Int. Acct. I Notes

Card Set Information

Int. Acct. I Notes
2011-06-12 18:39:34

Chapters 1 through 4
Show Answers:

  1. Earnings per Share:
    (Net Income - Preferred Dividends)/Avg. # of Commmon Shares Outstanding
  2. Note:
    Times interest earned ratio is a way to gauge a company's ability to pay fixed debts by comparing interest chargest with income available to pay charges.
  3. Note:
    Permanent accounts represent shareholder's equity, liabilities, and assets.
  4. Note:
    Vertical analysis expresses items as a percentage of appropriate corresponding total within the same year.
  5. Note:
    Equity has two parts: contributed capital and retained earnings.
  6. Note:
    Operational risk: How adept a company is at withstanding various events and circumstances that might impair its ability to earn profit.
  7. Note:
    Default Risk: A company's ability to pay its obligations when they come due.
  8. Note:
    Horizontal analysis compares each item as a percentage of some item in another year's financial statements.
  9. Note:
    Irregularities are intentional distortions of financial statements.
  10. Note:
    Intangible assets are reported net of accumulated amortization.
  11. Note:
    Pro forma earnings: Actual GAAP earnings reduced by any expenses the reporting company feels should be excluded.
  12. Note:
    Earnings quality refers to the ability of reported earnings to predict a company's future earnings.
  13. Note:
    If a discontinued item is "held for sale," it means that it is likely to be sold within a year.
  14. Note:
    Net Income + Other Comprehensive Income (Loss) = Comprehensive Income.
  15. Note:
    Interest = Principal x Interest Rate x Time Period
  16. Note:
    Income = Revenue - Expenses
  17. Depreciation Journal Entry:
    • D: Depreciation Expense
    • C: Accumulated Depreciation: Account Name
  18. Note:
    Temporary accounts (revenues, expenses, gains, and losses) are closed out to Income Summary which is then closed out to Retained Earnings.
  19. Note:
    Information is "material" if it can have an effect on user decisions.
  20. Debit Mnemonic:
    • Debit
    • Expenses
    • Assets
    • Dividends
  21. Note:
    • Assets = Liabilities + Equity
    • Equity is made up of Contributed Capital and Retained Earnings