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Technical Study Flashcards

1
Q

FR - Basic EPS calculation

A

Only IFRS - IAS 33

Basic: Income avail to SH / WACSO

Income avail: Income less dividends declared/paid

WACSO: Weighted avg common share o/s, # of share weighted by the days o/s

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2
Q

FR - Diluted EPS calculation

A

Diluted: Income avail to SH / PCS

Income avail: Income less dividends declared/paid

PCS: potential common shares, # of shares when options exercised

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3
Q

Tax - Corporate - Advertising

A

Advertising paid to foreign advertiser in Canada not deductible. To Canadian advertisers deductible

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4
Q

Tax - Corporate - Convention

A

Limited to 2

Held by professional organization

Connection to business

Location consistent with territorial scope

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5
Q

Tax - Corporate - Tuition

A

Deductible if primarily for benefit of employer

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6
Q

Tax - Corporate - Political Donations

A

Not deductible

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7
Q

Finance - Ratio - Current Ratio

A

Current assets / Current liabilities

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8
Q

Finance - Ratio - Quick ratio

A

CA - inventory - prepaids / CL

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9
Q

Finance - Ratio - Cash Conversion cycle

A

DSO + DOH - DPO

Days sales outstanding = AR/credit sales * days

DOH = days inven. on hand = Avg Inven / COS * days

DPO = (AP/COS) * 365

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10
Q

Finance - Ratio - Times Interest Earned

A

EBIT / interest expense

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11
Q

Finance - Ratio - Debt service coverage

A

Net operating income / principal+ interest payments

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12
Q

Finance - Ratio - A/R Turnover

A

Credit sales / avg AR

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13
Q

Finance - Ratio - DSO

A

(Avg AR / credit sales) * 365

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14
Q

Finance - Ratio - inventory turnover

A

COS / avg inventory

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15
Q

Finance - Ratio - DIOH

A

(Avg inventory / COS) * 365

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16
Q

Finance - Ratio - AP turnover

A

Purchases / AP

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17
Q

Finance - Ratio - DPO

A

(AP / COS ) * 365

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18
Q

MA - Variances - Price variance

A

(AP - SP) * AQ

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19
Q

MA - Variances - usage/efficiency variance

A

(AQ - SQ) * SP

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20
Q

Tax - Principal Residence Exemption

A

1) Ordinarily inhabited
2) one res per year
3) avg annual gain -> use higher
4) (1 + yrs desig.) / # of years owned * CG

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21
Q

SG - Step in a contingency plan

A

1) ID risks
2) prioritize risks
3) develop plan
4) maintain the plan

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22
Q

AA - Audit approaches

A

Explain the considerations in choosing between:

