Far 2 Flashcards
(28 cards)
Examples of input methods to recognize revenue include, resource ___________, ________ hours expended and costs ________. Milestones achieved is an example of an ________ method of revenue recognition
consumption; Labor; incurred; output
financial statements of all prior periods should be restated when there is a change in entity such as resulting form , change in companies in _____________ FS and consolidated FS vs. previous individual financial statements
Consolidated
change from ________ basis of accounting will be reported as a prior period adjustment resulting from the correction of an _______ on the FS
accrual; error
when depreciation expense is incorrectly recorded in Yr 1 for the full expense of the asset when it should have been depreciated at straight line, the correction would be to _______ the full amount of the asset, then credit _________ ___________ for the years that have passed, and retained earnings of the leftover the the full expense would have erroneously reduced Net income
debit; accumulated depreciation;
when there is acct principle is inseparable from a change in accounting estimate the effect should be reported as a _________ of income from __________ operations
component; continuing
summary of significant accounting policies should disclose policies such as basis of ___________, _________ methods, revenue ____________, accounting principles and methods
consolidation; depreciation; recognition
only a footnote disclosure is required for a “__________ _________” loss and nature of contingency should be disclose
reasonably possible
subsequent events occur after the balance sheet date but before the financial statements are __________. A subsequent event will only be recognized on the FS if it relates to a condition that __________ as of the balance sheet date.
issued; existed
Cash basis to accrual basis conversion: Add: increases in current ______ ;Subtract: _________ in current assets; Add: Decreases in _________ liabilities; Subtract: _________ in current liabilities
assets; decreases; current; increases
Conversion from cash basis revenue to accrual basis revenue:
add: _________ accounts receivable; ___________beginning accounts __________; Subtract __________ unearned (or deferred) revenue
Add ________ unearned (or deferred) revenue
Ending; Subtract; Receivable; ending; beginning
Net profit margin = Net ______ / Net _______
Income; Sales
Inventory turnover = Cost of goods sold/ Average ________
inventory
Debt to equity formula
Total Liabilities / Total equity
Return on equity = Net income / _______ _____ _________
average total equity
Return on assets = Net ________/ Average total ________
income; assets
Current Ratio = Total current __________/ Total Current ___________
Assets; Liabilities
Quick Ratio = Cash and cash equivalents + short-term __________ securities + _________ (net) / Current liabilities
marketable; Receivables
accounts receivable turnover = Sales (net) / average accounts _________ (net)
receivable
average inventory turnover = Cost of goods sold / average ___________
inventory
Days in inventory = Ending _________ / (Cost of goods sold / 365)
Inventory
Calculate cost of goods sold = beg inv + ______ = goods available for sale - _______ inventroy = COGS
When making a change to LIFO, the cumulative effect of the change is reported on the financial statements. (T or F)
FALSE, it is typically considered impracticable to calculate the effect as LIFO data is usually not readily available
Change in depreciation method is considered a change in __________ and change in Accounting ___________ therefore does not need to be reflected in beginning retained earnings and accounted for prospectively
PRINCIPLE; ESTIMATE
natural balance of allowance for doubtful accounts
CREDIT
