Final Prep - Dec 9

Final Prep - Dec 9 - AFM 101 Final Review Session Chapter 1...

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AFM 101 Final Review Session
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Chapter 1 n Four Financial Statements n IFRS n Governance, Management
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Chapter 2 n Objective of Financial Reporting n Assumptions Separate-Entity Assumption Unit-of-Measure Assumption Continuity Assumption Cost Principle
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Chapter 2 n Definitions of assets, liabilities (current and non-current), shareholders’ equity n Understanding transactions, accounts, t- accounts, double entry accounting n Statement of Financial Position
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Chapter 3 n Operating (Cash-to-Cash Cycle) n Periodicity Assumption n Income Statement Revenues Expenses Gains/Losses n Cash vs Accrual Basis
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Chapter 3 n Revenue Principle n Matching Process
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Chapter 4 n Adjusting Entries Accrued/Deferred Revenues/Expenses Contra Accounts n Materiality Closing Entries
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Chapter 5 – Cash Flow Statement n Classification Operating Investing Financing n How individual transactions affect cash n Direct vs Indirect Method of Reporting n Analysis of Cash Flows
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Chapter 5 – Statement of Financial Position n Increases to Non-cash Current Assets -> Subtract Operating Cash n Increases to Current Liabilities -> Add Operating Cash n Long-term Assets: May have investing cash inflows or outflows n Long-term Debt and Share Capital: May have financing cash inflows or outflows n Dividends
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Chapter 5 – Income Statement n Amortization/Depreciation n Gain/Loss on Sale: Operating Cash Flow Gain on Sale = Selling Price – Net Book Value n Net Income as basis for Operating Cash
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Chapter 6 n Regulating Bodies of the Accounting World n Auditors and the purpose of Auditing n Users n Disclosure
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Guiding Principles for Communicating Useful Information n Relevance n Material n Faithful Representation n Comparability n Verifiability n Timeliness n Understandability n Cost-Effectiveness
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Chp 7: Sales, Receivables, and Cash n Sales When to record revenue Sales Discounts Sales Returns and Allowances n Accounts Receivable Estimating Bad Debt Expense Receivables Method Sales Method Writing off Accounts Collecting an amount from a written off account
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Chp 7: Sales, Receivables, and Cash n Cash Bank Reconciliation Company Books Bank Statement End Balance End Balance + Additions (ie: automatic deposits) + Additions (ie: Deposits in Transit) - Deductions (ie: automatic withdrawals, Bank Charges) - Deductions (ie: Outstanding Cheques) +/- Error +/- Error Adj Ending Balance Adj Ending Balance
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Trade Receivables – AFDA Question n Dec 31, 2010 Trade Receivables = 200,000DR AFDA = 10,000 CR n During 2011 5,000,000 sales, 60% on credit Collected 2,500,000 of receivables $40,000 determined to be uncollectible n Company uses trade receivables method 3% deemed to be uncollectible
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Trade Receivables Beg Balance 200,000 Sales (5,000,000 x 60%) 3,000,000 Collected (2,500,000) Written-off (40,000) End Balance 660,000 3% 19,800
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Aging (Receivables) Method DR Bad Debt Expense 49,800 CR Allowance for Doubtful Accounts
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This note was uploaded on 01/18/2012 for the course AFM 101 taught by Professor Kennedy during the Fall '08 term at Waterloo.

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Final Prep - Dec 9 - AFM 101 Final Review Session Chapter 1...

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