FAR CPA Exam -Complete Exam Study
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F1 M1 - Balance Sheet, Income Statement, Comprehensive Income
What is included in a full set of financial statements?
-Statement of Financial Position (Balance Sheet)
-Statement of Earnings (Income Statement)
-Statement of CF
-Statement of Comprehensive Income
-Statement of Owners Equity
-Notes to Financial Statements
Current Assets
-Cash and Cash Equivalents
-Investments: Trading Securities
-Accounts Receivable
-Notes Receivable
-Inventory
-Prepaid Expenses
-Allowance for Doubtful Accounts (contra)
Non Current Assets
-Investments: AFS, HTM
-PPE: Land, Building, Equipment less: Accumulated Depreciation.
-Intangible Assets: Goodwill, Patents
-Other: Pensions, Benefits, Deferred Income Tax
Current Liabilities
-Current Portion of LT Debt
-Accounts Payable
-Notes Payable
-Interest Payable
,-Salaries Payable
-Unearned Revenue
Long Term Liabilities
-Bonds Payable
-Deferred Income Tax Liability
-Pensions / Retirement Benefits
Stockholders Equity
-Capital Stock: preferred and common
-Paid In Capital in Excess of Par
-Retained Earnings
-Accumulated Other Comprehensive Income
-Treasury Stock (contra)
Expense that correlates with each of the following unexpired costs:
-Inventory
-Prepaid Insurance
-Net Book Value of Fixed Assets
-Unexpired Cost of Patents
Inventory - COGS
Prepaid Insurance - Insurance Expense
Fixed Assets - Depreciation
Patents - Amortization Expense
Single Step Income Statement
All Revenues and Gains
- All Expenses and Losses
Pretax Income
- Income Tax Expense
=Net Income
Multi-Step Income Statement
Sales
- COGS
Gross Profit
- Operating Expenses
Operating Income
,- Non Operating Gains and Losses
Pretax Income
- Income Tax Expense
Net Income
+/-Discontinued Operations (net of tax)
Net Income
Selling Expenses
-Freight Out
-Commissions
-Advertising
-Salaries for Sales People
-can also be a % of other Expenses
General and Administrative Expenses
-Insurance Expense
-Salaries for Officers
-Legal Expenses
Accounting Expenses
Conditions that require an item to be shown as a discontinued operation
-strategic shift
-major effect on companies operations and financial results
Accounting for Discontinued Operations
Fair Value
- Cost to Sell
- Book Value
= Impairment Loss
-Must write down the book value by the impairment loss.
-Impairment loss cannot be reversed by more than the amount written down.
Gain or Loss on Sale
Selling Price
-Book Value (after Impairment)
=G/L (-tax expense)
, G/L from Discontinued Operation can consist of:
-Impairment Loss
-G/L during year
-G/L on disposal
Direct Method of Exchange Rate
Domestic price of one unit of another currency
$1.47 buys 1 euro
Indirect Method of Exchange Rate
Foreign Price of one unit of domestic currency.
0.68 euros buy $1
Foreign Currency G/L - Accounts Receivable
AR - Exporting Sale
Foreign Currency Increases, Assets Increase = GAIN
Foreign Currency Decreases, Assets Decrease = LOSS
Foreign Currency G/L - Accounts Payable
AP - Import
Foreign Currency Increases, Liabilities Increase = LOSS
Foreign Currency Decreases, Liabilities Decrease = GAIN
Foreign Currency Transaction vs. Translation
Foreign Currency Transaction
-used when we have a foreign currency transaction gain or loss
-G/L on one specific transaction
Foreign Currency Translation
-used when converting a whole set of financial statements
Statement of Comprehensive Income
Includes:
-Net Income
-Other Comprehensive Income
Guide with Verified Answers | Guaranteed
A+
F1 M1 - Balance Sheet, Income Statement, Comprehensive Income
What is included in a full set of financial statements?
-Statement of Financial Position (Balance Sheet)
-Statement of Earnings (Income Statement)
-Statement of CF
-Statement of Comprehensive Income
-Statement of Owners Equity
-Notes to Financial Statements
Current Assets
-Cash and Cash Equivalents
-Investments: Trading Securities
-Accounts Receivable
-Notes Receivable
-Inventory
-Prepaid Expenses
-Allowance for Doubtful Accounts (contra)
Non Current Assets
-Investments: AFS, HTM
-PPE: Land, Building, Equipment less: Accumulated Depreciation.
-Intangible Assets: Goodwill, Patents
-Other: Pensions, Benefits, Deferred Income Tax
Current Liabilities
-Current Portion of LT Debt
-Accounts Payable
-Notes Payable
-Interest Payable
,-Salaries Payable
-Unearned Revenue
Long Term Liabilities
-Bonds Payable
-Deferred Income Tax Liability
-Pensions / Retirement Benefits
Stockholders Equity
-Capital Stock: preferred and common
-Paid In Capital in Excess of Par
-Retained Earnings
-Accumulated Other Comprehensive Income
-Treasury Stock (contra)
Expense that correlates with each of the following unexpired costs:
-Inventory
-Prepaid Insurance
-Net Book Value of Fixed Assets
-Unexpired Cost of Patents
Inventory - COGS
Prepaid Insurance - Insurance Expense
Fixed Assets - Depreciation
Patents - Amortization Expense
Single Step Income Statement
All Revenues and Gains
- All Expenses and Losses
Pretax Income
- Income Tax Expense
=Net Income
Multi-Step Income Statement
Sales
- COGS
Gross Profit
- Operating Expenses
Operating Income
,- Non Operating Gains and Losses
Pretax Income
- Income Tax Expense
Net Income
+/-Discontinued Operations (net of tax)
Net Income
Selling Expenses
-Freight Out
-Commissions
-Advertising
-Salaries for Sales People
-can also be a % of other Expenses
General and Administrative Expenses
-Insurance Expense
-Salaries for Officers
-Legal Expenses
Accounting Expenses
Conditions that require an item to be shown as a discontinued operation
-strategic shift
-major effect on companies operations and financial results
Accounting for Discontinued Operations
Fair Value
- Cost to Sell
- Book Value
= Impairment Loss
-Must write down the book value by the impairment loss.
-Impairment loss cannot be reversed by more than the amount written down.
Gain or Loss on Sale
Selling Price
-Book Value (after Impairment)
=G/L (-tax expense)
, G/L from Discontinued Operation can consist of:
-Impairment Loss
-G/L during year
-G/L on disposal
Direct Method of Exchange Rate
Domestic price of one unit of another currency
$1.47 buys 1 euro
Indirect Method of Exchange Rate
Foreign Price of one unit of domestic currency.
0.68 euros buy $1
Foreign Currency G/L - Accounts Receivable
AR - Exporting Sale
Foreign Currency Increases, Assets Increase = GAIN
Foreign Currency Decreases, Assets Decrease = LOSS
Foreign Currency G/L - Accounts Payable
AP - Import
Foreign Currency Increases, Liabilities Increase = LOSS
Foreign Currency Decreases, Liabilities Decrease = GAIN
Foreign Currency Transaction vs. Translation
Foreign Currency Transaction
-used when we have a foreign currency transaction gain or loss
-G/L on one specific transaction
Foreign Currency Translation
-used when converting a whole set of financial statements
Statement of Comprehensive Income
Includes:
-Net Income
-Other Comprehensive Income
