Accounting Cheat Sheet
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rio_harcanAccounting Cheat Sheet
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rio_harcanBad Debt and Allowances Inventory
(Note: when figuring our write offs, only look at change in A/R or Allowances, not delta of both.)
Beg Invty + Purchase – End Invty = COGS
LIFO reserve = InvtyFIFO - InvtyLIFO
COGSLIFO - COGSFIFO = ∆LIFO reserve
COGSLIFO = Big InvLIFO + Purchases – EndInvLIFO
Net Income (FIFO)= Net Income (LIFO)+Change in LIFO Reserve
When comparing LIFO and FIFO companies rebuild I/S and B/S using workflow:
Write off: Reduce A/R & allowance by the same amount InventoryAssetsCOGSNet IncomeRetained Earnings
-Specific accounts are written off only when they are determined indeed uncollectible
Drop in LIFO reserve could indicate income is inflated because inventory is not being replenished.
-Income is reduced when bad dept expenses are estimates, not when accounts are written off.
Recording Depreciation, and Stock Transactions
If bond %-age > yield Premium
Debt retired at maturity results in no gains or losses, but debt retired before :
Cash proceeds – BV = gain or loss
If purchasing back at a loss, debit cash and “Gain on Bonds Payable”
If a firm changes its salvage
value or useful life, adjustments
are made to future depreciation,
-Column D shows up on not prior periods income.
B/S as Lease Obligation
-Operating leases make
orgs look more efficient by For DDB rate = 2*(1/useful life) For straight line rate = 1/useful life
more rev w/ fewer assets
-Accounting for advertising must be expensed when occurred except “Direct
Response Advertising”
-Must write asset down to MV if future undiscounted cashflows < BV of Asset
-”Software cost “is labeled cost but is actually an asset
Shareholders Equity General shit to remember:
-Coupons are semiannual unless otherwise notes
-New Revenue is NI(old) + Margin (1-Tax Rate)
-Costs are “capitalized” once they are considered assets
Income Tax
-Tax expenses are computed based on GAAP income
-Tax payable to IRS computed on taxable income
-Deferred income taxes line is accounting for difference btn GAAP & IRS tax liabilities
-A.F.S gains & losses bypass I/S
-Should recognize employee stock over vesting period
