Module 1

Question 1

PPE

Answer 1

Property, Plant and Equipment (Long-term asset)

Question 2

Net

Answer 2

Subtraction of accumulative depreciation, or accumulative amortization

Question 3

Typical Long Term Assets

Answer 3

PPE, Long-term investments, Intangible Assets

Question 4

MD&A

Answer 4

Management Discussion and Analysis (10-K)

Question 5

JSC

Answer 5

Joint Stock Company (Shares can be bought and sold)

Question 6

Liquidity

Answer 6

Company’s ability to make short-term payments (current assets)

Question 7

5 Current Assets

Answer 7

Cash and Cash Equivalents, Short-term investments, Accounts receivable, Inventory, Prepaid expenses.

Question 8

Liabilities

Answer 8

Nonowner source of capital used to finance the acquisition of assets (claims by creditors against the company) *must be repaid (owners equity is not obligatory in the same way). Listed in order of maturity.

Question 9

4 Current Liabilities

Answer 9

Accounts Payable, Accrued liabilities (wages payable, interest payable, income tax payable), Unearned revenue (advances, deferred revenues), Short-term borrowings (notes payable), current maturities of long-term debt.

Question 10

2 Long-term liabilities

Answer 10

Long-term debt (bonds, mortgages), other long-term liabilities (tax liabilities, long-term unearned revenue)

Question 11

Equity

Answer 11

Owner source of capital used to finance acquisition of assets. (contributed capital and earned capital)

Question 12

4 Types of contributed capital

Answer 12

Common Stock (CS), Additional paid-in capital (APIC), Preferred stock, treasury stock.

Question 13

Earned Capital

Answer 13

Retained Earnings (RE): accumulated net income that has not been distributed as dividends. 
Accumulated other comprehensive income (AOCI)

Question 14

AOCI

Answer 14

Accumulated Other Comprehensive Income - accumulated changes in asset and liability fair values (not reported on income statement)

Question 15

OCI

Answer 15

Other comprehensive income (links to the balance sheet)

Question 16

BVE

Answer 16

Value of stockholder’s equity

Question 17

MVE

Answer 17

Market Value, Market Cap, Size

Question 18

Gross Profit

Answer 18

Revenue - Cost of goods sold

Question 19

Overhead

Answer 19

Expenses that must be paid even if the business doesn’t earn any revenue from them

Question 20

SG&A

Answer 20

Selling, general & administrative (salaries, marketing, HR and IT, depreciation, amortization).

Question 21

Operating expenses

Answer 21

SG&A, R&D, other expenses

Question 22

Nonoperating (Financing) expenses

Answer 22

interest, dividend, gains and losses

Question 23

Revenue recognition principle

Answer 23

recognize revenue when earned

Question 24

Matching principle

Answer 24

recognize expenses when incurred

Question 25

SSE

Answer 25

Statement of Stockholder’s Equity

Question 26

SCF

Answer 26

Statement of Cash Flows

Question 27

SCF’s 3 business activities

Answer 27

Operating activities, Investing activities, Financing activities.

Question 28

Operating activities (SCF)

Answer 28

receipts from sales, rent, interest. Payments to suppliers, employees, rent, interest, taxes.

Question 29

Investing activities (SCF)

Answer 29

Long-term investments (PPE, land, buildings, long-term securities)

Question 30

Financing activities (SCF)

Answer 30

inflows from issuing stock, bonds and borrowing money. Outflows from repurchasing stock, repaying loans (principal), dividend payments.

Question 31

Accruals

Answer 31

Revenue expense that has not been received. (NI - Cash flows from operating activities)

Question 32

IFRS vs. US GAAP

Answer 32

Balances sheet in reverse order of liquidity, Income statements shows 2 not 3 years of data, IFRS can classify interest differently.