Financial Reporting Cheat Sheet
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Questions and Answers

What does liquidity measure in a company's finances?

  • The ability to meet short-term obligations (correct)
  • The long-term profitability of assets
  • The overall market value of the company
  • The relationship between total liabilities and equity

Which statement is true regarding the calculation of basic earnings per share (EPS)?

  • Basic EPS is calculated by dividing net income by total liabilities
  • Basic EPS includes preferred dividends in the numerator
  • Basic EPS is calculated using the net income available to common shareholders (correct)
  • Basic EPS accounts for all common shares issued only

Under the indirect method for foreign transactions, which exchange rate is used?

  • The average market price of the asset
  • The historical price of the currency
  • The domestic price of another currency
  • The foreign price of the domestic currency (correct)

What component is NOT considered when calculating diluted earnings per share (EPS)?

<p>Preferred stock dividends (A)</p> Signup and view all the answers

What happens to liabilities denominated in foreign currency when the foreign currency appreciates?

<p>They lead to a loss for the company (A)</p> Signup and view all the answers

Which of the following is a criterion for classifying preferred stock as cumulative?

<p>Unpaid dividends accumulate as dividends in arrears (A)</p> Signup and view all the answers

What is the filing deadline for a Form 10-K for large accelerated filers?

<p>60 days (C)</p> Signup and view all the answers

In calculating book value per common share, which of the following is used in the numerator?

<p>Common shareholders' equity (C)</p> Signup and view all the answers

What method is used for calculating the additional shares for diluted EPS when considering options?

<p>Treasury stock method (D)</p> Signup and view all the answers

What adjustment is made for convertible bonds in the if converted method for diluted EPS?

<p>Subtract tax from the interest expense (B)</p> Signup and view all the answers

What happens when foreign currency translates to a loss in assets?

<p>Assets decrease in value (B)</p> Signup and view all the answers

Which type of preferred stock participates in excess dividends without limit?

<p>Participating (C)</p> Signup and view all the answers

How is the weighted average number of common shares outstanding determined?

<p>By averaging shares throughout the year (D)</p> Signup and view all the answers

What is required to be disclosed regarding preference upon liquidation if it exceeds par value?

<p>It must be disclosed in footnotes. (C)</p> Signup and view all the answers

Which of the following refers to a situation where stockholders may exchange their preferred shares at a specified price?

<p>Convertible Stock (D)</p> Signup and view all the answers

What accounts for Treasury stock under the cost method?

<p>Recorded and carried at reacquisition cost. (A)</p> Signup and view all the answers

What method is primarily used for recording treasury stock?

<p>Cost Method (C)</p> Signup and view all the answers

What is the implication of a stock subscription default?

<p>Partial payments can be retained and converted to APIC. (D)</p> Signup and view all the answers

When is revenue recognized if a customer has paid nonrefundable consideration and there are no remaining performance obligations?

<p>When the performance obligations are completed. (A)</p> Signup and view all the answers

What must occur for a contract modification to be treated as a new contract?

<p>There is a scope increase. (C)</p> Signup and view all the answers

Which of the following is not part of the five-step approach for revenue recognition?

<p>Determine the competition in the market. (D)</p> Signup and view all the answers

What method must be used when recognizing a change in accounting estimate?

<p>Prospective Approach (A)</p> Signup and view all the answers

How are small stock dividends (<25%) accounted for?

<p>Retained Earnings decrease by the divident's par value. (B)</p> Signup and view all the answers

What is typically used to calculate gains and losses on treasury stock when using the cost method?

<p>Reissue Price - Repurchase Cost (B)</p> Signup and view all the answers

What document specifies the time the names of shareholders entitled to receive dividends are determined?

<p>Date of Record (C)</p> Signup and view all the answers

What triggers recognizing revenue at a point in time?

<p>Customer accepts the asset. (B)</p> Signup and view all the answers

What does fair value represent?

