ACG 3173 Final Exam Review

When the Effective Rate is HIGHER than the Coupon Rate is the note going to be issues at a.) Par b.) Premium c.) Discount c.) DISCOUNT ****** EXAM QUESTION Said another way... The interest rates have risen(^^^) so the prices have dropped (vv)

****** EXAM QUESTION C.) DISCOUNT Said another way... The interest rates have risen(^^^) so the prices have dropped (vv)

Why do we care about the difference between capital leases and operational leases?

*How it is Reported* -Capital Leases are recorded *AS IF YOU OWN THEM* ~Therefore, they are recorded on the BALANCE SHEET ~ Recorded on Assets and Liabilities ~Assets= Equipment Value & Depreciating ~Liability= Present Value Lease Payments ~Liability: Reduced as it is Expensed -Operating Lease is not as if you own it

What will you find on the right side of the balance sheet?

- Current Liabilities _ Long term Liabilities

The purpose of the financial statements is to

- Most properly reflect the underlining economic reality - Is just an estimate of that reality because it is the best they can do

Equity Method of Accounting

- Net increase in the investment account does not affect cash flows. - Company must deduct the net increase from net income to arrive at net cash flow from operating activities. -The standard technique used when one company has a significant investment in another company. -When the equity method is used to account for ownership in a company, the investor records the initial investment in the stock at cost, and that value is periodically adjusted to reflect the changes in value due to the investor's share in the company's income or losses

Capital Lease IS ( Income Statement )

- Principal Payment ~Operating Activity - Interest Expense (Non-Operating Income)

Capital Lease BS (Balance Sheet)

- Record as Asset (Equipment Value) (Depreciate) - Record as Liability ~PV Lease Payments ( Present Value) ~Reduce as Expensed

The Difference Between a Bond's Yield Rate and Its Coupon Rate.

-A bond's coupon rate is the rate of interest it pays annually -its yield is the rate of return it generates

What will be found under Current Liabilities?

-AP ( Accounts Payable) - Accrued Expenses and Other -Unearned Revenue

Conservatism Principle & connection to Basic / Diluted EPS ( Earnings per Share)

-Avoids overstating assets or income in the preparation of financial statements -Also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. This policy tends to understate rather than overstate net assets and net income, and therefore lead companies to "play safe". -It deals with anticipating possible future losses because the Diluted EPS, as opposed to Basic EPS, is the worst case scenario affect on Earnings Per Share ( Measure depicting the total earnings available to share holders) and the forecasted losses if the individuals who have the rights to eat up diluted shares act on their privilege to buy them.

Average Cost Inventory Cost Flow Method

-Companies that use the periodic system and want to apply the same cost to all units in an inventory account use the weighted average cost method. -The weighted average cost per unit equals the cost of goods available for sale divided by the number of units available for sale.

Accrued Expenses & Examples

-Expenses that have been INCURRED but not yet PAID ~seen on most Financial Statements -Current Liability Accrued Expenses Examples would be... 1.) Wages 2.) Salaries 3.) Utilities Etc.

What is the goal behind determining whether to use LIFO or FIFO?

-Goal is to show less Net Income on paper and manipulate the Costs of Goods sold to pay less income taxes -When COGS (Costs of Goofs Sold) is HIGHER... NI (Net Income) is going to be *LOWER* Sales (COGS) -------------------> Higher Reduction from = Gross Profit Sales = lower Gross ( Operating Expenses) Profit which =EBIT ( Earnings Before Income Tax) Leads to ( Interest Expense) Lower EBIT ( Income Taxes) = Net Income -Lower Taxable income & Tax Liability

Which Classification of Marketable Securities is reported in a different method than the other 2?

-Held to Maturity= Reported at Cost (Reliable) -Trading= Fair Market Value ( Relevant) -Available for Sale= Fair Market Value (Relevant)

Property Plant and Equipment Net

-Original cost minus accumulated depreciation -Property Plant and Equipment is the value of all buildings, land, furniture, and other physical capital that a business has purchased to run its business. -The term "Net" means that it is "Net" of accumulated depreciation expenses.

Under the Accrual basis of accounting...

-Revenues are recorded when they are EARNED regardless of when they are RECEIVED -Expenses are recorded when they are INCURRED regardless of when they are PAID -*Reflects the Firms Underlying Economic Reality more than Cash Basis of Accounting*

Under the Cash basis of accounting...

