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Flashcards in Conceptual Framework and Financial Reporting Deck (35):
1

Accounts Receivable Turnover

Net credit sales/average accounts receivable (Beg + end/2)

2

IFRS Interim reporting

not required for companies who prepare statements in accordance with IFRS

3

Level with lowest valuation purposes

Level 3

4

Presented with statement of CF in separate schedule

1. Conversion of debt to equity (ex. bonds to common stock
2. Acquisition of assets by incurring a mortgage; entering into a capital lease; issuing stock
3. exchange of noncash assets or liabilities for other noncash assets or liabilities

5

users of prospective financial information

1. general users with whom the responsible party is not negotiating directly
2. the responsible party
3. third parties with whom the responsible party is negotiating directly

6

Principal Market

market with greatest volume and level of activity

7

Reportable Operating Segment

Segment's revenue, profit (or loss), or identifiable assets are 10% or more of the company's total values

8

SEC form discloses info about material events

Form 8-K

9

SEC form annual filing

Form 8-K, Form 10-Q for quarterly filing

10

Gains and losses classified as...

can be classified as operating or nonoperating depending on the entity's major ongoing or central operations.

11

Quick Ratio

(Cash +(net) receivables+marketable securities/ current liabilities

12

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.

13

Cash paid to suppliers

CGS + (End. Inv - Beg Int)+ Beg AP - End AP)

14

Income approach for developing fair value measurements

using present value techniques to discount cash flows

15

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)

16

2 criteria required for incorporating items in IFRS income statement

it meets definition of an element and can be measured reliably

17

BEPS

(NI available to Common)/WA common shares outstanding

18

DEPS

(NI Available to common adjusted for effects of PCS)/WA common shares + shares issuable from PCS (potential common stock

19

how to calculate CAPITAL account

Beg cap,+ inv + inc - drawing = ending cap

20

Inventory Turnover

COGS(Sales - Gross Margin on Sales)/Average Inventory (Beg+end/2)

Beg inv = COGS + ending - Purchases.

21

current ratio

Current assets/current liabilities

22

dividend payout ratio

NI - dividend per share/earnings per share

23

COGS formula

Beg Inv + Puchases - End inv

24

Management approach

method used to determine what information to report for business segments

25

Working Capital

Current Assets + Current Liabilities

26

Book Value per Common Share

Common Stockholder's equity / outstanding shares

27

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

28

Cash discount

Cash (DR
Sales discount
Accounts receivable (CR)

29

Returns and allowances

Sales returns and allowances (DR)
AR (CR)

30

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

31

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

32

Fixed Overhead ratio

budgeted fixed overhead / budgeted direct labor hours

33

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

34

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)

35

COGS in Periodic System

Beg Inv
+ Net Cost of purchases
= goods avail for sale
- ending invent
= COGS