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Accounting Process
The Income Statement
Statement of Cash Flows
TVM
100
- Identifying - Measuring - Processing - Communicating
What is accounting process?
100
Revenues - Inflows of resources resulting from providing goods or services to customers Expenses - Outflows of resources incurred in generating revenues Gains and losses - Increases or decreases in equity from peripheral or incidental transactions of an entity Income tax expense - Because of its importance and size, income tax expense is a separate item.
What is Income from Continuing Operations?
100
- Operating - Investing - Financing
What are Three Sections?
100
1. A portion of the principal is due with each payment * The payment is larger because it includes - Principal - Interest * Less risk because the note is paid off over time 2. Principal is due at maturity * The payment is lower because it only includes interest * Riskier
What are Two Types of Notes?
200
Provide information that is - Useful for investment and credit decisions - Useful for assessing the amount, timing and uncertainty of future cash flows - Useful for assessing the resources, claims on those resources, and changes in those resources
What is objectives of Financial Accounting?
200
Includes revenues and expenses directly related to the principal revenue-generating activities of the company
What is Operating Income
200
1. Direct 2. Indirect
What are Cash Flows Methods?
200
Note is Due in Equal Annual Payments of Principal and Interest Note payable $200,000 Coupon Rate 5.00% Term 4 years
What is the Payment?
300
Assets – probable future economic benefits controlled by a company from previous transactions Liabilities – probable future sacrifices arising from present obligations from previous transactions Equity – residual interest
What elements of Financial Statements?
300
Includes gains and losses and revenues and expenses related to peripheral or incidental activities of the company
What is Nonoperating Income?
300
Changes in Cash received and Cash Paid
What is Direct Method?
300
1. Determine the future cash flows - Use the coupon rate of interest for this 2. Determine the present value at the market rate of interest
How is the new Fair Value approximate?
400
Account-grouping by a characteristic - Stores data - It looks like a check register
What is General Ledger?
400
1. Intraperiod tax allocation - Tax expense is associated with the component of income that caused it 2. Interperiod tax allocation - Difference in financial and tax reporting causes income to be reported in different years
What are Types of Tax Allocation?
400
Net Income +/- Accruals Operating cash flows
What is Indirect Method?
400
1. Net 2. Gross with a discount
What are Two Ways to Record Notes?
500
Remove the balances in the nominal accounts and transfers them to retained earnings
What is Closing Entries?
500
1. Discontinued operations 2. Cumulative effect of a change in accounting principle - For certain mandated changes in accounting principles - Most change in principles handled retrospectively
What are Types of Separately Reported Items/Other Comprehensive Income?
500
Indirect Method per GAAP
What is the Required Method?
500
Series of equal periodic payments.
What is Annuity?