Accounts Receivable Turnover
Net credit sales/average accounts receivable (Beg + end/2)
IFRS Interim reporting
not required for companies who prepare statements in accordance with IFRS
Level with lowest valuation purposes
Level 3
Presented with statement of CF in separate schedule
- Conversion of debt to equity (ex. bonds to common stock
- Acquisition of assets by incurring a mortgage; entering into a capital lease; issuing stock
- exchange of noncash assets or liabilities for other noncash assets or liabilities
users of prospective financial information
- general users with whom the responsible party is not negotiating directly
- the responsible party
- third parties with whom the responsible party is negotiating directly
Principal Market
market with greatest volume and level of activity
Reportable Operating Segment
Segment’s revenue, profit (or loss), or identifiable assets are 10% or more of the company’s total values
SEC form discloses info about material events
Form 8-K
SEC form annual filing
Form 8-K, Form 10-Q for quarterly filing
Gains and losses classified as…
can be classified as operating or nonoperating depending on the entity’s major ongoing or central operations.
Quick Ratio
(Cash +(net) receivables+marketable securities/ current liabilities
SEC S-K
SEC S-X
S-X - governs the form and content of financial states and financial statement disclosures
S-K - governs the form and content of non financial statement dsiclosures.
Cash paid to suppliers
CGS + (End. Inv - Beg Int)+ Beg AP - End AP)
Income approach for developing fair value measurements
using present value techniques to discount cash flows
monetary asset account vs. nonmonetary asset account
monetary asset account is fixed sometime in the future (loans to employees)
nonmonetary asset account - price change based on relative price levels in the future (merchandise inventory)
2 criteria required for incorporating items in IFRS income statement
it meets definition of an element and can be measured reliably
BEPS
(NI available to Common)/WA common shares outstanding
DEPS
(NI Available to common adjusted for effects of PCS)/WA common shares + shares issuable from PCS (potential common stock
how to calculate CAPITAL account
Beg cap,+ inv + inc - drawing = ending cap
Inventory Turnover
COGS(Sales - Gross Margin on Sales)/Average Inventory (Beg+end/2)
Beg inv = COGS + ending - Purchases.
current ratio
Current assets/current liabilities
dividend payout ratio
NI - dividend per share/earnings per share
COGS formula
Beg Inv + Puchases - End inv
Management approach
method used to determine what information to report for business segments
Working Capital
Current Assets + Current Liabilities
Book Value per Common Share
Common Stockholder’s equity / outstanding shares
AR Net method vs gross method
Net method after cash discount
if cash paid during discount period gross recognizes sales discount net doesn’t
If cash paid after 10 day discount period gross does not record te sales discount forfeited, but net does
Cash discount
Cash (DR
Sales discount
Accounts receivable (CR)
Returns and allowances
Sales returns and allowances (DR)
AR (CR)
Uncollectible accounts
allowance method is required under GAAP if uncollectible accounts a probable and estimable
Dire method is used when firm is unable to estimate uncollectible accounts
Allowance Method (uncollectible accounts)
period adjusting entry:
DR: Bad debt expense
Cr: allowance for doubtful accounts
write-off of uncollectible:
DR: allowance for doubtful accounts
CR: Accounts receivable
Recovery of accounts written off: Dr: Accts Rec CR: Allowance for doubtful accounts DR. Cash CR: Accts Rec
Fixed Overhead ratio
budgeted fixed overhead / budgeted direct labor hours
Periodic Inventory system
Physical inventory count is required.
Beging
Dr. Purchases (does not use inventory account)
Cr. Accounts payable
Paid delivery charges:
Dr. Transportation in
Cr. Cash
Returned damage defec:
DR. Accts pay
Cr. Purchases returns and allowances
Paid merch and received disc
Dr. AP
CR. Puchase discounts
Cr. Cash
Sold on account:
Dr. AR
Cr. Sales
After count, year end aadjus DR. Merch inv (ending) Dr. Purchases reutrns and Allow Dr. purchase discount Dr. COGS CR. Merchandise Inv (beg) Cr. Purchases Cr. Transportation in
Net purchases = Gross purchases + Transportation in
- Purchases Returns and allowance - Purchase Discounts
Beg Inv. + NET purchases = End Inv + COGS
Cash Flow assumption (inv)
Business entities are free to choose
specific Identification - being able to specifically identify cost of each inventory item and then total the individual cost of all inventory items
WA Cost-flow - (periodic system) (WA cost per unit = COGs Avail for Sale / # of units available for sale)
- end inv is equal to the # of units in end inven multiplied by WA Cost per Unit - COGS = # of units sold * WA Cost per unit
FIFO (First in - First out)- assumes end inv is composed of units of inventory most renently acquired. COGS is made up of the oldest merch. Reflecs the way most firms actually move inventory. (GAAP does not require this)
LIFO (last in - first out) - assumes end inv is composed of the oldest inventory layers. COGS is composed of the units of inventory most recently acquired (LESS RELIABLE THAN FIFO)
COGS in Periodic System
Beg Inv \+ Net Cost of purchases = goods avail for sale - ending invent = COGS