Balance Sheet Flashcards
(14 cards)
What is Networking Capital?
Net Working Capital is a measurement of a company’s Liquidity which tells us whether or not a company has enough assets to pay off it’s short term Liabilities/ Obligations.
What is Retained Earnings?
Retained Earnings is earnings accumulated by the company since inception that have not been paid to shareholder’s.
Retained earnings is increased by Income and Decreased by Losses and Dividends paid.
What is GAAP?
GAAP is a general purpose framework that encompasses the conventions, rules, and procedure necessary to define accepted accounting practices at a particular time and is maintained by FASB.
What is Deferred Tax Liability and how is it classified? LT or ST Liability?
Deferred Tax Laibility are taxes that are not paid and due in the future. ALL Deferred Tax Liabilities are Classified as LONG TERM.
How are Accrued Expenses classified?
Accrued expenses is a Current Liability.
What is another name for the Balance Sheet?
The Balance sheet is also known as The Statement of Financial Position.
What is “Replacement Cost?”
Replacement Cost is the amount required to obtain an Asset that is the same as or equivalent to an existing Asset.
-Meaning the replaced asset should be able to perform the EXACT FUNCTIONS as the Original Asset.
Under the Accrual Basis of Accounting, when are Revenues and Expenses recognized?
Under the Accrual Basis of Accounting, Revenues are recognized when Earned and Expenses are recognized when Incurred.
At what Value are Common Stock and Preferred Stock recorded when issued by a Corporation?
When a corporation issues Common Stock or Preferred Stock, it is recorded at Par or Stated Value under Stockholder’s Equity.
If FV of an AFS is lower than or greater than the Original Cost, what Statement are they reported on and where on that Statement?
If the FV of the AFS is lower than ORIGINAL COST, the difference is credited to AFS SECURITIES - UNREALIZED LOSSES and is reported in OCI in Stockholder’s Equity on the Balance Sheet.
If the FV of the AFS is greater than ORIGINAL COST, the difference is debited to AFS SCEURITIES - UNREALIZED GAINS and is reported in OCI in Stockholder’s Equity on the Balance Sheet.
When are ACCRUALS used? When are DEFERRALS used?
ACCRUALS are used when an economic event occurs (income earned or expense incurred) BEFORE the receipt payment of CASH. Examples include AR and AP
DEFERRALS are used when CASH is PAID or RECEIVED BEFORE the economic event occurs. Examples include PREPAID INSURANCE and UNEARNED RENT REVENUE.
How are Unmailed Checks reported when adjusting the Balance Sheet? Why?
Cash (current assets); because an unmailed check is still in the possession of the Mailing Office and they have the ability to redirect or NOT SEND the check to its destination.
How are Cash Overdrafts reported when adjusting the Balance Sheet?
Cash overdrafts are reported as a Current Liability or netted against other accounts at the same bank.
What is Common Stock and Where does it belong on the Balance Sheet?
Common Stock is the value of a company’s Shares held by Common Shareholders (can be individuals or entities). It belongs in the Stockholder’s Equity section of the Balance Sheet.
