Home / Summaries / FSA / accounting-statements-gaap

Analyzing Income Statements

Q: Where are discontinued operations reported

below income from continuing operations, net of tax , from the date the decision to dispose of the operations is made.

20 important questions on Analyzing Income Statements

When is revenue recognised and how is it reported?

As a general rule, revenue is recognized in the period in which it is earned, which may not necessarily be the same as the period in which cash is collected from the customer. Revenue is reported net of any returns and allowances in the income statement

What is the difference between principal and acting as a principal and agent, when the ticket prices is 10k but the the but the profit is 1k

Principal > profit margin 10%
Agent > profit margin 100%

Definition of unusual or infrequent items (two things), and as what are they classified (continuing, discontinuing or other comprehensive income)

Unusual in nature/unfrequent and material, continuing operations

Gains or losses from the sale of assets or part of a business, if these activities are not a irm’s ordinary operations
Impairments, write-offs, and write-downs Restructuring costs

What happens when thet choose for a prospective application

With prospective application, prior statements are not restated, and the new policies are applied only to future inancial statements.

change in accounting estimate (pro or retro)

Changes in accounting estimates are applied prospectively and do not require the restatement of prior inancial statements.

change in accounting policy (pro or retro)

Retro

Sometimes, a change from an incorrect accounting method to one that is acceptable under GAAP or IFRS is required. A correction of an accounting error made in previous inancial statements is reported retro or prospectivr?

requires retrospective application. Prior-period results are restated. Disclosure of the nature of any signiicant prior-period adjustment and its effect on net income is also required.
Prior-period adjustments usually involve errors or new accounting standards and do not typically affect cash low. Analysts should review adjustments carefully because errors may indicate weaknesses in the irm’s internal controls.

Revenue recognition long term contract formula

% of cost incurred/ total estimated costs

What is the difference between research costs and R&D costs under IFRS and US GAAP, software under US GAAp has one exception, when? (With regards to expensing and capitalization)

Development costs under IFRS can be cap[italized, but with US GAAP, both research and development costs are generally expensed as incurred. When technical feasibility has been established then it can be capitalized under GAAP

weighted average number of common shares

is the number of shares outstanding during the year, weighted by the portion of the year they were outstanding.

Where are discontinued operations reported

below income from continuing operations, net of tax, from the date the decision to dispose of the operations is made.

Diluted EPS formula (two ways)

1.Adjusted income available for common shares/ weighted average common and potential common shares outstanding
2= de lange formule 4;4

Antidilutive securities (ignore)

are stock options, warrants, convertible debt, or convertible
preferred stock that would increase EPS if exercised or converted to common stock.

What do when excercice price>market price

Ignore

And excercise price<market price

TSM method

Should diluted eps be higher or lower than basic eps

ALWAYS lower, as the denumenator gets bigger, you divide by a bigger amount as stocks are added

What is and why use common size income statements

Expresse each category as a percentage of revenue and, elimanetes effect of size so you can compare

Gross profit formula

Sales - cogs

Net profit margin formula

Net income / revenue

Operating profit margin formula

Gross profit - operating expenses / revenue (sales)

The question on the page originate from the summary of the following study material:

FSA

View summary

A unique study and practice tool
Never study anything twice again
Get the grades you hope for
100% sure, 100% understanding

Remember faster, study better. Scientifically proven.

flashcards
& notes

Analyzing Income Statements

20 important questions on Analyzing Income Statements

When is revenue recognised and how is it reported?

What is the difference between principal and acting as a principal and agent, when the ticket prices is 10k but the the but the profit is 1k

Definition of unusual or infrequent items (two things), and as what are they classified (continuing, discontinuing or other comprehensive income)

What happens when thet choose for a prospective application

change in accounting estimate (pro or retro)

change in accounting policy (pro or retro)

Sometimes, a change from an incorrect accounting method to one that is acceptable under GAAP or IFRS is required. A correction of an accounting error made in previous inancial statements is reported retro or prospectivr?

Revenue recognition long term contract formula

What is the difference between research costs and R&D costs under IFRS and US GAAP, software under US GAAp has one exception, when? (With regards to expensing and capitalization)

weighted average number of common shares

Where are discontinued operations reported

Diluted EPS formula (two ways)

Antidilutive securities (ignore)

What do when excercice price>market price

And excercise price<market price

Should diluted eps be higher or lower than basic eps

What is and why use common size income statements

Gross profit formula

Net profit margin formula

Operating profit margin formula

Summaries related to Analysis of Income Taxes

Global politics

Essentials of international relations

Behavioral genetics

Management and organisational behaviour

Follow Up Engels idioom 4/5 H

International Business

Marketing fundamentals

Projectmanagement, A practical Approach-Engl…

Basic Management Accounting for the Hospital…

International business

Organization theory and design