The amount of shareholders equity reported in the balance
Is the investment base for equity/net assets used in profitability
analysis, risk analysis and residual income-based equity valuation.
Is not the same as reporting quality (which
can imply conservatism).
Accounting information should (be):
Fair complete representation of firms economic
performance, position, and risk.
Provide relevant i
Asset and Liability
To simplify the complexity of valuation of assets and liabilities
in real companies.
Proposes application of a standardized framework to analyze
the impact of events and transactions on the
Criteria for Revenue Recognition
If firm has provided all or substantial portion of product or
If firm has received an asset or satisfied a liability with a value
measurable with reasonable precision.
Sample Questions Final Exam
1.) The following information about Douglas Corp.s Accounts Receivable (A/R) and Sales are presented below:
Year 2012-Beginning Balance of A/R = $791M
Year 2012 -Ending Balance of A/R = $807M
Year 2012 - Sales = $3,002M
Sample Questions Quiz 2
1. Which of the following transactions would result in an increase in the current ratio?
Collection of cash from an account receivable.
Selling shares of stock to stockholders in exchange for cash.
Purchasing a building