Term
| What's another name for a Balance Sheet? |
|
Definition
| Statement of Financial Position |
|
|
Term
| What reports the financial position (assets,liabilities, and equity) of a company at a particular date? |
|
Definition
|
|
Term
| What does the Balance Sheet show and "not show"? |
|
Definition
| The balance sheet does not attempt to show the total fair value of a company. Rather, it is meant to be useful to external users who wish to estimate the company's fair value |
|
|
Term
| The Balance Sheet is useful for assesing what? (5) |
|
Definition
1) Liquidity
2) Financial Flexibility
3) Operating Capability
4) Income Producing Performance
5) Capital (or "net assets" A-L=E) |
|
|
Term
| This is something that the Balance Sheet assesses and it refers to how quickly a company can convert an asset into cash to pay its bills. |
|
Definition
|
|
Term
| Refers to the ability of a company to use its financial resources to adapt to change |
|
Definition
|
|
Term
| refers to the ability of a company to maintain a given physical level of operations |
|
Definition
|
|
Term
| this is income relative to capital (A-L=E) |
|
Definition
Income Producing Performance
(e.g., Return on Investment) |
|
|
Term
|
Definition
|
|
Term
| the process of formally recording and reporting an element in the financial statements; it includes depiction of an element in both words and numbers, with the amount included in the totals |
|
Definition
|
|
Term
| What are the four things that make up the criteria for an item to be RECOGNIZED? |
|
Definition
1) must meet the definition of an element (asset,liability,equity)
2) must be measurable
3) must be relevant
4) must be reliable |
|
|
Term
| Which SFAC # give the criteria of an item to be recognized? |
|
Definition
|
|
Term
|
Definition
(a) probable future economic benefit
(b) obtained or controlled by a company
(c) as a result of past transactions or events. |
|
|
Term
| What is the primary attribute to an asset? |
|
Definition
|
|
Term
| What is service potential? |
|
Definition
| the potential to benefit from the asset |
|
|
Term
|
Definition
(a) probable future sacrifices of economic benefits
(b) arising from present obligations of a company (with little to no discretion to avoid) to transfer assets or provide services in the future
(c) as a result of past transactions or events |
|
|
Term
| What is Stockholder's Equity? |
|
Definition
| residual interest in the assets of a company that remain after deducting liabilites (A-L=E) |
|
|
Term
| What is the predominant measurement (valuation) of Balance Sheet Elements? |
|
Definition
|
|
Term
| This is the exchange price of the transaction in which the asset was acquired. Primarily used to value "non-financial" assets and liabilites |
|
Definition
|
|
Term
| The amount of cash (or cash equivalent) that could be obtained on the date of the balance sheet by selling the asset in an orderly liquidation. |
|
Definition
|
|
Term
| Does Fair Value measure "financial" or "non-financial" assets and liabilities |
|
Definition
|
|
Term
| What are the two alternatives to measuring (valuing) an element? |
|
Definition
1) Historical Cost
2) Fair Value (exit value) |
|
|
Term
| How do we determine fair value? (3 levels) |
|
Definition
Level 1: the most desireable and reliable; quoted price for identical asset (or liability) in active market; i.e., looking it up on Yahoo or whatever
Level 2: Adjusted quoted price (exit value) for similar asset (or liability); i.e. for a building we may look at comps to see what other similar buildings are valued at
Level 3: Unobservable inputs (e.g. PV of expected cash flows); may be RELEVANT but not as RELIABLE |
|
|
Term
| What are some approaches to a valuation technique? (3) |
|
Definition
1) market approach
2) income approach
3) cost approach |
|
|
Term
| Do companies have to disclose the projections of future cash flows? |
|
Definition
|
|
Term
| These are very short term, low risk investments |
|
Definition
|
|
Term
| Why are receivables more liquid than inventory? |
|
Definition
| You know your going to get your money/ Factoring may be possibly the way to get the money |
|
|
Term
|
Definition
| when a company can sell its receivables |
|
|
Term
| What is inventory valued at? |
|
Definition
|
|
Term
| What is the order of current assets from the highest liquidity to the lowest liquidity? |
|
Definition
1) Cash
2) Short Term Investments
3) Short Term Receivables
4) Inventories
5) Short Term Prepaids |
|
|
Term
| This is the time it takes to purchase inventory, produce a product or service, complete the sale, and collect the cash |
|
Definition
|
|
Term
| these will be converted to cash or used in operations within one year or operating cycle, whichever is longer |
|
Definition
|
