Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
29 Cards in this Set
- Front
- Back
|
Comprehensive Income |
Measures all changes in owner's equity. (EXCEPT: investments by owners to owners and errors from past statements) |
|
|
What is a major financial statement/ what is its purpose? |
Income statement- it reflects the earnings generated by the company during the accounting period. |
|
|
What are some types of income statement formats? |
Single Step: total revenue- Total expenses Multistep: income and expenses are divided up with different headers and sections |
|
|
What goes under other revenue and expenses? (big 6) |
Interest revenue Gains-PPE Dividend Revenue Interest expense Loss-PPE Unrealized gains and losses on TRADING SECURITIES |
|
|
What is discontinued operations? |
Operations that will NOT contribute towards future earnings (one time thing.) |
|
|
What is the formula for EPS? |
Net income-Preferred Stock Dividends/ (Weighted average # of common shares outstanding.) |
|
|
How do you calculate Weight-Average # of shares outstanding? |
C/S outstandingXmonths Outstanding-PurchasedXmonths Outstanding-Purchased-IssuedXmonths (add all of these together) |
|
|
What does FASB statement 154 say? |
the catch up number is called the cumulative effect of change in accounting principle which means the income statement should state the exact change in worth from one period to the next. |
|
|
What does retrospectively mean? |
The past financial statement should be restated to adjust for the application of the new accounting principle. |
|
|
What is the definition of earnings quality? |
high quality earnings should help a financial statement reader predict future earnings. |
|
|
What are transitory earnings? Permanent earnings? |
Earnings that are not part of the normal earning operation. (gain ppe) Normal operations |
|
|
What is the new and old rules regarding the revenue recognition process? |
Old: revenue must be REALIZABLE and EARNED New: 5 step process. 1. identify contract w customer 2. identity perf. obligation 3. determine price 4. allocate price to performance 5. recognize revenue after each perf. is met. |
|
|
What is the order of the balance sheet? |
Assets, Liablities, Owners Equity |
|
|
What are some common current assets? |
cash, marketable securities, A/R, inventory, prepaids |
|
|
What are some common long term assets? |
Investments/ PPE/Intangibles (patents/goodwill etc.) |
|
|
What are some common current liabilities? |
A/P, Salaries payable, Taxes payable. Unearned revenue, accrued liabilities, customer deposits, bank overdrafts. |
|
|
Where on the balance sheet does treasury stock go? |
It is a contra-equity |
|
|
What are some types of Audit Reports? |
Unqualified opinion Qualified opinion Adverse opinion Disclaimer opinion |
|
|
What is an unqualified/qualified audit report? |
unqualified- clean, no material errors qualified- clean except an auditor might not agree with one application of a GAAP) |
|
|
What is an adverse/disclaimer audit report? |
adverse- statement not in accordance with GAAp disclaimer- No opinion is given on financial statement |
|
|
Who are the major users of financial analysis? |
Creditors (banks and bond investors) Credit rating agencies Equity investors |
|
|
What is Horizontal/Vertical analysis? |
Horizontal- compare one period to another Vertical- compare a given to the total (same period) |
|
|
What is activity ratio? |
helps a financial statement reader asses whether a company is experiencing and changes in normal business flow. |
|
|
What are some major activity ratios? |
A/R turnover Inventory turnover |
|
|
What is the importance of the liquidity ratio? |
shows if liabilities would be covered if the came due. more likely to be given a loan if company was liquid. |
|
|
What is working capital? |
current assets-current liabilities. |
|
|
What is a major profitability ratio? |
Gross Margin: GM/Net sales Price Earnings: current stock market price/EPS |
|
|
What is occurring when the debt to equity ratio is 1? 1.5? |
1: debt = equity financing 1.5: more debt than equity |
|
|
What is/what is special about the times interest earned ratio? |
earnings before interest&tax/ Interest expense -as ratio goes up, you are in a better position to pay people back |
