Understanding Balance Sheets Flashcards
The excess of current assets over current liabilities is called _________.
working capital
A balance sheet with separately classified current and non- current assets and liabilities is referred to as a ___________.
classified balance sheet
With a ________, all assets and liabilities are presented broadly in order of liquidity.
liquidity- based presentation
The allowance for doubtful accounts is called a ______
because it is netted against (i.e., reduces) the balance of accounts receivable, which
is an asset account.
contra account
________ are normal operating expenses that
have been paid in advance. They are _____.
Prepaid expenses, assets
_______ are expenses that have been recognized on a company’s income statement but not yet been paid as of the balance sheet date.
Accrued expenses
IFRS permits companies to report PPE using ___________. US GAAP permits ___________.
either a cost model or a revaluation model, only the cost model for reporting PPE
IFRS provides companies with the choice to report investment property using either a ________ or a _________. In general, a company must apply its chosen model to all of its investment property.
cost model, fair
value model
Under IFRS, financial assets are subsequently measured at amortised cost if the
asset’s cash flows occur on specified dates and consist solely of principal and interest,
and if the business model is to hold the asset to maturity. The concept is similar in US
GAAP, where this category of asset is referred to as _____.
held- to- maturity
Deferred tax liabilities result from
temporary timing differences between a company’s
income as reported for tax purposes (taxable income) and income as reported for
financial statement purposes (reported income).
Six main components typically comprise total owners’ equity
(1) Capital contributed by owners - common stock/issued capital
(2) Preferred Shares
(3) Treasury Shares
(4) Retained Earnings
(5) Accumulated other comprehensive income (or other reserves)
(6) Noncontrolling interest (or minority interest
Current ratio
Current assets ÷ Current
liabilities
Quick (acid test) ratio
(Cash + Marketable
securities + Receivables) ÷
Current liabilities
Cash ratio
(Cash + Marketable securities) ÷ Current liabilities
Total debt ratio
Total debt ÷ Total assets
