Subdivisions Flashcards
What are the 3 categories of Cash Flows ? Explain each one
Operating: inflows/outflows of cash from business operations. ( income statement)
Investing: Changes in cash from acquistions/disposals of long term assets & investments
Financing: cash flows related to liabilities and equity ( balance sheet)
What are the Qualitative Characteristic
- Relevance: it is relevant if it makes a difference to a decision maker.
- Faithful Representation: if an economic condition is then reported measure and the condition is in a agreement
What are the 4 Enhancing Characteristics of the Qualitative Characteristic
Comparability- Users should be able to identify similarities & differences across the board
Verifiability- Different observers could reach similar conclusions based on the info
Timeliness- received in time to make a difference in the decision making
Understandability- The user comprehends the info within the decision context at hand
What is the conceptual framework intended to establish?
The objectives and concepts for use in developing standards of financial accounting and reporting
What makes up the Qualitative Characteristics of Relevance
Predictive Value: helps users increase the chance forecasting the outcome of past/ present events
Confirmatory value - if it confirms or changes past/present expectations based on previous evaluations
Material - It is persuasive and will have an impact on decision makers
What makes up the Qualitative Characteristics of Faithfully Representation
Completeness- includes all data neccesary to be faithful
neutral- freedom from basis
free from error - There is no omissions or errors
What are level 2 observable inputs that could be used in determining FV?
- Quoted prices in an active market for similar assets
- Quoted prices in an inactive market for identical assets
- Interest rates that are observable at commonly quoted intervals
- Companies Historical Performances
What are the five sources noted in the applicable standard ?
- Nature of a firms operation
- Use of estimates in F/S
- Vulnerability to significant concentrations
- Certain significant estimates
- The entity’s ability to exist as a going concern
What are the four concentrations?
- Concentration in revenue
- Concentrations in sources of supply
- Concentration in the market for the firms products
- Concentration in the volume of business - customer/ supplier
Operating Activities
The cash inflows and outflows items are associated with net income
What are examples of Operating Activities?
Cash received from - customers, dividends, interest ( inflows)
Cash paid to - suppliers, employees, interest and income tax (outflows)
Investing Activities
The cash inflows and outflows that relates to investments/ disposal of noncash assets
What are examples of Investing Activities?
Cash Received from- Sale of Long Term Asset, collection loan principal, disposal of debt/equity securities, sales of other assets(Property, plant, equipment, patents) inflows
Cash Paid - Purchases of long term asset, lending money, investment in debt/equity securities, and purchase of other assets outflows
Financing Activities
The cash inflows/outflows that relates to how the entity is financed
What are examples of Financing Activities?
Cash Received - sale on own stock, proceeds from borrowing (bonds,notes), retirement of debt (inflows)
Cash Paid- Repurchase of treasury stock, paying back lenders(principal payments), Payment of dividends (outlfows)