Intermediate Financial Acctg I

Front 1

Financial Report that lists revenues, expenses, gains, losses

Back 1

Income Statement
a.k.a. Statement of Earnings)

Front 2

Gross Profit

Back 2

Sales Revenue -
Cost of Goods Sold

Front 3

Comprehensive Income

Back 3

includes all changes in equity except those resulting from investments by owners and distributions to owners (all revenues/gains, expenses/losses reported in Net Income and all gains/losses that bypass net income but affect equity)

Front 4

Other Comprehensive Income

Back 4

non-owner changes in equity that bypass the income statement

Front 5

Comprehensive Income - calculation

Back 5

Net Income
+- Other Comprehensive Income
= Comprehensive Income

Front 6

Net Assets

Back 6

Total Assets - Total Liabilities

Front 7

Non-current Liabilities

Back 7

obligations that a company does not reasonably expect to liquidate within one year or the normal operating cycle

Front 8

Current Liabilities

Back 8

obligations that a company expects to liquidate within one year or the normal operating cycle

Front 9

Matching Principal (Expense Recognition Principal)

Back 9

Related income and expenses are recorded in the same period

Front 10

Debt-to-Equity Ratio

Back 10

Debt / Equity or

Debt / (Assets - Debt)

Front 11

Real Accounts

Back 11

Permanent accounts that appear in the balance sheet - show cumulative effect of a company's activities over the life of the company.

Front 12

Nominal Accounts

Back 12

Accounts that show activities (revenues, salary expenses, cost of goods sold) during a period of time - closed to zero at the end of the accounting period (usually 1 year)

Front 13

Irregular items

Back 13

-not part of day-to-day business
-reported below the line on income statement
-e.g. discontinued operations, unusual gains/losses, changes in acctg principals/estimates
extraordinary items

Front 14

Items considered extraordinary

Back 14

earthquake
uninsured expropriation of a business in a foreign country
bank failure
terrorist attack

Front 15

Ordinary Annuity

Back 15

Perodic payments made at end of each period

Front 16

Annuity Due

Back 16

Periodic payments made at beginning of each perod

Front 17

Journals for Bad Debt

Back 17

Allowance:
Dr Bad Debt Expense
Cr Allowance for Bad Debt

Write Off:
Dr Allowance for Bad Debt
Cr Accounts Receivable

Front 18

Depreciation Method:

Declining Balance

Back 18

Higher depreciation in early years

Straight-line depreciation rate multiplied by a factor

Front 19

Depreciation Method:

Sum of the Year's Digits

Back 19

Higher depreciation charge in early years

Depreciation rate =
remaining years
---------------------------
sum of years

Front 20

Profit Margin on Sales

Back 20

Net Income
----------------------------
Net Sales

Front 21

Cost Recovery Method of Revenue Recognition

Back 21

A company recognizes no profit until cash payments by the buyer exceed the cost of merchandise sold.

Front 22

Cash and Cash Equivalents

Back 22

Short-term, highly liquid investments - maturity in 3 months or less

Front 23

LIFO vs FIFO
Costs rising

Back 23

-Gross profit lower under LIFO
-Net income lower under LIFO
-Cash balance at YE higher under LIFO
-Taxes lower under LIFO
-IFRS does not permit LIFO for Financial Reports

Front 24

Non-interest Bearing Note
(Zero-interest Bearing)

Back 24

-PV is amount paid
-FV is amount to be collected
-Calculate implicit interest based on PV table

Front 25

Dollar Value LIFO (DVL)

Back 25

Increases/Decreases in an inventory pool measured in dollar value, not physical qty

Front 26

DVL LIFO
Price Index formula

Back 26

Ending Inventory at current cost
---------------------------------------
Ending inventory at base-year cost

Front 27

Gross Profit Method of Estimating Inventory

Back 27

Beginning Inventory +
Purchases
-------------------------------
Goods Available

Sales
Less: GP (x% of sales)
-------------------------------
Sales at cost

Goods Avail - Sales at cost
= Approx inventory

Front 28

Retail Method of Estimating Inventory

Back 28

Uses cost-to-retail ratio

Calculate goods avail, both cost and retail - compute ratio

Goods Avail - Sales
= Ending inventory at retail
x cost-to-retail ratio
= estimated inventory at cost

Front 29

Commercial Substance

Back 29

If future cash flow will change as a result of the transaction

Front 30

Non-monetary exchange of assets resulting in a loss

Back 30

Recognize loss immediately

Front 31

Non-monetary exchange of assets (with commercial substance) resulting in a gain

Back 31

Record new asset at fair-value of asset given up and immediately recognize a gain

Front 32

Non-monetary exchange of assets (without commercial substance) resulting in a gain

Back 32

Recognize new asset at cost - defer recognition of gain until asset is sold

Front 33

Calculating Average Accumulated Expenditures

Back 33

Total of
Each Amount x (months/12)

Front 34

Capitalization Rate

Back 34

Total Interest
-------------------------
Total Principal

Front 35

Ammortization of Goodwill

Back 35

Goodwill is not ammortized

Front 36

Impairment Test

Back 36

If:
Fair Value less costs to sell
or
Value-in-use
less than book value
Impairment is recorded

Front 37

Recording Impairment of an Asset

Back 37

Debit Loss on Impairment
Credit Accum Depreciation

Report on "other income and expense" section of Income Statement

Front 38

Supplies Used (calculation)

Back 38

Supplies (beg balance)
+ Supplies Purchased
---------------------------
= Supplies available
- Supplies (end balance)
-------------------------------
= Supplies used or
(supplies expense)