|
Term
| What must corporations disclose in the Statement of Changes in Stockholder's Equity? |
|
Definition
| they must disclose the changes in its stockholder's equity accounts (Beginning Equity and Ending Equity) |
|
|
Term
| A Statment of Changes in Equity disclosure may appear in what? (3) |
|
Definition
1) a financial statment
2) a supporting schedule
3) a note to the financial statments |
|
|
Term
| What are the major financial statments of a company and what do they show? |
|
Definition
1) Balance Sheet- shows the financial position at the end of the period
2) Income Statement- shows the results of operations
3) Statment of Cash Flows- shows the cash inflows and cash outflows
*4) Statment of Changes in Stockholder's Equity- self explanatory |
|
|
Term
| What does a company's financial position include? |
|
Definition
| A financial position includes economic resources (assets), economic obligations (liabilities), and equity, and their relationship to each other at a moment in time |
|
|
Term
| What are two purposes of a company's balance sheet? |
|
Definition
1) To provide info about its liquidity, operating capability, and financial flexibility
2) to provide a basis for evaluatiing income producing performance |
|
|
Term
| is the monetary value of the net assets invested by stockholders, as well as from earnings retained by the corporation |
|
Definition
|
|
Term
| is the monetary value of the net assets invested by stockholders, as well as from earnings retained by the corporation |
|
Definition
|
|
Term
| refers to maintaining the stockholders' equity of the corporation to provide a return of investment |
|
Definition
|
|
Term
| Why is capital maintenance important? |
|
Definition
| Information about the maintenance of a corporation's capital is important in assessing the adequacy of a corporation's profitablity and its ability to provide a return on investment |
|
|
Term
| These are the major sections (and the components of each section) of a company's balance sheet: |
|
Definition
1) ASSETS- Current Assets; Long Term Investments; Property, Plant, and Equipment; Intangible Assets; Other Assets
2) LIABILITIES- Current Liabilities, Long Term Liabilities, Other Liabilities
3) STOCKHOLDER'S EQUITY- Contributed Capital( Capital Stock and Additional Paid in Capital); Retained Earnings; Accumulated Other Comprehensive Income |
|
|
Term
| Current Assets may include five items: |
|
Definition
1) cash (and cash equivalents)
2) temporary investments in marketable securities
3) Receivables
4) Inventories
5) Prepaid Items |
|
|
Term
| Examples of Current Liabilities: |
|
Definition
1) Accounts Payable
2) Taxes Payable
3) Unearned Rent
4) Salaries Payable
5) estimated liabilites for warranties
6) current portion of long term debt |
|
|
Term
| Current Assets - Current Liabilities= |
|
Definition
|
|
Term
| Requires a description of all significant accounting policies to be included as an integral part of the financial statments |
|
Definition
| APB Opinion No. 22, "Disclosure of Accounting Policies" |
|
|
Term
| A donated fixed asset (from a governmental unit) for which the fair value has been determined should be recorded as a debit to fixed assets and a credit to what? |
|
Definition
|
|
Term
| On October 2, 2005, a company borrowed cash and signed a 3 year interest bearing note on which both the principal and interest are payable on October 2, 2008. At December 31, 2007 the accrued interest should be reported on the balance sheet as a what? |
|
Definition
|
|
Term
| Rent Revenue collected one month in advance should be accounted for as what? |
|
Definition
|
|
Term
| includes cash and cash equivalents (maturities less than or equal to 3 months, e.g., T-Bills, money market funds) that are unrestricted, valued at current market value |
|
Definition
|
|
Term
|
Definition
|
|
Term
| trading and available for sale portfolios (including CD's), valued at current market value at the balance sheet date |
|
Definition
|
|
Term
| What are Short Term investments valued at? |
|
Definition
|
|
Term
| e.g., A/R, post-dated checks, rent receivable, etc.; valued at net realizable value (i.e. gross accounts receivables less allowance for uncollectible accounts) |
|
Definition
|
|
Term
| What are Short Term Receivables valued at? |
|
Definition
|
|
Term
| e.g., merchandise, raw materials, work in process, finished goods; valued at lower of cost or market, must disclose cost flow assumption/method (e.g. LIFO, FIFO, weighted/moving average, dollar-value LIFO) |
|
Definition
|
|
Term
| What are Inventories valued at? |
|
Definition
|
|
Term
| e.g., insurance, rent, supplies; generally, valued at historical cost |
|
Definition
|
|
Term
| What are Short Term Prepaids valued at? |
|
Definition
|
|
