CPA FAR - F1 FLASHCARDS

What are the 5 financial statements?

Balance sheet, income statement, comprehensive Income, cash flows, changes in equity

Classified balance sheet

Separates current and noncurrent assets and liabilities

Inventory expires into...?

Cost of goods sold (COGS)

Prepaid insurance expires into...?

Insurance expense

Fixed assets expire into...?

Depreciation expense

Patents expire into...?

Amortization expense

Gain/Loss on disposal of asset

Proceeds − Book Value

Multiple-step income statement

Separates operating and nonoperating items

Single-step income statement

Total revenues - Total expenses

Discontinued operations include

Operating gain/loss, impairment, disposal gain/loss

When can a disposal be discontinued operations?

Strategic shift with major effect on operations/results

Increase in FV after impairment

Recognize gain, but not above previous impairment loss

Types of foreign currency transactions

Operating transactions and forward contracts

Foreign currency gains/losses go where?

Net income

Foreign currency transaction steps

Record - Remeasure at year-end (BS date) - Adjust at payment

What is comprehensive income?

Change in equity from nonowner activities

OCI reporting requirements

Tax effects, AOCI changes, total AOCI, reclassifications

Comprehensive income formats

Single statement or Two statements

PUFI

Pension

Unrealized debt security gains/losses

Foreign currency translation,

Instrument-specific credit risk

Basic EPS

Income to common / Weighted average shares

Dilutive securities

Options, convertibles, contracts, contingent shares

Basic vs Diluted EPS

Basic = current shares; Diluted = assumes conversions

Antidilution rule

Ignore securities that increase EPS

EPS reporting

Report basic and diluted EPS on income statement

Form 10-K

Annual, audited

Form 10-Q

Quarterly, unaudited

Common stock rights

Vote, dividends, residual assets

Preferred stock features

Convertible, callable, redeemable, cumulative, participating

Treasury stock methods

Cost method and Par Value method

Cost method

Record treasury stock at cost

Par value method

Record treasury stock at par

Treasury stock facts

Contra-equity, not an asset, no gains/losses on IS

Dividend declaration date

Creates liability; decreases Retained Earnings

Dividend record date

No journal entry

Dividend payment date

Pay cash

Types of dividends

Cash, Property, Stock, Scrip, Liquidating

Small stock dividend

<20 - 25% record at Market Value

Large stock dividend

>20 - 25% record at Par Value

Small stock dividend entry

RE - Common Stock + APIC (at FMV)

Large stock dividend entry

RE - Common Stock (at Par)