Acc 2 Final exam

Market value per share

Market Price ÷ Shares Outstanding

Earnings per share (EPS)

(Net Income – Preferred Dividends) ÷ Weighted Avg. Common Shares

Impact of transactions

Know how issuing stock, declaring dividends, or purchasing treasury stock affects assets, liabilities, and equity.

Dividends

Difference between cash dividends, stock dividends, and stock splits.

Bond Price

Present Value of Principal + Present Value of Interest Payments (use market rate).

Bond Interest

Face Value × Contract Rate (may be annual or semiannual).

Equity Method

Used when ownership is 20–50%; investor recognizes share of investee’s earnings.

Fair Value method

Used for insignificant influence (<20%).

Held-to-Maturity

Reported at amortized cost.

Available-for-Sale

Reported at fair value; unrealized gains/losses go to equity.

Trading Securities

Unrealized gains/losses go to income.

Balance Sheet Reporting

Trading → Current assets; AFS & HTM → Current or long-term depending on intent.

Cash Flow Sections

Operating, Investing, Financing.

Return on Total Assets

(Net Income + Interest Expense × (1 – Tax Rate)) ÷ Average Total Assets.

Direct Costs

Traceable to a product (e.g., DM, DL).

Indirect Costs

Shared across products (e.g., factory rent).

Total Manufacturing Cost

DM + DL + Applied MOH.

Contribution Margin (CM)

Sales – Variable Costs.

Break-even Point

Fixed Costs ÷ CM per Unit or CM Ratio.

Budgeting

Planning future financial goals.

Production Budget

Budgeted Sales + Ending Inventory – Beginning Inventory.

Direct Materials Variance

Includes Price and Quantity Variance: Total DM Variance = Price + Quantity.

Residual Income

Operating Income – (Minimum Rate × Average Assets).

Transfer Pricing

Transfer price determination when there is or isn't excess capacity.