Chapter 4 Flashcards by Reichelle Dignadice

info of basic FS (nature)

simple and complex

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structured representation of the P and Fperf of an entity

Financial Statements

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FP of an entity; as of a given reporting date; contains asset, liab and equity

SFP

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for a given reporting period; contains profit or loss and OCI

SCI

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historical changes in cash and cash equivalents; during a reporting period

SCF

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changes in equity & PnL, OCI and transactions with owners of the enterprise

SCOE

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accounting policies adopted; schedules to support the balances; other info relevant to the user & is not appropriately presented on the face

Notes to FS

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FS portrays

economic activities, result of the economic act, and representation of the company’s management

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specific principles, bases, conventions, rules and practices applied by an entity in preparing FS; should be in compliance with the FR framework

Accounting Policies

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FS, except SCF, are presented applying the accrual basis

True

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balance sheet; as of a given date, ALOE

Statement of Financial Position

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formal presentation of the accounting equation

SFP

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PAS 1: Presentation of FS (A&L) - How?

(1) current and non-current and (2) liquidity

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characteristics of current assets

to be realized, intended for sale/consumption in the entity’s NOC, purpose of trading and realized within 12 mos after RP, and cash and CE, unless restricted from being exchanged/used to settle a liab at least 12 mos from end of RP

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presumed to be unrestricted

Cash

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it is realized in the entity’s NOC

Trade Receivables (Notes and Accounts)

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sold in the entity’s NOC

Inventories

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consumed in the entity’s NOC

Prepaid Expenses

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purpose of trading

Financial Asset at FV through PnL

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investment in shares of stock; inv in debt insurance of other entities

FVTPL

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dividends receivable, interest receivable, advances to officers due currently and realized within 12 mos after the RP

Non-trade receivable collectible within 12 mos

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characteristics of current liab

settled in the entity’s NOC, purpose of trading, due to be settled within 12 mos after RP, does not have an unconditional right to defer the settlement of liab for at least 12 mos after RP

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settled in NOC

Trade Payable (Accounts and Notes)

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settled in NOC

Accrued Expenses

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settled within 12 mos after RP

Dividends Payable

earned within the NOC

Unearned Revenues

does not have an unconditional right to postpone settlement of obli

Long term notes payable due within 12 mos, maturity date is extended for 5 years from OG

land, building, equipment, furniture & fixtures, and tools

PPE

patents, franchise, trademarks, and customer list

Intangible Asset

land & building held for appreciation in value and rental

Investment Property

long-term advances to officers and key employees and non-trade receivables (collectible after 12 mos)

Fin. A not expected to be realized in cash in the entity's NOC or within 12 mos after RP

due beyond 12 mos from end of RP

Long-term Notes Payable

due beyond 12 mos after RP

Bonds Payable

due within 12 mos after RP but term is extended on a long-term basis and negotiation is completed before the end of RP

Long-Term Notes Payable

presentation depends on the form of bus org according to ownership

Equity

capital account of the proprietor and balance of the sum of cap & drawing accounts (drawing are not permanently transferred to cap) and each partner's equity is presented separately

SFP - sole proprietorship & partnership

according to source

SFP - corporation

contributed capital, retained earnings, cumulative OCI

SHE

share capital = ordinary and preference share

Contributed Capital

cc in excess of the legal capital

Share Premium/Add Contributed Capital

cumulative profits earned - dividends declared

Retained Earnings

change in equity arising from non-owner transactions that do not pass through PnL but are taken to OCI

Cumulative OCI

revaluation surplus, unrealized G/L, FOREX translation G/L, actuarial G/L on defined benefit employee retirement plans

Cumulative OCI

3 forms of SFP

account form, report form and financial position form

big T-account; assets (left) and liab & equity (right)

Account Form

continuous format of presenting all 3 elements

Report Form

it emphasizes the working capital (net assets = equity)

Financial Position Form

Working Capital

current assets - current liabilities

performance of an entity; for a given RP; income and expenses

SCI

PnL section (income statement); OCI

Fin. Perf of an entity

2 forms of SCI

one statement form and two-statement form

PNL and OCI

One Statement Form

1 statement for PNL and 1 statement for OCI (PNL -1st and OCI)

Two-Statement Form

merchandising/manufacturing; COGS, selling/marketing, GenAd and other OPEX

Function of Expense Method

service; presented based on account names in edger; salaries, supplies, insurance, depreciation, amortization and OPEX

Nature of Expense Method

2 forms of Expenses

function of expense method and nature of expense method

inflows & outflows of C & CE

SCF

3 kinds of activities in SCF

operating, investing and financing

short-term placement of cash; time deposits maturing within 90 days/less; debt securities maturing 90 days/less from date of acquisition

Cash Equivalents

determination of income in PnL; collections from customers

Operating Activities

payment to suppliers, payment to employees for wages and salaries, payment to gov for taxes and payment to lenders for interest

Operating Activities

transactions affecting assets not normally identified with normal operating cycle

Investing Activities

earnings per share are required: basic and diluted

Large/Publicly accountable entities

profit earned by a holder of 1 OSC

Earnings per Share

profit is reduced by?

PS if cumulative and PS is non-cumulative

whether PS is declared or not

Cumulative

div on PS that has been declared during the period

Non-cumulative

profit only in the numerator excluding the OCI

True

granting of non-trade loans & collecting them; acquiring and disposing inv in non-current fin assets; acquiring and disposing PPE and intangible assets

Investing Activities

non-trade liab and SHE; payment of dividends; issuance of debt; issuance of share capital

Financing Activities

repayment of settlement of debt obligations; purchase of treasury shares

Financial Assets

non-cash act that significantly affect assets & liab are not presented on the face but on the notes

True

2 methods of presenting CF

direct and indirect method (provided that presentation is consistent from one period to another)

enumerates major classes of gross operating cash receipts and payments

Direct Method

made based on income statement accounts and changes in account balances in SFP

Reconstructions

reconciling PNL before income tax to operating cash flows

Indirect Method

income and expenses not involving cash receipts and cash payments

Adjustments

movement of each equity component during a RP; one column for each equity component; beg balance of each equity account is reconciled to the end balance

SCOE

elements of notes to FS

basis for presentation of FS, supporting sched for line items presented on the face, and other disclosures

Basis for presentation of FS

summary of significant acco policies

Supporting sched for line items presented on the face

details of the balance of inventories, PPE and intangible assets

contingent liabilities; contractual commitments; events after the RP (relevant)

Other disclosures

affect the amounts or classification of elements; required additional info to be presented in the notes

Effect of events after the RP

events, favorable & unfavorable, that occur bet the end of the RP and the date when the FS are authorized for issue

Events after the RP

management of the enterprise approves and authorizes the issue of the FS

Date of Issuance

BoD authorizes the FS

Corporate form of org

2 types of events after RP

adjusting and non-adjusting events

conditions that existed at the end of RP

Adjusting Events

indicate of conditions that arose after the RP

Non-Adjusting Events

reclassify the info and recognize a FS element that was not previously recognized

Adjusting Events

related to a condition different from the condition as of the RP

Non-Adjusting Events

may be ignored if not considered significant and will not affect the evaluation of the user

Non-Adjusting Events

material & non-disclosure could influence the economic decision of the users = disclosed (nature and estimate)

Non-Adjusting Events