accounting exam 3

Operating Cash Inflows

sale of goods or services, collection of interest and dividends

Operating Cash Outflows

purchase of inventory, payment for operating expenses, payment of interest, payment of income taxes

Investing Cash Inflows

sale of investments, sale of LTAs, collection of notes receivable (principal, not interest)

Investing Cash Outflows

purchase of investments, purchase of LTAs, lending with notes receivable

Financing Cash Inflows

issuance of bonds, notes payable, stock

Financing Cash Outflows

repayment of bonds or notes payable (principal), acquisition of treasury stock, PAYMENT of dividends

Noncash Investing and Financing

purchase of LTAs by issuing debt or stock, exchange of LTS, conversion of bonds payable into CS

FV single amount

PV (1+i)^n

PV single amount

FV / (1+i)^n

interest expense

CARRYING value (with NP/LL/Discount or Premium on Bonds Payable) * interest rate

principal reduction (NP, LL, Discount or Premium on Bonds Payable)

monthly payment - interest expense

Installments / Notes Payable

Cash

• NP

Interest Expense

NP

• Cash

(interest expense recalculated with new CV, cash same)

Lease initial price

PV annuity

Leases (after PV initial price)

Asset

• Lease Payable

Interest Expense

Lease Liability

• Cash

Bonds - Face Amount

Cash

• BP

Interest Expense

• Cash

(each issuing date)

BP

• Cash

Bonds - Discount

Discount - debit then credit, + to CV, CV and interest expense UP

Cash

Discount

• Bonds Payable

Interest Expense

• Discount

• Cash

BP

• Cash

Bonds - Premium

Premium (not DD), credit then debit, - from CV, CV and interest expense DOWN

Cash (Paid) - bonds

face amount * stated rate

Interest Expense - bonds

CV (w plugs) * market rate

Bond Retirement before Maturity Gain/Loss

gain/loss = CV of bond - price paid for equipment

Bonds - Issue Price

MARKET RATE

PV maturity payment

+ PV annuity interest payments (calc step 1 with stated rate)

Debt to equity ratio

Total L / Total SE

ROA

NI / Avg Total Assets

Times Interest Earned Ratio

Net Income + Interest Expense + Tax expense / Interest Expense

Common Stock (and Preferred) Issuance

Cash

• Common Stock

• APIC (if par)

for preferred dividends

Dividend = shares x % x par value

Treasury Stock (APIC like gain/loss)

Buy Back

Treasury Stock

• Cash

Reissue ABOVE COST (~gain)

Cash

• Treasury Stock

• APIC

Reissue BELOW COST (~loss)

Cash

APIC

• Treasury Stock

Large Stock Dividends

par value

Stock Dividends

• Common Stock

Small Stock Dividends

market value

Stock Dividends

• Common Stock

• APIC

Return on Equity

NI / Avg SE

Dividend yield

Dividends per share / stock price

Earnings per share

NI - Dividends on preferred stock / Avg shares of common stock outstanding

Price earning ratio

Stock price / earnings per share