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34 Cards in this Set
- Front
- Back
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Ppd Expense OE/Adj./Reverse |
OE Adj. Reverse 1)Asset Expense N/A Cash Asset 2)Expense Asset Expense Cash Expense Asset |
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Unearned Revenue OE/Adj./Reverse |
OE Adj. Reverse 1)Cash Liability N/A Liability Revenue 2)Cash Revenue Liability Revenue Liability Revenue |
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Accrued Expenses/Revenues OE/Adj./Revenues |
OE Adj. Reverse 1) N/A Expense Liability Liability Expense 2) N/A Asset Revenue Revenue Asset |
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Estimates/Apportionment OE/Adj./Reverse |
OE Adj. Reverse Equipment Depn. Exp. N/A Cash Accum. Depn |
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CAP |
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APB
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FASB |
Financial Accounting Concepts FASB Staff Positions
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How is FASB codification organized? |
Topic Subtopic section paragraph xxx-xx-xx-xx If the codification does not cover something the conceptual framework does. Very rare. It is the single authoritative source now, since everything else has been absorbed. |
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What are the conceptual framework fundamental qualitative characteristics? |
Relevance Confirmatory Materiality Predictive
Faithful Representation Error free Complete Neutral |
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What are the conceptual framework enhancing qualitative characteristics? |
Comparability Verifiability Timeliness Understandability |
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Conceptual framework elements of financial statements? |
Moment in time 1. Assets 2. Liabilities 3. Equity Throughout a period 4. Investment by owners 5. Distribution to owners 6. Comprehensive income 7. Revenues 8. Gains 9. Expenses 10. Losses |
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What are the four basic assumptions in the conceptual framework? |
Economic entity-That the business is separate from its owners/stockholders. Going concern- That the entity plans on continuing in business indefinitely. Monetary unit- Money is the common denominator. It is relevant, simple, universally available, understandable and useful. Periodicity- That a company will divide its activities into artificial but regular periods. |
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What is the constraint in the conceptual framework? |
Cost constraint (cost benefit)- Is the information obtained worth the money and time spent to get it.
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What are the principles in the conceptual framework? |
Measurement principle- Historical cost-based on the basis of acquisition. Is verifiable. Fair value- the price if sold now. Market based measure. GAAP is moving to it. Revenue Recognition-It requires companies to recognize revenue in the period in which the performance obligation is satisfied. Expense recognition-expense follows revenue. Full Disclosure- To disclose matters that would make a difference to users. |
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Which accounts do you close and how? |
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What are the differences between period and product costs? |
Product-
Period-
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What are the pros and cons of the income statement? |
Pro-
Con-
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What is the single step income statement? |
Revenues Sales Revenue Other Revenue Expenses COGS Selling expenses Admin. expenses Other expenses Income before taxes Income tax expense Net Income EPS |
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What does the Retained Earnings Statement look like?
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XYZ Corp. Retained earnings, January 1 2015 (PPA if necessary) Add Net Income Less Dividends Retained Earnings, December 31, 2015 |
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What is the current operating performance approach versus the modified all-inclusive concept. |
Current operating-Only regular and recurring revenues and expenses. Modified all-inclusive -Current+ Unusual gains/losses Discontinued operations Extraordinary items Non-controlling interest GAAP uses modified all-inclusive |
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What does a multi-step Income Statement look like? |
Sales Revenue COGS Gross Profit Operating Expenses Selling Expenses Admin. Expenses Income from operations Other Gains/Revenues Other Losses/Expense Income before taxes Income Tax Expense Net Income EPS |
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What is comprehensive income? |
Includes: -Net Income -Other comprehensive income(unrealized g/l on available for sale securities, translation g/l on foreign currency etc) Does not include: -Distributions to owners -Investment by owners Can be displayed in: -a single continuous statement -two separate but continuous statements. |
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EPS |
NET INCOME-PREFERRED DIVIDENDS This presentation is expanded when discontinued operations and/or extraordinary items are present |
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How are errors corrected? |
Change in accounting principle: -ex. FIFO to average cost -done retrospectively to preserve comparability across all periods. Change in accounting estimate: -ex. change in salvage value or useful life, allowance for noncollectable receivables, inventory obsolescence -accounted for prospectively-this period forward Correction of error: -math mistakes, change from non-GAAP to GAAP, oversight/misuse of facts, mistakes in accounting principles -accounted for as a prior period adjustment at the beginning of the RE statement |
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How are discontinued operations accounted for? |
Occurs when; -a business segment is being eliminated and -operations have ceased or are being phased out They are reported after Income from Continuing Operations and in two parts Income from operations of discontinued segment (net of tax) Gain/Loss from disposal of discontinued segment (net of tax) |
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What is the order of accounts in the balance sheet? |
Assets Liabilities Owner Revenues Expenses |
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What are the 5 types of adjusting entries? |
Deferrals: 1) Ppd Expenses 2) Unearned Revenues Accruals: 3) Accrued revenue (for services performed but not paid for, no original entry) 4) Accrued expenses (for services performed but not paid for, no original entry) Estimates and Apportionments 5)Depreciation and Bad Debt Expense 5) |
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Which adjustments are reversed? |
All accruals Ppd expense if the original entry debited a nominal account Unearned revenue if the original entry credited a nominal account |
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What are the basic and expanded equations for the balance sheet? |
Basic: Assets=Liabilities+Owners' Equity Expanded: Assets= Liabilities + Common Stock + Retained Earnings - Dividends + Revenues - Expenses |
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What is the accounting cycle? |
Trx Journal Post Unadjusted trial balance Adjustments Adjusted trial balance Financial statements Closing Post closing trial balance Reversing |
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What are the real and nominal accounts and what are their normal balances? |
Debit Assets (real) Expenses (nominal) Credit Liabilities (real) Equity (real) Revenues (nominal) |
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What is the SEC? |
Established by the federal government after the Securities Acts of '33 and '34. They encourage the setting of accounting standards by a private body. They require public companies to use GAAP. They have oversight and enforcement authority. |
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What are the alternate names for the income statement? |
Statement of operations Statement of income Statement of earnings Income Statement |
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What are the alternate names for the balance sheet? |
Balance Sheet Statement of Financial Position |
