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ACCT 217 > Theory > Flashcards

Theory Flashcards

1
Q

what is gaap
-publicte?
-priva

A

Accounting rules and practices for the preparation of
financial statements

o Publicly-traded corporations use International Financial
Reporting Standards (IFRS)
o Private corporations may use IFRS or Accounting Standards for
Private Enterprises (ASPE)

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2
Q

SOI

A

Statement of income
o Reports revenues and expenses for a specific period of
time

REV-EXP=NI

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3
Q

SOCE

A

Statement of changes in equity
o Reports the changes in each component of shareholders’
equity during a period of time

CS+RE= TOTAL EQUITY

BALANCE START
NI
DIV DEC
ISS CS
BALANCE END

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4
Q

SOFP

A

Shows the assets, liabilities and shareholders’ equity at a
specific point in time

A=L+SE

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5
Q

SOCF

A

Shows, for a specific period of time, how company
obtained cash and how that cash was used

OIF

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6
Q

Correct definition of current asset

A

asset expected to be converted to cash, sold, or used in one year or one operating cycle (which ever is longer)

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7
Q

define operating cycle

A

avg time between when a business pays cash to obtain proucts and when it receives cash from customers

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8
Q

ORDER OF CURSRENT ASSETS

CTA (nuts) ISP
cat that ate (nuts) is still pooping

A

CASH
TRADING INVEST
AR
Notes receivable
INVENTORY
SUPPLIES
PREPAID EXPENSE

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9
Q

non current assets order

LPIO

A

Long term investments
Property Plant and Equipment
Intangisble assets
goodwill
other assets

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10
Q

Current Liabilities Order

A

Bank indebtedness
AP
Deferred Rev
Bank loan/Notes Payable
Current portion of long term debt

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11
Q

NC Liabilities

A

Bank loan notes payable
lease liabilities
pension and benefit obligations
deferred liabilities

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12
Q

Liquidity Ratios
defintition
types
higher or lower?

A

Measure a company’s short-term ability of a company to meet unexpected needs for cash

Working Capitall= CA-CL
Current Ratio= CA/CL

Higher is better for both

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13
Q

Solvency Ratios
DEFINITION
TYPES
HIGHER OR LOWER

A

Measure a company’s ability to survive over a long
period of time:
o The higher the percentage of debt to total assets, the
greater the risk that debts cannot be repaid when they
are due

D2A: Total Liabilities/Total Assets (%)

Lower is better

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14
Q

Profitability Ratios

A

Measure the income or operating success of a
company for a given period of time, usually one yea

Earnings Per Share= Income Available to SH/Weighted Avg # of CS

PE Ratio= Market Price per share/ Earnings Per Share

Higher is better

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15
Q

Objective of Financial Reporting

A

provide financial indo that is USEFUL

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16
Q

Fundamental Qualitative Characteristics

RF

A

1) Relevance: should be important to decisions, may be predictive/confirmatory ; Materiality is important: will info thats not there influence decisions of user?

2)Faithful Representation: info should reflect truth; complete neutral and error free

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17
Q

Enhancing Qualitative Charactteristics

CVTU

A

1) Comparability: using the same principles of gaap (whole industry is comprable)
2)Verifiablility: independant consensus that info is represented faithfully
3) Timeliness: useful in period
4) Understandability: classified (organized) and clear and concise

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18
Q

Const Constraint

A

info provided should be more benefit than the cost of getting the info togeteher

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19
Q

going concern assumption

A

the business will continue to operate in the future

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20
Q

wHAT DICTATES HOW elements are measured

A

GAAP

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21
Q

Two ways of measuring elements

A

Historical cost:
-A/L should be recorded at cost acquired
always

Fair value:
-certain assets/liabilities can be recorded and reproted at fair value

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22
Q

How does accounting care about the environenmnet

A

they create sustainability reports relating to ESG factors

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23
Q

IFRS ASPE depreciaiton ammortization

A

ifrs: DEPRECIAITON AND AMMORITIZATION (INTANGIBLE GOODS)

aspe: ammortization both

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24
Q

Basic earnings per share ratio IFRS vs ASPE

A

IFRS requried to submit in financial statements

ASPE not required to present in financial statement

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25
Q

debit/credit effect

A

the respoective side increases

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26
Q

debit / credoit balance

A

whichever side has the greater balnace

27
Q

which sides have a debit balance

A

dead

debit
expnses
asset
div decle

28
Q

3 purposes of the general journal

A

1) disclose complete effect of a transaction in one place + a brief explanation of the transaction below
2) provides chronological record of transactions
3) helps prevent and locate errors