<p>The price that would be received to sell an asset or transfer a liability (B)</p> Signup and view all the answers

Which of the following indicates that a transfer is separately identifiable?

<p>The asset does not integrate with others (A)</p> Signup and view all the answers

What does the 'Market Approach' in fair value measurement involve?

<p>Using prices from recent transactions involving comparable assets (D)</p> Signup and view all the answers

Which liquidity ratio indicates a company's ability to meet short-term obligations?

<p>Current Ratio (D)</p> Signup and view all the answers

What is included in the calculation for 'Days Sales in Accounts Receivable'?

<p>Ending A/R divided by Sales (net) multiplied by 365 (D)</p> Signup and view all the answers

Which level of the fair value hierarchy is based on unobservable inputs?

<p>Level 3 (A)</p> Signup and view all the answers

What must be adjusted if a change in accounting entity occurs?

<p>Prior financial statements presented in comparative F/S (B)</p> Signup and view all the answers

Which profitability ratio measures the success of producing sales relative to net income?

<p>Return on Sales (A)</p> Signup and view all the answers

What is a key aspect of 'Error Correction' in prior period adjustments?

<p>Errors involve oversights of facts and misapplication of GAAP (C)</p> Signup and view all the answers

What is the measure of a company’s ability to convert sales into profit?

<p>Net Profit Margin (C)</p> Signup and view all the answers

In fair value measurement, what does the term 'Principal Market' refer to?

<p>The market with the highest transaction volume (A)</p> Signup and view all the answers

What kind of assets utilizes the 'Highest and Best Use' measurement approach?

<p>Non-Financial Assets (D)</p> Signup and view all the answers

What event requires restoring previous financial statements due to changes?

<p>Retrospective accounting adjustments (A)</p> Signup and view all the answers

What does the 'Debt-to-Equity Ratio' measure?

<p>Total liabilities divided by total equity (C)</p> Signup and view all the answers

Which of the following is a characteristic of 'Not Separately Identifiable POs'?

<p>Highly interrelated or interdependent assets (A)</p> Signup and view all the answers

What type of fund is primarily used for the construction of major capital assets?

<p>Capital Project Fund (D)</p> Signup and view all the answers

Which type of financial statement shows the balance of net assets with and without donor restrictions?

<p>Statement of Financial Position (D)</p> Signup and view all the answers

In a private purpose trust fund, the assets are legally protected but are not categorized as what?

<p>Pensions (C)</p> Signup and view all the answers

What basis of accounting is used for proprietary funds?

<p>Full Accrual (A)</p> Signup and view all the answers

Which of the following is NOT a typical component reported within the Statement of Activities for NFPs?

<p>Change in outstanding debts (D)</p> Signup and view all the answers

What is the primary purpose of fiduciary funds?

<p>To manage the economic resources on behalf of others (D)</p> Signup and view all the answers

Under which circumstances would unconditional promises (pledges) not be recognized as revenue?

<p>If they are conditional promises (D)</p> Signup and view all the answers

What is the accounting treatment for donated services that do not create an asset?

<p>Recorded if they meet certain criteria (C)</p> Signup and view all the answers

Which of the following statements is true regarding the amounts and nature of a nonprofit organization's net assets?

<p>Net assets include both restricted and unrestricted categories (B)</p> Signup and view all the answers

What task does the Statement of Cash Flows in NFPs primarily perform?

<p>Detail sources and uses of cash (B)</p> Signup and view all the answers

In beneficiary accounting for financial interrelated entities, which entry indicates a financial interest in recipient net assets?

<p>DR: Interest in recipient net assets (B)</p> Signup and view all the answers

Which of the following is a characteristic of government funds?

<p>Focus on stewardship of resources (D)</p> Signup and view all the answers

Which of the following is an example of a conditional contribution?

<p>A donation given with the condition of a matching grant (D)</p> Signup and view all the answers

What is the purpose of the Governmental Accounting Standards Board (GASB)?

