F1

Question 1

10k filing requirements

Answer 1

annual filing
60 - large accelerated
75 - accelerated
90 - all other

Question 2

10Q filing requirements

Answer 2

quarterly filing
40 - large accelerated & accelerated
45 - all others

Question 3

8k filing requirements

Answer 3

changes when material events occur

Question 4

True of False: Revenue from discontinued operations are included in income statement revenues

Answer 4

False; Discontinued operations are included in discontinued operations

Question 5

what is stockholders’ equity? / how do you calculate?

Answer 5

the owner’s claim of residual assets (A-L) / toal shareholder’s equity (A-L) - preferred stock outstanding (greater of call price & par value) - cumulative preferred dividends

Question 6

book value per common share

Answer 6

common shareholders’ equity / common shares outstanding (issued - repurchased)

Question 7

Retained earnings = ?

Answer 7

Net income/loss - dividends declared (cash, property @ fv, stock +/- prior year adjustments net of tax (error corrections) +/- accounting changes reported retrospectively net of tax (usually lifo or depreciation change)

Question 8

Treasury stock - cost method

Answer 8

gain/loss calc upon reissuance

original issuance:
cash (shares @ purchase price)
common stock (shares @ par)
APIC - CS (excess

Buyback:
Treasury stock
Cash

Reissuance above cost
Cash (shares @ par)
Treasury stock (shares @ cost)
APIC - TS (gain/excess)

Reissuance below cost:
Cash (shares @ par)
APIC - TS
Retained earnings (plug/excess)
Treasury stock

Question 9

Treasury stock - legal/par method

Answer 9

Gain/loss immediately upon repurchase

original issue:
Cash (shares @ par)
Common stock (shares @ par)
APIC - CS (excess)

Buyback above purchase price:
treasury stock (shares @ par)
APIC - CS
Retained earnings (loss)
Cash (shares @ cost)

Buyback below purchase price
treasury stock (shares @ par)
apic - cs (reversal)
cash (shares @ par)
apic - ts (‘gain’)

Reissuance
cash (shares @ price)
treasury stock (shares @ par)
APIC - CS (plug)

Question 10

treatment of property dividends

Answer 10

adjusted to fair value (gain/loss to net income) on date of declaration, recorded at FV at declaration date to retained earnings

Question 11

treatment of stock dividends

Answer 11

no cash outflow, no dividend income to owner, increases amount of shares owned

Question 12

donated treasury stock

Answer 12

no change in total stockholders’ equity, common shares outstanding decreases, book value per share increases

Cash
APIC
donated treasury stock

Question 13

How should you distribute cash dividends to shareholders?

Answer 13

1. Find capitalization of each group
   # of shares x par value x dividend rate
2. allocate initial capitalization then excess based on relative capitalization
   dividend received / total dividend declares = relative cap

@ declaration:
Retained earnings
Dividend payable

Question 14

nominal accounts

Answer 14

temporary accounts that start at 0 each year

Question 15

freight out

Answer 15

selling expense

Question 16

freight-in

Answer 16

COGS

Question 17

profit margin

Answer 17

net income / sales

Question 18

net realizable value

Answer 18

selling price - cost to sell

Question 19

comprehensive income = ?

Answer 19

Net income + OCI
= operating income - interest expense - inc taxes - discontinues ops + OCI

Question 20

Other comprehensive income

Answer 20

PUFI
Pension adjustments
Unrealized gain/loss from AFS securities/bonds)
Foreign TRANSLATION adjustment
Instrument specific credit risk

Question 21

AOCI

Answer 21

OCI & PUFI to date as of beg of year +/- PUFI in CY =?- reclassification adjustments

Question 22

where are transaction gains/losses reported?

Answer 22

income statement

Question 23

where are translation gains/losses reported?

Answer 23

OCI/PUFI

Question 24

basic eps

Answer 24

net income available to common shareholders (NI - cumulative pref dividends) / weighted average # of common shares outstanding (wacso)

Question 25

diluted eps

Answer 25

(income available to common shareholders + interest on dilutive shares net of tax) / WACSO

Question 26

antidilutive

Answer 26

actions (options) increase basic EPS

Question 27

how are dividends in arrears recorded?

Answer 27

disclosure only

Question 28

where is depreciation expenses included on the income statement?

Answer 28

selling, general, and administrative expenses

Question 29

statement of financial position (balance sheet)

Answer 29

financial risk, short term liquidity, long term solvency > potential growth, performance at a point in time

Question 30

statement of earnings (income statement)

Answer 30

performance & operating risk (REGL- Revenues, Expenses, Gains, Losses), performances for a period of time

Question 31

statement of cash flows

Answer 31

why cash changed!

Question 32

statement of owners/stockholders equity

Answer 32

why equity changed (could be change in capital, retained earnings, or AOCI)

Question 33

income from continuing operations =

Answer 33

operating income (revenue & expenses) + nonoperating income (gains & losses)

Question 34

areas to report with discontinued operations

Answer 34

• impairment loss (to be written down)
• Results of operations (net income/loss from operations)
• Gain or loss on sale (to be reported in the period in which it occurs)

Question 35

where is AOCI reported?

Answer 35

in the balance sheet as an item of equity following retained earnings as a reduction of equity