29
Q

General Ledger

A

all accounts are listen, it is called the “Chart of accounts”

30
Q

What is posting

A

transferring JE from General journal to General Ledger

31
Q

what is trial balance

A

general ledger accounts and their balances

all it does is prove sum of debits = sum of credits

supports in the prepartion of financial statments

32
Q

LIMITATIOS OF TB

A

DOES NOT PROVE GENERAL LEDGER IS CORRECT (missing transactions, incorrect accoutns, duplicate postings can mess it up)

33
Q

Aspe: when can revenue be recognized

A

1) service provided/ risks of ownership passed on
2) revenue can nbe measured
3) collection is certain

34
Q

IFRS : when can be recognized

A

when company satisifies a performance obligationn

1) identify the contract
2)idenetify performance obligation
3) determine transaction price
4) allocate transaction price to performance obligations in the contract
5) recognize revenue when or as the company satisfies the performance obligation

35
Q

What is over/under stated before adjusted for prepaid expenses

A

A and SE is overstated

36
Q

What is over/under stated before adjusted for deferred revenues

A

L is overstated and SE is undesrstated

37
Q

What is over/under stated before adjusted for Accrued revenue

A

A and SE understated

38
Q

What is over/under stated before adjusted for accrued expenses

A

L understated and SE overstated

39
Q

review of acct cycle

A
  1. Analyze transactions
  2. Journalize the transactions
  3. Post to the ledger accounts
  4. Prepare a trial balance
  5. Journalize and post adjusting entries
  6. Prepare an adjusted trial balance
  7. Prepare financial statements
  8. Journalize and post closing entries
  9. Prepare a post-closing trial balance
40
Q

Data analytics and the arrow

A

Descriptive
Diagnostic
Predictive
Prescripritve

Hindsight insight foresight

41
Q

inflow outflow for

OPERATING
INVESTING
FINACNCING

A

Operation:
Inflow= revenues
Outflow= expenses

Investing:
inflow= long term investment/ money from selling long term assets
outflow= buying PPE, buying shares of other companies

Financing:
inflow= issuing shares/ taking out a loan
outflow= paying dividends, buying shares

42
Q

SOI - how to list exxpenses

A

largest to smallest expense

Salaries expense
Supplies expense1,500
Rent expense900
Depreciation expense83
Insurance expense50
Interest expense

43
Q

ACCUMULATED OTHER COMPREHENSIVE INCOME

A

se account

44
Q

notes receivable

A

amounts owed to a company by customers/others that bear interest

45
Q

“investments” is used without any modifier (trading or long-term), it is assumed

A

non curent asset

46
Q

what is the conceptual framework

A

interrelated objectives that lead to consistent standards in accounting!! these prescribe the nature, function, and limits of accounting financial statemetns!!

47
Q
A
48
Q

objective of general purpose financial resporting

A

provide financial info to investors lenders and others that will be useful in decision making

49
Q

what are the qualitiative charactersistc

A

fundamental and enhancing

50
Q

historical cost or fair value\?

A

historical cost

51
Q
A
52
Q

accrued expense- interest questions

AT THE END OF THE TERM OF THE LOAN, how much interest do you have to pay

A

loan x percent of interest / 12

53
Q

COMMON SHARES ARE NOT ADJUSTED !! IF THIS IS AN ADJUSTING ENTRY THEY R TRYING TO FOOL YOU

A

YES WORD

54
Q

post closing trial balance has no?

A

temporary accounts

55
Q

Paying dividend next month?

A

note payable

56
Q

GOOD WILL IS NOT A ——-

A

INTANGIBKE ASSET

57
Q

what is an invoice

A

AN EXPENSE!

58
Q

Ethical financial accounting

A

for info to be valuable, you need high ethical standards,

Actions should be legal and responsible, while considering orgs interests

FOLLOW GAAP

59
Q

Changes in CS formula

A

Common shares @ beginning + Common shares issued- common shares repurchased= common shares @ end

60
Q

SOCE order

A

balance originally
net income
div decl
cs
balance end

61
Q

common shares is on which finsnandial statements

A

SOCE
SOFP
SOCF

62
Q

div decl is on which fs

A

soce
socf

63
Q
A

ACCT 217 (62 decks)

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