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Flashcards in General Purpose Financial Statements Deck (102)
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1

What types of information can you get from the Balance Sheet?

Assess the entity's strengths and weaknesses, especially risk and the allocation of assets

2

What is a measurement base?

The attribute of an account being measured and reported

3

Current Ratio

Current Assets / Current Liabilities

4

Quick or Acid Test Ratio

(Cash +/- Short Term Investments +/- AR ) / Current Liabilities

5

What is a contra account?

It has the opposite balance of the associated account. It can be a debit or credit (Subtracted from associated account)

6

What is an adjunct account?

Has a balance that is the same as the associated account in terms of debit/credit. (Added to associated account)

7

What is a valuation account?

It is an account that is used to increase or decrease the book value of an item to a measure of current value

8

What are the three important valuations for a form?

1- Total OE or Net Assets
2 - Market Value of new identifiable assets
3- Total value of the firm

9

What is the accounting cycle?

1. Analyze relevant source documents and record journal entries in a journal.
2. Post the information from the journal to the accounts in the ledger
3.Record adjusting journal entries at the end of the accounting period.
4. Prepare trial balances.
5. Prepare the income statement, balance sheet and statement of cash flows
6. Close the temporary account balances

10

What 2 classifications must be presented in the IFRS statement of financial position?

Current and Non-Current

11

Does IFRS require more detailed note disclosures compared to US GAAP?

Yes

12

Does IFRS require specific formatting of financial position information?

No

13

Does US GAAP use the term "reserve"?

No, only IFRS

14

What is accounting income?

Revenues less expenses plus gains less losses

15

What is economic income?

The change in net worth of a business enterprise during an accounting period

16

What is the net worth of a business enterprise described as?

Fair market value of net assets

17

How do you calculate the Market Value

Beginning Market Value + Net Income + Owner Investments - Dividend and Stock Repurchases = Ending Market Value

18

What is a revenue?

Revenues represent increases in net assets or settlements of liabilities by providing goods and services. Revenues are related to the company's primary business operations

19

What is an expense?

Expenses represent decreases in net assets or incurred liabilities through the provision of goods or services. Expenses are related to the company's primary business operations. Expenses provide benefit to the firm. Losses do not.

20

What is a gain?

Gains represent increases in equity or net assets from peripheral or incidental transactions

21

What is a loss?

Losses represent decreases in equity or net assets from peripheral or incidental transactions. Losses do not provide value or benefit to the firm.

22

Which items are not shown on the Income Statement

Prior Period Adjustments, OCI, retrospective changes in accounting principle

23

What items are found in Other Comprehensive Income?

(1). Foreign currency translation adjustments;
(2). Unrealized holding gains and losses on securities available for sale;
(3). Pension and other postretirement benefit plan cost adjustments;
(4). Certain deferred derivative gains and losses.

24

Is there GAAP requirements for presentation of the top portion of the Income Statement?

No. Its very loose with the presentation

25

Is there GAAP requirements for presentation of the bottom portion of the Income Statement?

Yes, its very specific

26

Which two items show on the bottom portion of the income statement?

Discontinued items and extraordinary items

27

Basic format for the income statement

Net sales
- Cost of goods sold
= Gross margin
- Operating expenses
+ Miscellaneous revenues and gains
- Miscellaneous expenses and losses
+ or - Unusual or infrequent items
= Income from continuing operations before tax
- Less income tax expense
= Income from Continuing Operations
+ or - Income from Discontinued Operations (net of tax)
+ or - Extraordinary Items (net of tax)
= Net income

28

What is intraperiod tax allocation?

when the tax effect is shown with the item itself

29

Intraperiod tax allocation is applied to which items?

Discontinued operations, extraordinary items, OCI, Adjustments for retroactive accounting principle changes, prior period adjustments

30

What is interperiod tax allocation?

recording a period's total tax consequences in current taxes payable and deferred tax accounts