F1 Flashcards

full set of financial statements

Balance Sheet

Income Statement

Statement of Cash Flows

Statement of Comprehensive Income

Statement of Changes in Owners Equity

classified balance sheet

Distinguishes current and noncurrent assets and liabilities

COGS, Insurance Expense, Deprecation Expense, Amortization Expense

Name the expense account for the following unexpired costs:

Inventory, Prepaid Insurance, Net BV of Fixed Assets, Unexpired Cost of Patents

Net Basis

Are gains and losses on disposal of assets shown on a:

Gross Basis: Report both the sale proceeds and net book value of disposed asset

or

Net Basis: Report difference between the sales price and the net book value of the disposed asset

Multi-Step Income Statement

Reports operating revenues and expenses separately from nonoperating revenues and expenses and other gains and losses

Single Step Income Statement

Total expenses are subtracted from total revenues without distinguishing between operating and nonoperating

Components of Gain/Loss on Discontinued Operations

Impairment Loss

Gain/Loss from actual operations

Gain/Loss on disposal

Accounting for subsequent FV increase of a discontinued component

Gain = FV - Cost to sell, but not in excess of previously recognized loss

Gain is reported in period of increase

Strategic Shift and major effect on entities operations and financial results

Requirements for operation to be able to be reported in discontinued operations

Operating transactions

Forward exchange contracts

Two types of foreign currency transactions

Operating transactions

Importing, Exporting, Borrowing, lending, and investing transactions

Forward exchange contracts

Agreements to exchange two different currencies at a specific future date and at a specific rate

Included in determining net income

Where FCT gains and losses are reported in the financial statements

Comprehensive Income

Change in equity (net assets) that results from transactions and other events or circumstances from non owner sources.

Comprehensive income disclosures

Tax effects of each component included in OCI

Changes in the accumulated balances of OCI

Total accumulated OCI

Reclassification adjustments between OCI and net income

2 formats for reporting comprehensive income

Statement of comprehensive income

Statement of income followed by separate statement of comprehensive income

4 items OCI

Pension Adjustments

Unrealized G/L on AFS debt securities and hedges

Foreign Currency translation adjustments and G/L on certain FC transactions

Instrument specific credit risk for liabilities and their changes in FV

Income available to common shareholders / WACSO

Basic EPS formula

Reporting requirements for EPS

On face of income statement with equal prominence for basic and diluted amounts for both net income and Income from continuing operations

Per share amounts for discontinued operations can be reported on the face or the income statement or disclosed in the notes

10-K

Filled annually and Includes:

Summary of Financial Data

MD&A

Audited Financial Statements

10-Q

Filled quarterly and includes:

Unaudited financial statements

Interim MD&A

Certain Disclosures

Common Stock Properties

Residual ownership interest

Rights: Voting, Dividend, & share in distribution of assets upon company liquidation (after creditors and preferred stockholders claims)

Preferred Stock Properties

Convertible, Callable

Redeemable

Dividends can be cumulative and/or participating

Cost method

Treasury stock is debited at cost of shares repurchased

More common method of accounting for treasury stock

Legal Method

Treasury stock is debited at par value of shares repurchased

Important notes about repurchased treasury stock

No G/L is reported on the income statement

Income and retained earnings may never increase by the transaction

APIC-TS account used to absorb gains and losses

Treasury stock is not an asset

Cash and property dividends are not paid on treasury stock

Stock dividends my be paid on treasury stock

Cost Method Process

Recorded, carried , and reissued at reacquisition cost

Gains are credited to APIC-TS

Losses are charged against any existing gain amounts, then retained earnings

Reported as a deduction from total stockholders equity

Legal Method Process

Recorded at par value with cost of stock that is in excess of par value recorded as a deduction to APIC-TS and then from Retained Earnings after APIC-TS has been depleted

Report as deduction from capital stock

Date of Declaration

Date cash dividend becomes a liability and reduces retained earnings

Date of Record

No journal entry, memorandum entry only

Date of Payment

Date cash dividends are actually paid

Cash

Liquidating

Property

Script

Stock

5 Types of Dividends

Script Dividend

Promise to pay a dividend in the future

Stock Dividend

Capitalize part of retained earnings, increasing legal capital

Small Stock Dividend

<20%-25%

Accounting for Small Stock Dividend

Fair value of additional shares issued at date of declaration is transferred from retained earnings to capital stock and APIC

Accounting for Large Stock Dividend

Par value of additional shares issued is transferred from retained earnings to capital stock