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60 Cards in this Set
- Front
- Back
Balance Sheet (statement of financial position or statement of financial condition) |
1. assets 2. liabilities 3. owner's equity - residual interest in the net assets |
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Statement of comprehensive income |
all changes in equity except for shareholder transactions (eg issuing stock, repurchasing stock, dividends) |
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Income statement |
1. revenues 2. expenses 3. other income - that arise not in the ordinary course of business |
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Statement of cashflows |
report cash receipts & payments 1. operating cfs 2. investing - acquisition or sale of PPE 3. financial Cfs - issue or retire of firm's debt and equity securities |
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Management commentary (management discussion) |
Most useful section - discusses nature of the business, past performance, future outlook |
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Standard auditor's opinion (3 parts) |
1. performed an independent review 2. reasonable assurance that no material errors 3. in accordance with accepted accounting principles |
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Unqualified opinion |
"clean opinion" auditor approves of statement qualified - bad |
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Adverse opinion |
bad - means statements are not presented clearly |
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Proxy statements |
things issued to shareholders when there needs to be a shareholders vote |
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Inventories - IFRS |
Lowest cost or net realizable value (selling price - completion costs & selling costs). If net realizable value < inventory value on balance sheet write down & incur a loss on income statement. Under IFRS allowed to write back up |
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Inventories - GAAP |
Lowest cost or market (replacement cost). If market > inventory balance write down and incur loss on income statement. Under GAAP not allowed to write back up. |
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Deferred tax assets |
Taxes payable > tax expense |
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List CA's |
1. Cash & Equivalents - amortized cost 2. Market securities 3. A/R - net realizable value 4. Inventories 5. Other - (prepaid expenses, deff. tax assets) |
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Standard Costing |
method to measure inventory - used by manufacturing firms - assign predetermined amounts of materials, labor and overhead to goods prodcued |
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Retail Method |
method to measure inventory - uses retail prices and then subtracts out gross profit |
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List CL's |
1. A/P 2. Notes payable & current portion of LT debt 3. Accrued liabilities 4. Unearned revenue |
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List Non-current assets |
1. PP&E 2. Investment Property - assets that generate rental income or capital appreciation 3. Intangible assets 4. Financial Assets |
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Cost Method for PP&E |
All PP&E (minus land) is reported at amortized cost (historical - Acc. dep, amortization, depletion, & impairment) - tested for impairment - impairment occurs if carry value > recoverable value - GAAP |
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Value in use |
Recoverable amount under IFRS - PV's of asset's future cash flows |
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Unidentifiable Intangible Assets |
cannot be acquired (must be built internally) and may have an unlimited life ex: good will |
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Identifiable Intangible Assets |
Acquired separately - ex: patents, trademarks etc. |
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Financial Instruments |
Contracts that rise a financial asset of one firm and fin. liability of another firm. - ex: stocks, bonds, derivs, loans, recievables - measured in historical cost, amortized cost, fair value |
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Fin. Instruments @ historical costs |
unquotes equity investments, loans to and receivables from |
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Fin. Instruments @ amortized costs |
held-to-maturity securities - debt acquired and held to maturity. calc. amortized cost = issue price - principal PMTS + amortized discount - amortized premium - impairment losses |
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Fin. Instr @ Fair value (mark-to-market) |
- trading securities, available-for-sale, and derivatives - Trading securities - held for trading want them to profit in near term. reported on balance sheet & unrealized gains/losses are on income statement (same with derivs) - Available-for-sale - not expected to be held to maturity or profit in near term. Unrealized gains/losses are not on income sheet but are on other comprehensive income |
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List Non-current liabilities |
1. Long-term fin. liabilities 2. deff. tax liability when expenses > tax payables |
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List Shareholders' Equity |
1. Contributed capital 2. pref. stock 3. non-controlling interest 4. retained earnings 5. treasury stock 6. acc. other comprehensive income |
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Common-size balance sheet |
list all line items as a % of total assets |
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Direct method |
- presentation of operating cf's - each line item of income statement is converted to cash receipts or PMTs - converts accrual method to a cash-basis method |
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Indirect method |
- presentation of operating cf's - takes net income & makes adjustments for transactions that affect net income but are not cash |
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Activity ratios |
(asset utilization or turnover ratios) show well a firm utilized assets such as inventory and fixed assets |
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Receivables Turnover |
Annual sales/ avg. receivables |
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Avg. collection period |
=365/ receivables turnover |
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Inventory Turnover |
Cogs/ Avg. inventory |
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Payables turnover |
purchases / avg. trade payables purchases = (end inv. - beginning inv. * COGS) |
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Defensive internal ratio |
# of days the firm could pay off its avg. cash expenditures with its current liquid assets = cash + market securities + receivables/ avg. daily expenditures expenditures = cash from COGS, SG&A, R&D + dep. |
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Tax burden ratio |
Net Income/ EBT - lower ratio = higher burden |
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Interest burden ratio |
EBT/ EBIT |
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Business Segment |
Portion of a larger company that accounts for more than 10% of company's revenues |
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Sensitivity Analysis - pro forma |
based on "what if" questions |
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Scenario Analysis |
based on specific set of outcomes for key variables |
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Simulation Analysis |
technique used in which probability distributions for key variables are selected and a computer is used to generate a distribution of values for outcomes |
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Product Inventory Costs |
1. Purchase expense 2. conversion costs (labor and overhead) 3. other ex: cost to transport to shipping location - capitalized costs so they are expensed in the same period inventory is sold |
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Period Inventory Costs |
1. Abnormal labor/ over head 2. storage 3. admin 4. selling - expensed in period in which they occur |
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Periodic Inventory System |
Inventory value & COGS determined at the end of the period (use a purchases account) - no detailed records of inventory are maintained = begin inventory + purchases = Cost of goods sold available COGS = goods available for sale - ending inventory |
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Perpetual Inventory System |
Inventory values & COGS updated continuously |
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Revaluation Method for PP&E |
allowed by IFRS firms - allows firms to report long-lived assets at their fair value, as long as there is an active market for the asset |
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Derecognition |
when long-lived assets are sold, exchanged or abandoned |
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Taxes payable |
The tax liability on the balance sheet - can also be called current tax expense |
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Tax loss carryforward |
A current/past loss that can be used to reduce taxable income (can result in a deferred tax asset) |
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Tax base |
Net amount of an asset or liability used for tax reporting purposes |
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Accounting Profit |
Pretax financial income (income before tax, earnings before tax) |
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Income tax expense |
Expense recognized on income statement that includes taxes payable & changes in deff. tax assets & liabilities. = Taxes Payable + DTL - DTA |
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Deferred tax liabilities |
Balance sheet amount that results from excess income tax expense > taxes payable |
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Deferred tax assets |
Balance sheet amount that results from an excess of taxes payable > tax expense |
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Valuation allowance |
Reduction of deferred tax asset based on likelihood asset will not be realized |
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Temporary Difference (Taxes) |
diff. between tax base & carrying value that will result in increased taxable amount or deductible amounts |
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How a Tax Asset occurs? |
Tax Expense < Tax Payable - Revenues taxable before on recognized on I/S - Expenses on I/S before they are tax deductible - Tax loss carryforwards - Post-employment benefits, warranty expenses, tax loss carryforwards |
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How a Tax Liability occurs? |
Tax Expense > Tax Payable - Revenues put on I/S before taxable - Expenses taxable before put on I/S - Most common because dep. method is different on I/S then used for taxes |
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Statutory Rate |
tax rate of the jurisdiction where the firm operates
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