-Revenues are recorded when they are RECEIVED -Expenses are recorded when they are PAID

Discount rate

-Stated Rate < Market Rate - Buying at a discount means you pay LESS than the NAV ( Net Asset Value )

Par Rate

-Stated Rate = Market Rate - The nominal value of a bond, share of stock, or a coupon as indicated in writing on the document or specified by charter.

Premium Rate

-Stated Rate > Market Rate - Buying at a Premium means you pay MORE than the

What does the Long Term Debt Mean?

-That is the present value future cash flow -Market value of the debt

Allowance for Doubtful Accounts (Allowance for Bad Debts)

-The allowance for doubtful accounts is a reduction of the total amount of accounts receivable appearing on a company's *balance sheet*, and is listed as a deduction immediately below the accounts receivable line item. -This deduction is classified as a contra asset account. -Uses the Aging of Receivables -Allowance for Doubtful Accounts

Bad Debt Expense

-The amount of the adjustment to the allowance for uncollectible accounts, representing the cost of estimated future bad debts charged to the current period. -On the Income Statement -Income statement approach to estimating bad debt Uses Percentage of Sales -Divide the amount of bad debt by the total accounts receivable for a period, and multiply by 100. -Direct Write-Off Method

Coupon Rate

-The interest paid on a bond -Expressed as a percentage of the bond's par value

What does it mean when *NET* is next to something on the financial statement or Ratio?

-The term "Net" means that it is "Net" of accumulated depreciation expenses. -or other related expenses

Specific Identification Inventory Cost Flow Method

-This Method assigns the specific cost of each inventory item to cost of goods sold. -This means that you must track the cost of each item in your inventory. -Companies with expensive low-volume merchandise use the specific identification method because the physical flow of goods is easier to track.

These 4 ways for a company to determine the cost of its inventory are

1. FIFO ( First in First Out) 2. LIFO ( Last in First Out) 3. Average Cost 4.Specific Identification

Lease, Leasee, &Lessor

1.) A lease is an agreement conveying the right to use property, plant, and equipment (PP&E) usually for a stated period of time. 2.)A person who acquires the right to possession and use of goods under a lease 3.)Owner who is leasing out property

What are the 2 kinds of accounting methods for leases?

1.) Capital Lease ~recorded on the balance sheet 2.) Operating Lease ~ recorded on the Income Statement under Lease Expense

Difference in Lease Criteria in regards to Accounting

1.) Capital Lease ACCOUNTING Criteria: ~Lease is considered as asset (leased asset) and liability (lease payments). Payments are shown in Balance sheet 2.) Operational Lease ACCOUNTING Criteria: ~No risk of ownership. Payments are considered as operating expenses and shown in Profit and Loss statement

Difference in Criteria between Capital Lease and Operating Lease in regards to Ownership

1.) Capital Lease OWNERSHIP Criteria: ~Ownership of the asset might be transferred to the lessee at the end of the lease term. 2.) Operational Lease OWNERSHIP Criteria: ~Ownership is retained by the lessor during and after the lease term.

Difference in Lease Criteria in regards to Present Value

1.) Capital Lease PRESENT VALUE Criteria: ~The present value of the lease payments equals or exceeds 90% of the total original cost of the equipment. 2.) Operational Lease PRESENT VALUE Criteria: ~The present value of the lease payments equals or exceeds 90% of the total original cost of the equipment.

Difference in Lease Criteria in regards to Purchase Bargain Option

1.) Capital Lease PURCHASE BARGAIN OPTION Criteria: ~The lease contains a bargain purchase option to buy the equipment at less than fair market value. 2.) Operational Lease PURCHASE BARGAIN OPTION Criteria: ~The lease cannot contain a bargain purchase option.

Difference in Lease Criteria in regards to Risk and Benefits

1.) Capital Lease RISK AND BENEFIT Criteria: ~Transferred to lessee. Lessee pays maintenance, insurance and taxes 2.) Operational Lease RISK AND BENEFIT Criteria: ~Right to use only. Risk and benefits remain with lessor. Lessee pays maintenance costs

Difference in Lease Criteria in regards to Tax

1.) Capital Lease TAX Criteria: ~Lessee is considered to be the owner of the equipment and therefore claims depreciation expense and interest expense 2.) Operational Lease TAX Criteria: ~Lessee is considered to be renting the equipment and therefore the lease payment is considered to be a rental expense

