Deck11 Flashcards Preview

CPA - FAR > Deck11 > Flashcards

Flashcards in Deck11 Deck (23):
1

How to figure the number of days in the Operating Cycle (Approximate)

# of days sales in inventory + # of days sales in receivables

2

Successful "Leverage" is used when it can borrow at a particular rate of interest and then:

Make more money for its stockholders(contributed capital) than it has to pay back.

3

Book Value Per share =

Total owners equity(less treasury stock)/Number of Shares Outstanding

4

Return On Assets (ROA)=

Net Income/Average Assets

5

Profit Margin =

Net Income/Sales

6

When using ratios, when do you use averages for balance sheet accounts?

When they are being measured against income statement accounts.

7

Return on Equity uses (a) Common Stock (b) Preferred Stock (c)both

(a)Common Stock only ROE=NI/Average Common Stock

8

Earning Per Share (EPS) =

NI-Preferred Stock Div/(Weighted Average Common Stock Outstanding)

9

Price-Earnings Ratio (PE Ratio) =

Stock Price Per Share/EPS

10

Debt-Equity Ratios = Leverage Ratios Use the main accounting equation to figure these out

A = L + E - Use the equation to organize your thoughts and solve problems on the CPA exam

11

When using Cash Basis of Accounting, which what title should "Income Statement" be replaced with?

Statement of Cash Receipts and Cash Disbursements

12

The modified cash basis of accounting does not employ any of the elements of accrual accounting? T or F

False

13

When using the Income Tax Basis for Accounting some things are recognized that would not be recognized on Income Tax Statements. T or F

T - eg. Life Insurance Proceeds, Life Insurance Premiums

14

For personal financial statement, Assets and liabilities should be measured at:

Fair Value(estimated current amount)

15

Which of the following is/are included in a personal financial statement? Income Statement, Balance Sheet, Statement of Cash Flows

Balance Sheet

16

On personal financial statements, stock(asset), stock should be valued at _________.

Fair Value (market) - Not purchase price, and do not include dividends received

17

When figuring personal Net Worth, should you include Net Income?

No

18

On personal financial statements, estimated income taxes on the amount of Current Value of Tax Basis Values should be reported where?

Separate line item between liabilities and net worth

19

On a personal financial statement, the amount a person has "vested" means:

The amount the person has a claim on. Contributions from an employer (401K) are not considered "vested" because the person does not have a claim on them.

20

Life insurance policies should be reported at:

Cash surrender value - Any loans against it

21

What does the Private Company Council (PCC) Do?

Work with FASB to set Private Company accounting standards.

22

How does the PCC set standards?

Relevance vs. Cost Benefit By weighing the Relevance of the information vs. the Cost Benefit

23

Under liquidation basis of accounting, are Notes Payable valued at the amount of cash expected to be paid or received?

No. Liabilities are measured under GAAP and are not written as "expectations" unless forgiven.