<p>To establish accounting/reporting standards for governments (C)</p> Signup and view all the answers

When is revenue recognized under the modified accrual basis for government accounting?

<p>When it is collectible in the current period or within 60 days (A)</p> Signup and view all the answers

Which of the following describes permanent tax differences?

<p>They will not reverse in future periods (A)</p> Signup and view all the answers

What happens to intercompany gains on the sale of land in a partnership?

<p>They need to be undone each year from retained earnings (B)</p> Signup and view all the answers

Which accounting method focuses primarily on public accountability in government entities?

<p>Modified accrual accounting (B)</p> Signup and view all the answers

How should goodwill be allocated in a partnership during liquidation?

<p>Based on the capital account balances (C)</p> Signup and view all the answers

Which of the following is a characteristic of governmental financial statements as per GASB?

<p>Understandability for individuals without accounting knowledge (A)</p> Signup and view all the answers

What is the result of a non-taxable income becoming taxable income in terms of deferred tax items?

<p>Recognition of deferred tax liabilities (D)</p> Signup and view all the answers

What accounting records are typically recognized when a governmental fund incurs an expenditure?

<p>When liabilities are incurred (A)</p> Signup and view all the answers

Which of the following is included in the GASB hierarchy of accounting standards?

<p>GASB Bulletins and guides (A)</p> Signup and view all the answers

Which statement is true regarding the treatment of temporary tax differences?

<p>They result in deferred tax assets or liabilities (B)</p> Signup and view all the answers

What is the purpose of a special revenue fund?

<p>To account for revenues from specific taxes or earmarks (B)</p> Signup and view all the answers

In the context of accounting for partnerships, how is a bonus typically allocated?

<p>Among the remaining partners based on their capital accounts (B)</p> Signup and view all the answers

How should expenditures for long-term assets be treated in governmental financial statements?

<p>Capitalized and depreciated over the life of the asset (C)</p> Signup and view all the answers

What does a higher inventory turnover indicate?

<p>Better sales efficiency (D)</p> Signup and view all the answers

What is the effect of using the LIFO inventory method in an environment of rising prices?

<p>Creates lower tax liabilities (B)</p> Signup and view all the answers

Which financial ratio measures the proportion of total debt to total assets?

<p>Total Debt Ratio (D)</p> Signup and view all the answers

What is the primary goal of cash conversion cycle analysis?

<p>To determine operational efficiency (A)</p> Signup and view all the answers

How is the Price to Earnings (P/E) ratio calculated?

<p>Market Price per Share / Earnings per Share (D)</p> Signup and view all the answers

Which method is most suitable for tracking inventory for unique, high-value items?

<p>Specific Identification (D)</p> Signup and view all the answers

What should be the basis for revenue recognition in cash basis financial statements?

<p>When cash is received (C)</p> Signup and view all the answers

Which of the following is NOT a feature of a modified cash basis of accounting?

<p>Recognition of all liabilities and equity (C)</p> Signup and view all the answers

What is a primary characteristic of a perpetual inventory system?

<p>Records inventory changes directly after each sale (B)</p> Signup and view all the answers

Which type of event is recognized in financial statements as Type 1?

<p>Condition that existed at B/S date (B)</p> Signup and view all the answers

What does the term 'Days in Payable' refer to?

<p>Average time a company takes to pay its suppliers (A)</p> Signup and view all the answers

What financial metric can be calculated as Sales (net) / 365?

<p>Revenue per day (C)</p> Signup and view all the answers

What method primarily uses the lower of cost or net realizable value for inventory valuation?

<p>Lower of Cost and Net Realizable Value (D)</p> Signup and view all the answers

What does the term 'Cash Equivalents' refer to?

<p>Short-term, highly liquid investments (D)</p> Signup and view all the answers

Flashcards

Stock Issued at Par

Company issues stock for the exact stated value.

Stock Issued Below Par

Company issues stock for less than its stated value.

