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F2 Flashcards

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1
Q

The contents of the Summary of Significant Accounting Policies note to the financial statements.

A

Measurement bases used in preparing the financial statements

Specific accounting policies and methods used

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2
Q

What are the U.S. GAAP disclosure requirements for risks and uncertainties?

A

Nature of operations
Use of estimates in preparing the financial statements
Significant estimates
Current vulnerability due to certain concentrations

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3
Q

What is a subsequent event and what are the two categories of subsequent events?

A

An event or transaction that occurs after the balance sheet date but before the financial statements are issued or are available to be issued

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4
Q

Recognized subsequent events -

A

provide additional information about conditions that existed at the balance sheet date

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5
Q

Nonrecognized subsequent events

A

provide information about conditions that occurred after the balance sheet date and did not exist on the balance sheet date

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6
Q

Fair Value

A

The price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date

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7
Q

Valuation techniques that can be used to measure the fair value of an asset or liability

A

Market approach
Income approach
Cost approach

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8
Q

Market Approach

A

Uses price and other relevant information about market transactions involving identical or comparable assets or liabilities to measure fair value

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9
Q

Income approach

A

Converts future amounts, including cash flows or earnings, to a single discounted amount to measure the fair value of assets or liabilities

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10
Q

Cost approach

A

Uses current replacement cost to measure the fair value of assets

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11
Q

Level 1 Input

A

Highest priority

quotes prices in active markets for identical assets or liabilities

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12
Q

Level 2 Input

A

inputs other than quoted market prices that are directly or indirectly observable for an asset or liability

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13
Q

Level 3 Inputs

A

Lowest priority
unobservable inputs for the asset or liability that reflect the entities assumptions and are based on the best available information

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14
Q

Four required disclosures for segments of an enterprise

A

Operating segments
Products and services
Geographic areas
Major customers

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15
Q

10% size test

A

10% of revenue, assets, or profit/loss

If met, reportable segment

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16
Q

75% Test

A

75% of the total consolidate revenue of the entity

Only includes external revenues

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17
Q

Disclosure requirements for reportable operating segments

A 
Must report:
Identifying factors 
Products or services
Profit/loss details
Asset details
Measurement criteria 
Reconciliations
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18
Q

Form 10-K

A

Filed annually

Summary of financial data, MD&A, audited

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19
Q

Form 10-Q

A

Filed quarterly

Unaudited financial statements, interim MD&A, certain disclosures

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20
Q

Form 11-K

A

Employee benefit plans

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21
Q

Form 20-F

A

Non U.S. (10-K) annual report

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22
Q

Form 40-F

A

Canadian (10K) annual report

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23
Q

Form 6-K

A

Similar to 10-Q

filed semiannually by foreign private issuers

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24
Q

Form 8-K

A

Major events

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25
Forms 3, 4, and 5
10% ownership files
26
Regulation S-X
sets forth the form and content of and requirements for interim and annual financial statements to be filed with the SEC 2 yrs BS 3 yrs IS and Statement of Cash flows
27
Guidelines for interim reporting
same accounting principles used in most recent annual report Allocate expenses to the interim period benefited Revenues are recognized in the period in which they are earned and realized or realizable A total for comprehensive income in condensed FS of interim periods
28
General guidelines for OCBOA financial statement presentation:
Different titles from accrual basis financial statements Required financial statements are the equivalent of the accrual basis balance sheet and income statement Financial statements should explain changes in equity accounts A statement of cash flows is not required Disclosures should be similar to GAAP financial statement disclosures
29
Working Capital
= Current assets - Current liabilities
30
Current ratio
= current assets/current liabilities
31
Quick ratio
[Cash and cash equivalents + ST marketable securities + Receivables(Net)]/CL
32
AR Turnover
Sales / Avg AR (net)
33
Days Sales in AR
Ending AR (net) / [Sales(net)/365]
34
Inventory turnover
COGS / Avg. Inv
35
Days in inventory
Ending inventory / [COGS/365]
36
AP Turnover
COGS / Avg. AP
37
Days of Payables Outstanding
Days sales in AR + Days in Inv. - Days of payables outstanding
38
Asset turnover
Sales / Avg. Total Assets
39
Profit Margin
Net income / Sales
40
ROA
Net Income / Avg. total assets
41
Dupont ROA
Profit Margin x Asset Turnover
42
Cash Conversion Cycle
Days sales in AR + Days in inv. - Days of payables outstanding
43
Return on Equity
Net Income / Avg. Total Equity
44
Return on Sales
Income before int. income, int. exp., taxes / Sales(net)
45
Gross (Profit) Margin
Cash flows from ops / Current liabilities
46
Debt-to-Equity
Total liabilities / Total equity
47
Total Debt Ratio
Total liabilities/Total Assets
48
Equity Multiplier
Total Assets / Total Equity
49
Times Interest Earned
Income before int. exp. & taxes / Int. Exp
50
EPS
Income available to common shareholders / weighted avg. common shares outstanding
51
Price earnings ratio
Price per share / Basic earnings per share
52
Dividend payout
cash dividends / Net Income
53
Working Capital
CA - CL
54
Working Capital Turnover
Sales / Avg. Working Capital
55
In creating a new partnership interest with an investment of additional capital, what three methods can be used?
Exact method Bonus method Goodwill method
56
Exact method (partnerships)
The purchase price equals the BV of the capital account purchased No adjustment to the existing partners' capital accounts No goodwill or bonus
57
Bonus method (partnerships)
New partner's capital account = (A + B + C) x C's percentage ownership Excess of new partner's contribution over capital interest received is a bonus to old partners Excess of capital interest received over new partners contributions is a bonus to the new partner
58
Goodwill method (partnerships)
Goodwill is recognized based on the total value of the partnership by the new partner's contribution Goodwill is shared by the existing partners using the agreed profit/loss ratio
59
Bonus method (withdrawal of partner)
The difference between the balance of the withdrawing partner's capital account and the amount that person is paid is the amount of the bonus The bonus is allocated among the remaining partners' capital accounts in accordance with their remaining profit and loss ratios
60
Goodwill method of withdrawal of a partner
The partner may elect to record the implied goodwill in the partnership based on the payment to the withdrawing partners. The amount of the implied goodwill is allocated to all of the partners in accordance with their profit and loss ratios After allocating goodwill, the balance in the withdrawing partners' capital account should equal the final distribution to the withdrawing partner
61
In liquidating a partnership, what is the order of preference?
1. creditors 2. loans and advances to partners 3. capital accounts to partners All losses must be provided for before disposal, that is, maximum potential losses before distribution of cash

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