Section 2 - Cash and Cash Equivalents & Balance Sheet Flashcards Preview

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Flashcards in Section 2 - Cash and Cash Equivalents & Balance Sheet Deck (10):
1

What does the Balance Sheet consist of?

-Statement of Financial Position
-consist of
1) assets
2) liabilities
3) stockholders' equity
-divided into "current" and "noncurrent"
-Assets = Liability + Stockholders' Equity

2

What are Current Assets?

Assets that will be used up or converted into cash w/in ONE YEAR or the operating cycle, whichever is longer

-cash
-temporary trading
-A/R
-N/R
-inventories
-prepaid expenses

3

What are Current Liabilities?

Liabilities to be settled w/in ONE YEAR or the operating cycle, whichever is longer

-A/P
-accrued expenses
-dividends payable
-income taxes payable
-current portion of LT debt

4

What is the most liquid asset?

CASH!

-usually the first item on "current assets" of b/s

5

What are Cash Equivalents?

-security easily converted into cash w/in 90 days or less than 3 months
-highly liquid

-treasury bills
-commercial paper
-money market funds

6

What are examples of Cash and Cash Equivalents?

-coin and currency on hand (petty cash)
-money market accounts
-unmailed checks
-savings accounts
-CDs w/ an original maturity of 3 months or less
-negotiable paper (bank checks, travelers checks, money order)

7

What items are excluded from Cash?

-compensating balance - "legally restricted deposits", if illegal report in cash
-postdated or NSF checks --> receivables

-overdraft protection
-->same bank, net them, positive--> cash, negative --> current liability
-->different banks, positive --> asset, negative --> current liability

-restricted cash
-->current, separate from cash
-->non-current, other assets or investment

-postage stamps - prepaid expenses under supplies

8

What are the steps in Bank Reconciliation?

Balance on bank statement
+deposits in transit
-outstanding checks
+-errors by bank
=corrected balance

Checkbook balance
+amounts collected by bank
-unrecorded bank charges
+-errors made in recording transaction
=corrected balance

9

What does GAAP Income Statement consist of?

-Statement of Earnings and Comprehensive Income
-State of Profit and Loss

ON-TIDE-N-OC

-Operating income
-other income (Non-operating)
-provision for income Tax
-Income from continuing operations
-gain/loss from operations Discontinued component unit
-Extraordinary loss
-Net income
-Other comprehensive income
-Comprehensive income

10

How is IFRS "Statement of Financial Position" (Balance Sheet) reported?

-assets/liabilities reported as current and noncurrent
or
-if liquidity is more relevant and reliable, b/s items maybe reported based on liquidity w/o separating current/noncurrent