Stock Issued Above Par

Company issues stock for more than its stated value.

Stock Subscriptions

Agreement to purchase future shares.

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Dividend Declaration

Board of Directors approves distribution to shareholders

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Dividend Payable

Liability representing dividends owed.

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Treasury Stock

Company's repurchased own shares.

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Treasury Stock - Cost Method

Record repurchased shares at reacquisition cost

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Treasury Stock - Par/Stated Value Method

Record shares at par/stated value, less common method.

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Revenue Recognition - Output Method

Revenue recognized based on the value to customers

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Revenue Recognition - Input Method

Revenue recognized based on the entity's efforts to satisfy the performance obligations.

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Change in Accounting Estimates

Adjustments to prior years financial statements

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Change in Accounting Principle

Shift from one acceptable accounting principle to another.

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Statement of Financial Position

A financial statement that reports a company's assets, liabilities, and equity at a specific point in time.

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Statement of Earnings

A financial statement that reports a company's revenues and expenses over a period of time to determine net income (or loss).

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Statement of Comprehensive Income

A financial statement that reports all changes in equity during a period, other than those resulting from investments by owners and distributions to owners.

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Statement of Cash Flows

A financial statement that summarizes the cash inflows and outflows of a company for a period of time (operating, investing, and financing).

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Statement of Owner's Equity

A financial statement that shows the changes in a company's ownership equity over a period of time.

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Liquidity

The ability of a company to meet its short-term obligations.

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Solvency

The ability of a company to meet its long-term obligations.

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Basic Earnings Per Share (EPS)

A measure of how much profit is generated for each outstanding common share.

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Diluted Earnings Per Share (EPS)

A measure of how much profit is generated for each outstanding common share, taking into consideration dilutive securities.

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Form 10-K Filing Deadlines

Specific deadlines for filing Form 10-K by companies, based on company size (revenue/market cap).

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Form 10-Q Filing Deadlines

Specific deadlines for filing Form 10-Q by companies, based on company size (revenue/market cap).

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Stock Issuance

The process of issuing new shares of company stock.

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Preferred Stock

A type of stock with preference in dividends and liquidation over common stock.

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Cumulative Preferred Stock

Preferred stock where unpaid dividends accumulate and must be paid before any common dividends.

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Fair Value

The price received to sell an asset or transfer a liability in an arm's-length transaction.

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Principal Market

Market with highest volume or activity level for an asset or liability. Use its price for fair value.

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Most Advantageous Market

Best price for an asset/liability considering transaction costs.

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Level 1 Fair Value Inputs

Observable, active, and identical market prices of identical assets or liabilities.

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Level 2 Fair Value Inputs

Observable, quoted prices for similar but not identical assets or liabilities.

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Level 3 Fair Value Inputs

Unobservable and assumption-based valuations. Uses significant estimations.

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Change in Accounting Entity (retrospective)

Restatement of previous comparative financial statements for a new reporting entity.

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Error Correction (Prior Period Adjustment)

Adjust opening retained earnings of the earliest period for errors in recognition, measurement, presentation or disclosure.

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Comparative Financial Statements Presented

Financial statements of the year with the error are included. Adjustments are made to prior financial statements.

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No Comparative Financial Statements Presented

Adjust opening retained earnings for errors, but not included in comparative reports.

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Governmental Funds

Funds used by governmental entities for general activities, like public safety and infrastructure.

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Modified Accrual

A basis of accounting for governmental funds where revenues are recognized when measurable and available, and expenditures are recognized when incurred.

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Capital Project Fund

A governmental fund that accounts for capital projects such as building roads, schools.

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Proprietary Funds

Funds accounting for business-type activities of governmental entities, such as utility services.

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Full Accrual

Basis of accounting for proprietary and fiduciary funds, where revenues are recognized when earned and expenditures are recognized when incurred.

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Fiduciary Funds

Funds held by a government entity on behalf of others, such as trust funds or pension funds.

