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Acctg 331 - Exam2
| Term | Definition |
|---|---|
| Current Ratio Formula | CA/CL |
| Acid-Test Ratio Formula | QA/CL |
| Quick Assets examples | cash, short-term investments, and A/R |
| Working Capital Formula | CA-CL |
| Debt-to-Equity Ratio | TL/Equity (higher=higher risk) |
| liquidity | the ability of a company to convert its assets to cash |
| long-term solvency | whether a company will be able to pay all its liabilities including its LONG-TERM liabilities |
| does the BS measure based on book or market value | book value |
| Current assets are listed in decreasing order of ___ | liquidity |
| intangible are long or short term assets? | long |
| accrued liabilities are | payables |
| where are payment terms, interest rates, and other details of LT Liabilities reported? | disclosure notes |
| Where is other comprehensive income (OCI) reported? | equity section of BS |
| What must disclosure notes include? (3) | Summary of significant accounting policies, Descriptions of subsequent events, Related third-party transactions |
| Subsequent events are | significant transactions or occurrences that happen after the balance-sheet date but before the financial statements are issued |
| What is the Summary of Significant Accounting Policies | conveys valuable info about a company's choices from among various alternative accounting methods |
| Subsequent events examples | issuance of debt or equity securities, sale of assets (not inv.) |
| Auditors focus on the ___ of financial statements | fairness |
| Unqualified Auditor's Report | conforms with GAAP |
| Qualified Auditor's Report | nonconformity with GAAP but not serious enough to invalidate FS as a whole |
| Adverse Auditor's Report | does not conform with GAAP |
| Disclaimer Auditor's Report | missing info to make fair report |
| Unqualified with an Explanatory Paragraph Auditor's Report | mostly conformed with GAAP but needs other important info emphasized, lack of consistency, going concern, or material misstatement |
| More debt is ___ financial leverage | higher |
| Restructuring Costs are included in Income from _____ operations | continuing |
| Earnings Quality | ability to predict future earnings |
| Restructuring Costs | recognized in the period the disposal cost is incurred (termination benefits) |
| Land Held for Sale is __ on the BS | Current Asset |
| If sold before the end of the period, the income/loss is from the beginning of the reporting period to... | its disposal date; Gain or Loss on disposal |
| If not sold when the reporting period ends, income/loss is from the beginning of the reporting period to... | end of the reporting period; Impairment Loss (if sold for less than book value) |
| Change in accounting principle is accounted for ___ | retrospectively (revising last years' financial statements) |
| Change in accounting estimate is accounted for ___ | prospectively |
| Error in same year | journal entry is reversed |
| Error discovered in subsequent years (after error is made) | prior period adjustment recorded |
| Comprehensive income stems from owner or non owner transactions? | non-owner (not reported in IS) |
| Operating Activities | interest, taxes, and dividends (not dividends paid to owners), A/P |
| Do indirect Operating activities begin with Net Income | yes |
| Investing Activities | investment securities, buying stocks/bonds, loans to others |
| Financing Activities | creditors and investors, borrowing with notes, loans, mortgages, bonds; dividends to owners, payments of principle, N/P |
| Land held for speculation is classified as | long-term investment |
| Is interest expense an operating expense? | No |
Created by:
lexi.welte
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