Accounting Test 3 flashcards

(cost - salvage value) / useful life

= Straight Line Depreciation (1 year)

Par

Value of one stock

Preferred Stock

You got prioritized with dividends, less risk

Common Stock

last in line to be paid in the event of liquidation, limited liability, high risk

Expenditure

Money you spend to produce your product(s)

Revenue

Money that comes in from the products you sell

Revenue expenditure

Costs that are incurred through the day-to-day operations of a business to maintain its current assets and generate revenue

Capitol Expenditures

Funds that are used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment

Total Common Stock/par per share

= Number of shares of common stock

Total preferred stock/par per share

= Number of shares of preferred stock

Common Stock + APIC Common Stock / # of shares of common stock

= avg. issue price per share of common stock

Common Stock Par + Common Stock APIC + Preferred Stock Par + Preferred Stock APIC

= Paid in Capitol

CS Par + PS Par

= Legal Capitol

((Beg) Ret. Earnings + Net Income) - (End) Ret. Earnings

= Total Dividends Declared

Total Dividends - Preferred portion

= Common Dividend

Cost of preferred stock / # of shares of preferred stock

= amount of dividends declared per preferred share

Cost of common stock / # of shares of common stock

= amount of dividends declared per common share

Market price per share / earning per share

= price earnings ratio

Objectivity Principle

The principle that financial statements should be based on objective, verifiable evidence

(Acquisition price - Salvage Value + Restoration Cost)/ Estimated Resource Output

Units of output method

Selling price - (FV assets - FV debt)

= Goodwill value

Minimize Tax

DDB

maximize net income

Straight line

fair value and historical cost

IFRs allows….?

only historical cost

GAAP allows…?

Original Cost - accumulated depreciation

= Book Value

selling price - book value

= Gain/Loss

(Cost – Salvage + Restoration cost if any)/Estimated output 

=Depletion Rate

Patent Cost / Useful life to buyer

= Amortization Expense

Dividends per share/Earnings per share

=Dividend payout ratio

(Net income – Preferred Dividends)/Weighted average # of common shares 

=EPS (basic)

Dividends per share/Market price per share

=Dividend yield ratio