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Balance Sheet Accounts: Current Assets: Cash | Accumulated Depreciation (contra)| A/R | Prepaid Expenses Net Working Capital =
Current Ratio=
Long-Term Assets: PPE | Intangible Assets | Current Liabilities: Acct
...
| Unearned Revenues
Current Assets / Current Liab
...

Noncurrent Liabilities: obligations due after 1 year
Equity: Common/Preferred & Treasury Stock | Addt’l paid in capital | Earned Capital | Retained Earnings | Dividends | Accum
...
Retained Earnings: Open
...
of R
...
+ Net Income [– Net Loss] – Dividends = End
...
Retained Earnings **Ret
...
only affected by revenue & expense accts
...
Income)
– Nonoperating Expenses
– Tax Expenses
Income from Continuing Operations
+/– Nonrecurring Items net of tax
= Net Income

Receivables

Decrease
Inventories

Increase
Decrease

Payables &
Accruals

Increase
Decrease

$ Paid Operating
Goods & Services

Cash Flow from
Operations

$ Paid Acquisition
Investments & PPE

Cash Flow from
Investing

$ Paid Dividends &
Reacquisition Debt
or Capital Stock

Increase

Cash Flow from
Financing

Net Change in
Cash for the
Period

Sales & Net Inc
...
)
Cash paid for inventories
not accounted for in COGS
COGS include inventory
costs paid prev
...
Exp
...
Assets)
+ Increases in current liabilities (– Decreases in C
...
)
= Cash Flow from Operating Activities

C
...
↑
Asset Acct↓
Liab/Equity↑

C
...
↓ :
Asset Acct↑
Liab/Equity↓

Leverage Ratio =
Avg
...
Assets / Avg
...
– Pref
...
Common Shares
P/E Ratio = Mkt Price per share / EPS
Net Book Value (NBV) = Orig
...
Deprec
...
M
...
OH Rate (POHR) =
Est
...
Asset Base
Converting Operating Lease into Capital
Lease = Sum PV(Op
...
for Transactions Worksheet:
= 1 – (COGS/Sales)
PV Annuity =
PMT * (1/i) * [1-(1/(1+i)^N)]
Owner Financing: issuance of stock ↑Cash & Contrib
...
E
...
Pay
...
Rec
...
g
...
); ↑A/R | ↑Cash; ↓A/R | [Bad Debt] ↑Allowance; ↑Bad Debt Expense | [Default] ↓A/R; ↓Allow
...
Rec
...
Pay
...
taxes: ↓Cash; ↓Net Income
Accrued Expenses: must record expense in same period; ↑Wages Payable; ↓Net Income
Increase in Unearned Revenue: ↑Cash; ↑Unearned Rev
...
) | (once earned) ↓Liab
...
S
...
; ↑Ret
...

Dividends declared: ↑Dividends Payable; ↓Retained Earnings
Warranties: matching principle requires recognition warranty expense (incurred) same period as underlying sales recognized
Warranty expense is amount allotted for estimated costs (↑payable, ↓net income); Warranty service is actual cost from servicing (does NOT ↓Net Income)
Bad Debts: ↓Acct
...
on Bal
...
S
...
S
...
Rec
...
Sheet: Net A/R = Gross A/R – Allowance
Default by Debtor: ↓Gross A/R; ↓Allowance (use positive $ amount) | No Effect on B
...
, I
...
, nor C
...
S
...
S
...
Firms:
(1) Raw materials (purchased from suppliers);
(2) W
...
P
...
sales x cost of first inventory purchased (take out of oldest inventory first)
LIFO: each mo
...
inventory + cost inventory purchased this mo
...
+purch
...
Bal
...
Net Inventories 500

Open
...
Gross Acct
...

+ Sales on Credit
- Cash Collection from Customers
- Bad Debts Written-Off
= Closing Bal
...
Bal
...
Allow
...
Bal
...
Rec
...
Net A/R

Open
...
Retained Earnings
+ Net Income
- Dividend Declared
= Closing Bal
...
Earn
...
Bal
...

= Closing Bal
...
Bal
...
Net Work-in-Progress Inventories
Open
...
Net Raw Material Inventories
+ New Purchase
- Transfer to WIP Inventories
= Closing Bal
...
Bal
...
Deferred Revenues

Transaction that reduces Income but does not reduce Cash Flow: ↓Inventory; ↑Inventory Impairment Loss [OR] ↑Allow
...
rate); at Discount (PFV, when r>m)
Accounting Entries for Bonds: e
...
bond issued at premium: ^Cash; ↓Bond Payable
For making period payments: CPN PMT = FV * CPN Rate | Interest Expense = Book Value * Market Interest Rate
[Coupon PMT = “Cash PMT”] CPN>Interest: ↓Cash by amount of CPN PMT, ^Interest Expense; ^ Bond Payable by difference btwn CPN and Interest PMT
CPNVariance Analysis:
Price Variance = AQ(AP) – AQ(SP)
Labor Rate Variance = Actual Hrs(Actual Rate – Std
...
Rate(Actual Hrs
...
Hrs
...
Material & Labor costs = part of WIP inventory

Profit = price * Volume – Cost (where cost = FC+unit VC*Volume)

Contribution Margin = Sales (Revenue) – VC

CM Ratio = Tot
...
M
...
Sales [or] = unit CM/Sale Price

Income Statement: Sales – Variable Expenses = Contribution Margin – Fixed Expenses = Net Operating Income (Net Income)
Calc
...
FC à solve for Q
Operating Leverage: degree of operating leverage = CM / Net Income
POHR = Est
...
Mfg
...
Tot
...
POHR for different cost drivers: Machine Hrs = Budgeted MFG
...
OH / (Budgeted D-L Rate * Budgeted D-L Hrs
...
amt
...
OH * Actual Hrs (OR if $D-L, Actual Mfg
...
OH – (Actual Hrs
...
)]



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Title: Final Exam Notes Page/Cheat Sheet
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