Financial Accounting (ACCT2200)

For a 5-year period, a stock had annual returns of 6.4 percent,... For a 5-year period, a stock had annual returns of 6.4 percent, -11.2 percent, 0.3 percent, 19.8 percent, and 13.4 percent. What is the arithmetic average return? Group of answer choices

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Nature and reporting of current liabilities ƒ Understand the nature and reporting requirements of contingencies ƒ Illustrate the trade-off between reliability and relevance in accounting for contingencies

Extend our understanding of valuation methods beyond simple present value calculations. „ Understand the terminology of long-term debt „ Bonds – coupon and zero-coupon bonds „ At Par vs. Discount vs. Premium „ Market interest rate versus coupon rate „ Mortgages – Interest plus Principal paid each period „ Practice bookkeeping for debt issuance, interest accruals, periodic payments, and debt retirement. „ Understand how long-term debt affects financial statements over ti...

Obligations that must be discharged in a short period of time (generally less than one year) „ Reported on balance sheet at nominal value examples: ƒ Accounts payable ƒ Short-term borrowings ƒ Current portion of long-term debt ƒ Deposits ƒ Warranties ƒ Deferred Revenues / Income

Understand when accounting departs from the “transactions- based” model and towards market-driven valuations

Tax Depreciation „ Accelerated depreciation „ No judgment in determining depreciation expense „ Tax Reporting ≠ Financial Reporting ==> timing differences in measurement of income „ Why would a firm prefer accelerated depreciation for tax purposes? „ Why does government allow this? „ Why not use the tax method for financial reporting? „ Different depreciation for tax and financial reporting gives rise to Deferred Taxes

Understand that the accounting method used for acquisitions depends on the extent to which the investor exerts influence over the investee.

Accounting – Mapping of actions and events into financial statements „ (Economic) Principles governing the accounting mapping: Objectivity, conservatism, revenue recognition, and matching