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NFPs

Nonprofit organizations, whose resources are legally restricted (compared to business-like operations) .

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Statement of Financial Position (NFP)

NFP's financial statement equivalent of a balance sheet, showing assets, liabilities, and net assets.

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Statement of Activities (NFP)

NFP reporting of changes in net assets, showing revenues and expenses during a period.

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Statement of Cash Flows (NFP)

NFP reporting of cash inflows and outflows from operating, investing, and financing activities.

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Unconditional Contributions

Donated resources that do not require any specific action from the recipient.

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Conditional Contributions

Donated resources that require specific actions or conditions to be met before being recognized.

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Donated Services

Services offered to an organization freely that meet specific criteria.

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Donated Materials

Items offered to an organization, only recognized if significant.

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Split evenly if no agreement

In a partnership disagreement, if there is no agreement on distribution, assets are divided equally among partners.

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Financing CFs

Cash flows from debt and equity financing activities.

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Indirect Method (CF)

Calculates cash flows from operating activities by adjusting net income for non-cash items.

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Withdrawal of a Partner

Partner leaving a partnership, potentially affecting other partners' capital accounts.

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Net Income

The revenue left after considering all expenses.

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Noncash Expenses/Losses

Expenses that don't involve cash outflow, e.g., depreciation, bad debt.

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Noncash Income/Gain

Income that does not involve cash inflow, e.g., gain on investment.

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Permanent Tax Differences

Tax differences that do not reverse, e.g., tax-exempt interest.

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Temporary Tax Differences

Tax differences that will reverse in the future.

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Intercompany Sale of Land - Gain/loss

Gain or loss on the sale of land between related companies to be eliminated.

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Intercompany Fixed Assets

Eliminating gains or losses on intercompany fixed asset transactions and adjusting accumulated depreciation.

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Book Income First, Tax Income Later

Taxable income is recognized after book income; this creates deferred tax liabilities.

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Tax Income First, Book Income Later

Taxable income is recognized before book income; creates deferred tax assets.

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Book Expense First, Tax Expense Later

Tax expense recognized later than book expense, creating a deferred tax asset.

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Tax Expense First, Book Expense Later

Tax expenses recognized earlier than book expenses; creates a deferred tax liability.

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Deferred Tax Items

Items that are a result of a temporary difference between book income and tax income.

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Uncertain Tax Position

Tax liability where the outcome is uncertain, requiring recognition.

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Modified Accrual

Revenue recognized when available (collectible); and expenditures when incurred. Used in government accounting.

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General Fund

Governmental fund for normal operations financed by taxes.

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Special Revenue Fund

Funds targeted for specific purposes, based on taxes or other revenue sources.

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Inventory Turnover

Measures how many times a company sells and replaces its inventory during a period.

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Days in Inventory

Average number of days inventory sits on the shelf before being sold.

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COGS/365

Cost of goods sold divided by 365, a calculation of inventory turnover.

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Average Inventory

The average value of inventory over a period.

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Total Liabilities

The sum of all obligations of a company.

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Total Debt Ratio

Percentage of total assets financed by debt.

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Total Assets

All the resources owned by the company.

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Operating Cash Flow

Cash generated from the core operations of a business.

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CFs from Operations

Cash flows generated from a company's core business activities.

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Equity Multiplier

Ratio of total assets to total equity.

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A/P Turnover

Measures how many times a company pays its suppliers per year.

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Average A/P

Average balance outstanding in accounts payable over a period.

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Times Interest Earned

Measures a company's ability to pay its interest obligations.

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EBIT

Earnings before interest and taxes.

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Sales

Total revenue generated by a company.

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Net Income

Profit remaining after all expenses and taxes.

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Days Sales in A/R

Average number of days it takes for a company to collect on its credit sales.

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Days in Payable

Average number of days a company takes to pay its suppliers.

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Days in Payable

Average number of days a company takes to pay its suppliers.

