issuance of bonds