Int. Acct. I Cards
Card Set Information
Int. Acct. I Cards
Chapters 1 through 4.
What does the debt to equity ratio show?
Extent of reliance on creditors in providing resources.
What is fair value?
The price the seller would receive if assets were sold.
How do you compute working capital?
Current assets - current liabilities
What does income from continuing operations exclude?
Discontinued operations and extraordinary items
How are interest revenue and gains from selling investments classified?
As nonoperating income.
How do you compute a company's book value?
Assets - Liabilites as shown on the Balance Sheet
What is historical cost?
Original transaction value
What is the major difference between single and multiple step income statements?
Single step groups all revenues and gains together and all expenses and losses together
With discontinued operations, what elements are reported when the component has been sold?
1. Operating income or loss from beg. of period to disposal date.
2. Gain or loss on disposal of assets.
What are 2 financing ratios?
1. Debt to Equity
2. Times Interest Earned
What is exluded from current assets in the acid test ratio?
Inventories and prepaid items.
When cash flow precedes expense or revenue recognition:
How do you find retained earnings?
Revenues + Gains - Expenses - Losses - Dividends
Does income from continuing operations include taxes?
What are quick assets?
Cash, short-term investments, accounts receivable
How do you compute gross profit?
Sales revenue - COGS
Times Interest Earned Ratio
Net Income + Interest Expense + Taxes
In what order are assets listed on the balance sheet?
Property, Plant, & Equipment
How do you compute market value?
# of outstanding shares of common stock x price per share
What is Other Comprehensive Income?
Certain Gains and Losses that are excluded from net income calculation, but included in comprehensive income calculation
How do you compute impairment loss?
Book Value - (Fair Value - Cost to Sell)
How do you report a held for sale discontinued operation if the book value is less than the fair value minus costs to sell?
There is no impairment loss, so you simply record the operating loss or gain as well as the tax benefit or expense.
What value are plant, property, and equipment reported at?
Original cost minus accumulated depreciation to date.
What is MDA?
Management Discussion and Analysis.
What does a proxy statement do?
Discloses compensation info of directors and top executives.
When cash flow comes after expense or revenue recognition:
How are long-term prepaid expenses classified?
How is accrued interest payable classified?
What is liquidity?
Period of time before an asset is converted to cash, or a liability is paid off.
What is long-term solvency?
Riskiness of a company regarding the amount of liabilities in its capital structure.
What does intraperiod tax allocation do?
Associates tax expenses or benefits with each major component of income that causes it.
When do you include an impairment loss?
When the discontinued component is held for sale, and the book value is greater than fair value minus costs to sell.
What is the income statement used for?
To summarize profit generating activities that occured.
What is comprehensive income?
Traditional net income plus nonowner changes in equity.
How is unearned revenue classified?
How do you compute the acid test ratio?
With discontinued operations, what elements are reported when the component is held for sale?
1. Operating income or loss for entire reporting period.
2. Impairment loss (if book value is greather than fair value minus cost to sell)
How do you account for material events that are either unusual or infrequent, but not both?
The item should be included in continuing operations, but reported as a separate income statement component.
What are 2 liquidity ratios?
1. Current Ratio
2. Acid Test Ratio
How do you compute debt to equity ratio?
What does a prior period adjustment refer to?
An addition to or reduction in the beginning retained earnings balance in a statement of shareholder's equity.
What is the correction of material errors considered to be?
A prior period adjustment
On the balance sheet, how do you classify long-term receivables?
What are 3 examples of accrued liabilities?
On the balance sheet, what do you call the portion of a note payable that is due now?
Current maturity of long term debt
What must you remember to do when reporting a discontinued operation?
Remove any revenues, expenses, gains, losses, and income tax related to the discontinued operation from continuing operation financial information.
On the income statement, how do you classify bad debt expense?
As an operating expense