Cash Flow Statement
Essay by fahima9524 • June 23, 2015 • Course Note • 729 Words (3 Pages) • 1,343 Views
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Final Exam prep focus list-acct 1b by topic
Cash Flow Statement:
- Understand the primary purpose of the statement of cash flows.
- Know 3 categories of cash flow statement and meaning /significances of each categories, Operating Activities, Investing Activities, and Financing Activities.
- Be able to compute cash provided (generated) and cash used for each of major activities in all 3 cash flow categories.
- Be able to prepare a partial cash flow statement in BOTH Direct and Indirect methods of preparing cash flow statement.
- Conceptual understanding of Increase or decrease of net cash provided/used by each of activities.
- General understanding of “non cash investing and financing activities” and its disclosure requirement on a financial statement.
- How do the following transactions impact on cash flow:
- sale of common stock.
- purchase of equipment.
- sale of land.
- issuance of long-term debt.
- inflows from revenue.
- inflows from sale of equipment.
- outflows for income taxes.
- outflows for wages.
- decrease in short-term notes payable.
- depreciation expense.
- decrease in inventory.
- loss on sale of equipment.
LT Debt, Bonds, Note:
- Understand advantages and disadvantages of issuing Stocks vs. Bonds in an organization, in other words, “Equity financing” vs. “Debt financing” options to an organization, its’ ups and downs.
- What are “bonds” to a corporation? What are bonds to an investor?
- What types of bonds are available in our country? What do they mean: convertible bonds, term bonds, serial bonds, callable bonds, debenture bonds?
- Conceptual understanding of “Discounting” bonds issuance vs. “Premium” bonds issuance, what are those “discounts” and “premium” amounts meant to the bond issuer and bondholders?
- Accounting Journal entries at the Inception of bonds issuance in BOTH issuing bonds with discounts and with premiums.
- Accounting Journal entries at periodic interest payments and amortizations of bond premium and bond discount over the life of the debt.
- Notes Payable, such as mortgage loan, vs. bonds
Corporation equity financing chapters:
- Journal entries issuing shares for cash, issuing shares for services provided to the corporation.
- Component of SHE (Shareholders’ Equity Statement)
- How those 3 distinctively different corporate financing transactions are differing from each other: one, CASH dividend, two, STOCK dividend, and the third, stock SPLITS.
- Be able to calculate EPS (yes, that is Earning Per Share)
- Good conceptual and mechanical understanding of RETAINED Earnings account in a typical corporate financial statement.
- Compute Retained Earnings account balance whether it’s beginning balance or it’s ending balance, how those balances show on SHE.
- Treasury shares what are those and how those are shown on a SHE.
- Issuing shares at what valuation base in finance and accounting world? Fair market value, Cost, present value, or other values?
- Number of shares: outstanding, authorized, issued, treasury shares. How to tally up each.
- Effect of the declaration of a cash dividend by the corporation board of directors.
Financial statement analysis:
- Return of Assets, Return on Equity, how those two ratios are interrelated?
- Receivable and inventory turnover ratios, what do they indicate to a corporation?
- Solvency ratios, what are they?
- Basic horizontal and vertical analysis method, basics.
Operating (fixed) assets (PP&E) and Contingent Liabilities:
- Intangible assets, what are they and how they show on a typical financial statement of a corporation? Patent, copy rights, trademarks, brands
- Goodwill? Who? How they are valued and recorded on a financial statement.
- Different depreciation methodologies: straight line depreciation, declining balance, units of production depreciation methods; should be able to compute the depreciation amount and journal entries using each of those methods.
- Research and Development costs to a corporation, how do they get treated in financial reporting?
- Contingent Liabilities, what are the rules on US GAAP, i.e. pending litigation, warranty, etc.
- Depletion, Amortization, Depreciation, are these 3 words are the same or how are they different from each other?
- Warranty cost, pending litigations, how those economic events are treated and shown on a financial report?
Partnership:
- Partnership structure basics, what are the differences between corporations vs. a partnership in terms of financial statement?
Investment:
- Equity method vs. cost method of accounting for LT investment.
- 3 classifications of reporting investment.
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