Substantive: substantive testing only. No reliance on controls

Combined: some tests of controls relied upon

23
Q

General: what should be done if no specific HB section IDed

A

Consider general FS concepts - ASPE section 1000, IFRS IAS 1

24
Q

Finance - Valuation - Approach for an income or cash flow valuation

A 
Pre-tax income
\+/- accounting adj
\+/- normalize adj
= adjusted pre-tax 
- income taxes or +/- non-cash
= adjusted aft-tax
x multiple or / discount rate
= capitalized earnings/CF value
\+NRV redundant
=value of equity
25
Finance - Valuation - Approach for an asset-based valuation
``` Book value +/- FMV difference - liabilities - costs of disposal = value of equity ```
26
Finance - Valuation - Approach for intangible asset valuation
Same as a normal valuation (NPV, capitalized earnings) but under excess earnings: remove the earnings attributable to other assets.
27
Finance - General - what is the difference betwen hard and soft capital rationing
Soft capital rationing is internally restricted limits on the capital projects to be taken on. Hard capital rationing is based on the entity's ability to raise capital to fund those projects.
28
Finance - Capital Budgeting - How should capital projects be allocated with limited resources?
NPV or profitability index compared and choose the highest NPV until all resources used.
29
Finance - Cost of Capital - Reminders for calculating WACC
Interest cost of debt to be adjusted by (1- tax rate) Use market values
30
Finance - Cost of Capital - WACC formula
(E/V * Ce) + (D/V * Cd * (1-T))
31
Finance - Cost of Capital - Why would a company not fully fund with debt?
More risky to lenders Higher interest in future Risk of default, and thus a cost with the risk
32
Finance - Cost of Capital - CAPM formula
Rf + [beta * (Rmkt - Rf)]
33
Finance - Cost of Capital - Dividend discount model formula
[div * (1+g) ] / (Ce - g)
34
Finance - General - What are the 5 financial risks
Market risk: changes in overall market (online shopping, competitors) Credit risk: credit with customers or suppliers default. Liquidity Risk: Risk of having cash tied up and not cover ST obligations Operational Risk: Normal business risk (lawsuits, fraud, estimates off) FX risk: Losses due to currency fluctuations
35
Finance - Hedging - What is the outcome of a forward contract?
Elimination of downside risk, but also opportunity to sell at higher price Protected down, removed up
36
Finance - Hedging - What are futures
Formalized forward contract
37
Finance - Hedging - What is a call and what are the effects of a change in market price?
Option to "call" something to you. Option to buy If mkt price below: can buy and sell at high market If mkt price above: expiry and fees paid
38
Finance - Hedging - What is a put and what are the effects of a change in market price?
Option to "put" something to someone else. Option to sell If mkt price below: expiry and fees paid If mkt price above: can purchase at market and sell for profit
39
Finance - Hedging - What are the 4 risk management approaches? Situation? Cost?
Opportunistic - actively forecasting: When mgmt is superior. Costs high Passive - rides it out: When risks moderate. No cost Defensive - reacts and insures: When risks high. Moderate Compromise - full hedging strategy: When risks not too high. High
40
FR - ASPE - Rev Rec process
ASPE 3400 Define issue ID: components Recog: collection assured, performance achieved, assurance of revenue Conclude
41
FR - IFRS - Rev Rec Process
IFRS 15 ID contract ID perf obligations Determine trxn price Allocate trxn price Determine when perf obligations satisfied.
42
Tax - Personal - Setup of personal tax return
Income (including cap gains) - Other deductions (RRSP, child care, spousal support) =NIFTP - Common items (LCGD, NCL) = TI x tax rates - 15% of non-refundable (in ref sched). - Tax credits - instalments = Taxes payable
43
Tax - Personal - What are the common issues with home office expenses?
Deduction permitted: performs >50% of duties Employees: only rent, supplies, R&M. Commissioned: additional expenses. Allocate on a reasonable basis
44
FR - ASPE - Government Grant process
ASPE 3800 / IAS 20.7 Conclude if requirements satisfied Cap or non-cap? Cap: deduct from asset or deferred and amortize Non-cap: Expense or defer on basis of expenses
45
FR - ASPE/IFRS - General procedure for accounting for an investment
Type of investment (look at control, influence) Methods to record (use handbook) Explain method and impact
46
FR - ASNPO - Rev Rec
ASPE 4410 Method: Restricted fund or deferral Type of contribution: restricted, endowment, or unrestricted Fair value measurement.
47
Tax - Employee vs. contractor implications
Employee: CPP paid by employer, no deductions Contractor: include deductions, remit GST, double CPP.
48
Tax - Employee vs. contractor tests
``` Control: dictate work Tools: EE or ER? Subcontracting: able? Risk: taken on? Mgmt held by EE: high? Profit ops: present? ```
49
Finance - What is the marginal cost of capital and how does it change with new financing taken on?
Weighted average cost of the last dollar raised. Debt: cost increases as more subordinate Equity: increases as debt issued as more financial risk
50
Finance - How to analyze a cash discount?
Compare the present value of the new and old policy with the AFTER TAX cost of debt for the cash to be borrowed (instead of paid under the discount).
51
Tax - How is the accelerated investment incentive calculated?
Add 1/2 net acquisitions
52
Tax - How are stock options taxed on the exercise date and selling date (employee of public and CCPC)
Employment benefit: FMV on exercise date - exercise price on date Exercise date: pubco = employment benefit CCPC = none. Sale date: pubco = Capital gain CCPC = emp benefit AND cap gain
53
Tax - How are dividends taxed by individuals and corporations?
Corp: included in NI and deducted in Div C deduct. For private: pay Part IV tax. Individuals: Eligible grossed up by 38% Ineligible grossed up by 15%
54
Tax - Salary vs. Dividends
Salary: - CPP/EI included/paid - Saves tax for corp (potentially) - Potentially higher taxes personally - contribute to RRSP - earned income Dividends: - Non-deductible - Best when company under business limit - easier to manage

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