Read the summary and the most important questions on Financial accounting : international financial reporting standards. | 9789810684570 | Walter T. Harrison ; Charles T. Horngren

• 1 Conceptual Framework and Financial Statements

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• What does a income statement represent?

  1. Revenues

  • Net sales
  • Other income revenues

  2. Expenses

  • Cost of goods sold
  • Selling, general and administrative expenses
  • Depreciation, amortization and provisions.
  • Non-recurring income and expenses
  • Finance costs, or interest expenses (the cost of borrowing money)
  • Income tax expense.

• What does the statement of financial position represent?

  1. Assets

  • Cash and cash equivalents
  • Trade receivables
  • Inventories
  • Other current assets
  • Total current assets
  • Property, plant and equipment
  • Intangible assets
  • Other non-current assets
  • Total non-current assets
  • Total assets

  2. Liabilities

  • Trade payable
  • Tax payable
  • Borrowings - short-term
  • Other current liabilities
  • Total current liabilities
  • Borrowing - long-term
  • Other non-current liabilities
  • Total non-current liabilities
  • Total liabilities

  3. Shareholder's equity

  • Capital
  • Retained earning, reserves and others
  • Total shareholder's equity
  • Total liabilities and shareholder's equity.

• Which questions should you ask in an ethical analysis?

  1. Which options are most honest, open, and truthful?
  2. Which options are most kind, compassionate, and build a sense of community?
  3. Which options create the greatest good for the greatest number of stakeholders?
  4. Which options result in treating others as I would want to be treated?

• 5 Short Term Investements & Receivables

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• What are trading securities?

  Trading securities are share investments that are expected to be sold in the near future with the intent of generating profits on the sale.

• What is a note receivable?

  A written promise to pay the lender a definite sum at the maturity date, plus interest.

• The Aging-of-receivables method is ... 

  a way to estimate bad debts by analyzing individual accounts receivable according to the length of time they have been receivable from the customer.

• How to write of uncollectible accounts?

  1. Debit accounts receivable

  2. Credit Allowance for doubtful receivables.

• How to recover previously written-off receivables?

  1. Reverse write of entry OR

  2. Decrease bad debt expense

• What is the direct write-off method?

  A method of accounting for bad debts in which the company waits until a customer's account receivable proves uncollectible and then debits uncollectible-account expense and credits the customers accounts receivable.

• The Acid-test ratio is calculated by ...

  (Cash + short-term investments + net current receivables) / Total current liabilities = acid-test ratio.

  The higher the acid-test ratio, the easier it is to pay current liabilities.