Roger Chapters 1-5 Flashcards by Dyanna Deguzman

What are the 4 characteristics of hedges?

No net investments

Underlying = (what you multiply notional amount by)

Notional amount = # units

net Settlement = settled at a net amount

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What is functional currency?

Currency that has the greatest economic impact

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What are IFRS’s 5 key elements?

Assets
Liabilities
Equity
Income
Expenses

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LT construction costs journal entry

* cash

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What rate does remeasurement use for monetary, non-monetary, and income statement items?

Monetary assets/liabilities = current rate

Non-monetary assets/liabilities = historical rate

Income statement = weighted average rate

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Times interest earned

Income before interest expense and taxes / interest expense

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LT construction Billings and collections journal entries

Billing

construction receivable
* billings

Collections

cash
* construction receivable

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What are enhancing qualitative characteristics?

Comparability (consistency)
Understandability
Timeliness
Verifiability

CUT like a V

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Defensive interval ratio

Cash, marketable securities, receivables / average daily expenditures

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Rate of return in common stock equity (return on equity)

(Net income - preferred divs) / average common SE

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Working capital

Current assets - current liabilities

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What are the 5 key elements for IFRS?

Assets
Liabilities
Equity
Income
Expenses

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What is transaction/local currency?

Currency of a particular country where books and records are kept.

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Length of operating cycle

days’ sales average receivables + # days’ supply in average inventory

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What are the levels for fair value measurement?

Level 1: Actual market in active market, identical assets

Level 2: Actual market but similar transaction or NON-ACTIVE market

Level 3: Unobservable data, mgmt judgement

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Days payables outstanding

Ending accounts payable / (COGs/365)

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Receivables turnover

Net credit sales/ avg trade receivables (net)

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What makes something have faithful representation?

Free from error
Neutrality
Completeness

FENCe

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Earnings per share

(Net income - preferred divs) / Weighted average shares outstanding

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What do you do when a security goes from available for sale to held to maturity?

Reclass at FMV

Unrealized gain/loss to OCI then AOCI (amortize this over the remaining life of the security)

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Dividend payout ratio

Cash dividends / net income

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Debt to total assets

Total debt / total assets

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What rate does translation use for assets/liabilities and income statement items?

Assets/liabilities = current rate

Income statement = weighted average rate

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What do you call going from functional currency to reporting currency?

Study These Flashcards

Translation

Put on the balance sheet under OCI

How do you recognize revenue for right to use vs access to property?

Right to use: Recognize once access given to customer (ex: giving access, unlimited uses) Access to: Recognize over period of time (ex: obligation to maintain)

How do you reconcile from book to bank balance?

``` Book balance + amounts collected by bank - unrecorded bank charges +/- errors made in the books —————————————————- Bank balance ```

% completion recognize profit journal entry

* CIP * gross profit on CIP * CIP * construction expense * construction receivable

What is the definition of FV price?

Price when SOLD or price PAID when transferred

What are monetary and non-monetary assets?

Monetary asset = asset that buys less is rising inflation (ex: cash) Nonmonetary = asset that does NOT guarantee a fixed amount received (adjusted for inflation)

What is OCI is made up of?

Derivative cash flow hedges Excess adjustment between PBO and FV Net unrealized gain/loss from AFS securities Translation foreign currency

% completion equation

Costs incurred to date / total construction costs = % complete % complete x total profit = profit recognized to date Profit recognized to date - profit previously recognized = profit recognized this period

days sales in average receivables

365/receivables turnover

Quick ratio

Cash, marketable securities, and receivables (net) / current liabilities

What do you when a security goes from held to maturity to available for sale?

Reclass at FMV Unrealized gain/loss in OCI

days’ supply in average inventory

365/inventory turnover Or Average ending inventory / average daily COGs

What do you call going from transactional currency to functional currency?

Remeasurement Put on the income statement

Price earnings ratio

Mkt price of stock / EPS

Current cash debt coverage ratio

Net cash from operating activities / average current liabilities

What is the difference between recognition and realization?

Recognition = booking in the financial statements Realization = getting the cash (non-cash to cash)

What is reporting currency?

Currency financial statements are prepared in (USD $)

Asset turnover

Net sales / average total assets

What is risk based off of for PCD assets?

1. Market risk makes up part (difference between stated and market rate) 2. Credit risk is the other part (risk the person won’t pay)

What are GAAP’s 10 key elements?

``` Assets Liabilities Equity or net assets Investments by owners Distributions to owners Comprehensive income Revenue Expenses Gains Losses ```

Cash conversion cycle

Days sales A/R + Days in inventory - Days payable outstanding

Profit margin on sales

Net income / net sales

How do you reconcile from bank to book balance?

``` Bank balance + deposits in transit - outstanding checks +/- errors made by bank ———————————————- Corrected book balance ```

Inventory turnover

COGs / average inventory

Debt to equity

Total debt / SE

Rate of return on assets

Net income / average total assets

Cash debt coverage ratio

Net cash provided by operating activities / average total liabilities

Put option vs call option

Put option = right to sell Call option= right to buy

How does a principal recognize income vs an agent?

Principal: Recognize all revenues. Payment to agent is an expense Agent: Recognize revenue as amount received from principal

What makes something relevant?

Predictive value Confirmatory value PC

What do you do when a security goes from trading to available for sale or vice versa?

Reclass at FMV Put the difference as realized gain/loss on income statement Eliminate any related valuation allowances

What makes information useful?

Relevance and faithful representation

Book value per share

Common SE / Outstanding shares

ON-TIDe-N-OC

``` Operating income Non-operating income Taxes Income from continuing operations Discontinued operations g/l Net income Other comprehensive income Comprehensive income ```

Current ratio

Current assets / current liabilities

Roger Chapters 1-5 Flashcards

(58 cards)