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Cash Conversion Cycle

Time needed to convert inventory to cash.

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Ending Inventory

The value of unsold inventory at the end of an accounting period.

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Average A/P

Average balance outstanding in accounts payable over a period.

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Cash Basis of Accounting

Revenue recognized when cash is received, and expenses recognized when cash is paid.

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Modified Cash Basis of Accounting

Combines elements of cash and accrual accounting.

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Disclosure includes

Notes to financial statements that provide details about accounting methods used.

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Disclosure of Rights and Uncertainty

Notes that inform users about risks and uncertainties impacting the financials.

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Concentration Disclosures

Significant dependencies on specific customers or suppliers that may impact financial performance.

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Simple Bank Reconciliation

Process of matching bank and company records to identify discrepancies.

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Deposit in Transit

Deposits made by the company but not yet recorded by the bank.

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Outstanding Checks

Checks written by the company but not yet cleared by the bank.

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Bank Collections

Collections made by the bank that are not yet recorded in company records.

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Non-Sufficient Funds (NSF)

A charge imposed by the bank when a check is returned due to insufficient funds.

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Accounts Receivable T-Account

A record of amounts owed to a company by customers.

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Sales Discount

A reduction in price offered for early payment.

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Gross Method

Initial recording of sale does not account for discount.

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Net Method

Initial recording of sale accounts for discount.

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Factoring

The sale of accounts receivable to a third party.

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Without Recourse Factoring

The factor assumes all credit risk.

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With Recourse Factoring

The factor has the option to resell A/R back to the seller if the debtor defaults.

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Allowance Method

A method of accounting for uncollectible accounts receivable by estimating and recording an allowance for doubtful accounts.

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Subsequent Collection of Uncollectible AR

Recording of collections when previously written-off accounts are collected

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Composite Depreciation

Averaging economic lives of similar assets, then depreciating them in a single group.

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Accumulated Depreciation

The total depreciation expense of an asset over its life.

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Impairment

A permanent loss in the value of an asset.

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Depreciation

The process of allocating the cost of a long-lived asset over its useful life.

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Depletion

The process of allocating the cost of a natural resource over its useful life.

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Asset Retirement Obligations (ARO)

Liabilities arising from the eventual removal or disposal of long-lived assets.

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Employee Related Liabilities

Obligations related to employee compensation and benefits.

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Payroll Taxes

Taxes related to employees' compensation paid by the employer.

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Payroll Deductions

Amounts withheld from employee paychecks for taxes or other purposes.

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Exit or Disposal Activities

Costs relating to closing a business location or other activities.

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Gain Contingencies

Potential gains that haven't yet occurred.

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Loss Contingencies

Potential losses that haven't yet occurred.

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Lease Payments

Amounts paid to use an asset under a lease agreement.

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Operating Leases

Leases where the lessor maintains ownership and risks.

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Finance Leases

Leases where the lessee assumes significant risks and rewards.

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Reclassification of Debt Categories

Moving debt securities from one classification (e.g., trading to available-for-sale) and updating accounts on income statement or outside of.

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Valuation of Debt Securities

Determining the value of debt investments (e.g., bonds, notes).

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Investment Basics

General principles for accounting for investments in financial instruments.

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Consolidation

Combining financial statements of a parent company with its subsidiaries.

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Study Notes

Financial Reporting (FAR) Cheat Sheet

  • Full Set of Financial Statements: Includes Statement of Financial Position (Balance Sheet), Statement of Earnings (Income Statement), Statement of Comprehensive Income, Statement of Cash Flows, and Statement of Owner's Equity.

  • Individual Foreign Transactions: Liquidity and solvency are impacted. Basic Earnings Per Share (EPS) calculations are important.

  • Liquidity and Solvency: Liquidity measures the ability to meet short-term obligations; Solvency measures the ability to meet long-term obligations. Current Assets and Current Liabilities are crucial factors.

  • Basic Earnings Per Share (EPS): Calculated using Income Available to Common Shareholders and Weighted Average Number of Common Shares Outstanding.

  • Comprehensive Income: Includes items such as income available to common shareholders, preferred dividends, and other comprehensive income.

  • Form 10-K and 10-Q Filing Deadlines: Vary based on company size and revenue.

  • Stock Issuance: Different journal entries depend on whether stock is issued above, at, or below par value.

Revenue Recognition

  • Five-Step Approach (I am a STAR): 1) Identify the contract with the customer; 2) Separate Performance Obligations; 3) Determine the Transaction Price; 4) Allocate the Price to each PO; 5) Recognize Revenue.

  • Revenue Recognition Timing: Satisfied Over Time or Satisfied at a Point in Time. Criteria for each.

  • Fair Value: The price received to sell an asset or transfer a liability. Non-financial assets are measured using highest and best use.

  • Criteria for Identifying Contracts: Parties involved must approve the contract, with defined payment terms, probable collection of consideration.

  • Contract Modification: Treated as a new contract if scope or price changes significantly.

Assets

  • Accounts Receivable: Beginning balance, credit sales, cash collected, write-offs. Conversion to a note. Sales Discounts are part of transactions.

  • Cash Equivalents: Short-term, highly liquid investments. Criteria such as ready convertibility to cash and short maturity.

  • Inventory: FIFO (First-In, First-Out), Weighted Average, LIFO (Last-In, First-Out), Specific Identification. Inventory valuation considers Lower of Cost or Net Realizable Value (NRV).

  • Inventory Valuation Methods: Specific identification, FIFO, weighted average, moving average, and LIFO (with dollar-value LIFO). Differences in how these impact COGS and ending inventory.

  • Factoring and Discounting: Sales of accounts receivables or notes receivable, with or without recourse. Key elements of recognizing when a transaction constitutes a true sale.

  • Impairment of Assets : Testing for recoverability; calculation of impairment loss.

Liabilities

  • Employee-Related Liabilities: Payroll taxes and deductions, accrued vacation. Exit or disposal activities impact employee liabilities.

  • Lease Criteria: OWNES Criteria to identify a finance lease. Operating leases recognize only lease expense. Finance leases consider assets and liability.

  • Trade Accounts Payable: Gross and Net methods.

  • Trade Notes Payable: Interest-bearing notes, bonds, and debentures.

  • Gain Contingencies: Not recognized until they are probable; Loss Contingencies are measured differently.

  • Annuity: Annuity Due or Ordinary Annuity

Investments, Cash Flows, and Taxes

  • Consolidation: Combining financial statements of different entities, particularly subsidiaries.

  • Statement of Cash Flows: Operating, Investing, and Financing activities. Indirect Method for Operating Cash Flow calculations.

  • Temporary and Permanent Tax Differences: Tax differences are classified.

  • Partnership Admission: Exact, Bonus, and Goodwill methods to value partners' contributions.

  • Partnership Withdrawal: Bonus or Goodwill methods are used to allocate the withdrawal amount.

  • Partnership Liquidation: Steps for winding down partnership affairs.

Government and Not-for-Profit (NFP)

  • Governmental Accounting: Governmental funds, proprietary funds, fiduciary funds. Fund accounting distinctions (e.g., Modified Accrual vs. Full Accrual).

  • NFP Accounting: Statement of financial position, statement of activities, and statement of cash flows.

  • Contributions to NFPs, treatment of conditional and unconditional contributions;

  • Cash/Collection Contingencies and Receipts/Collections/Donations.

  • NFP Revenue Recognition: Recognizing cash contributions as revenue. Recognizing multi-year pledges; Conditional and Unconditional promises.

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Description

This quiz covers essential concepts in financial reporting, including the full set of financial statements, liquidity and solvency measures, and Basic Earnings Per Share (EPS) calculations. It is designed to aid learners in understanding the fundamentals and key components required for effective financial analysis.

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