Difference in Lease Criteria in regards to Term

1.) Capital Lease TERM Criteria: ~The lease term equals or exceeds 75% of the asset's estimated useful life 2.) Operational Lease TERM Criteria ~The lease term is less than 75 percent of the estimated economic life of the equipment

What are Cost Recovery Systems 1.) Depreciation 2.) Amortization 3.) Depletion

1.) Depreciation- -Allocation of the cost of a tangible asset over its service life ~ Be careful regarding context of conversation... accounting definition of depreciation does not have the same meaning as other uses such as car lot car depreciation off the lot **--The Purpose of Depreciation is *NOT to try to report the asset at Fair Market Value* 2.) Amortization- Allocation of the cost of an intangible asset over its service life 3.) Depletion- Allocation of the cost of a natural resource over its service life

What can be found under Long-Term Liabilities? &Other Long-Term Liabilities

1.) Long-Term Liabilities 2.) Other Long-Term Liabilities 3.)Commitments and Contingencies Other Long-Term Liabilities- Various obligations, such as warranty and deferred compensation liabilities and long-term tax liabilities, that will be satisfied at least a year in the future. -Balance sheet item that includes obligations which are not going to be paid off within the year or operating cycle, but are not included in the "long term liabilities" category (it might include items such as deferred credits, customers deposits or some estimated tax liabilities)

Unrealized Gains: 1.)Where do they go? 2.)Do Unrealized Gains affect Earnings?

1.) Other Comprehensive Income (Loss) 2.) No; Unrealized Gains do NOT affect Earnings

Reported at Fair Market Value is_____________ & Reported at Cost is __________________.

1.) Relevant 2.) Not Relevant but Reliable Problem with PP&E ~"But what is it worth now?"

Makers is an accelerated Depreciation method Only for useful for ______________ purposes and does not qualify for being in the boundaries of ____________ so can companies use the Makers Depreciation method on financial statements?

1.) Tax 2.) GAAP ( Generally Accepted Accounting Principles) 3.NOOOOO

Net Asset Value and how you find it

1.) The Net Asset Value of a mutual fund; equal to the market value of the assets in the mutual fund portfolio divided by the number of shares outstanding 2.)The value of all the investment company's assets, less any liabilities it has, divided by the number of shares. However, because investment company shares are traded on a stock market, the share price that you get may be higher or lower than the NAV (Net Asset Value -The difference is known as a discount or premium.

What are the are two ways that the value of a share in a investment company is often expressed:

1.) The Share Price -Def: The price you actually buy and sell at -The net asset value per share NAV

Statement of Cash Flows

1.) The financial statement that identifies a firm's sources and uses of cash in a given accounting period 2.) Financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing. 3.) A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.

What is a Contingency Liability and when is a firm required to disclose their Contingent Liabilities?

1.) When the probability of them having to pay it is greater 50% 2.) And if the amount can be reasonably estimated.

Differences and meanings of reporting PP&E, *NET* & just PP&E

1.) When they give us their PP&E, *NET* # ( or value balance) -What the Property, Plant, and Equipment is probably *Worth RIGHT NOW* or could be Fair Market Value of Asset 2.)Does not have *NET* next to it... -They are probably reporting what they paid for it also referred to as Historical Cost 3.)

Operating Lease: Thinking in terms of your definitions of Assets and Liabilities... So you lease something from a friend 1.) Do you have use of the Asset? 2.) Is it expected to provide a future economic benefit to you? 3.)But if it is reported under an operating lease arrangement, do you have to report it as an asset? 4.) Do you have a probable sacrifice of future economic resources? 5.) Do you have to record it as a Liability? Is this all changing?

1.) Yes 2.) Yes 3.) No 4.) Yeah, you owe the friend the money per the contractual arrangement 5. No Yes, at the end of this year for publicly traded companies and the year following for everyone else

A Company Puts out a statement saying ," We Generally Invest our Excess Cash in Investment Grade Short - Intermediate term fixed income securities AAA-Rated money market funds 1.) Such investments are classified as_______ or ______ on the accompanied consolidated Balance Sheet? 2.)Equity investments are accounted for using the ___________ of accounting if the investment gives us the ability to exercise significant influence, but not control. 3.) Equity-Method investments are included within "______"

1.) a.)Cash and Cash Equivalents & b.)Marketable Securities 2.) Equity Method of Accounting 3.) Other Assets

Describe the 4 main depreciation methods and related into for each. 1.)Accelerated depreciation method 2.)double declining balance depreciation 3.)straight-line depreciation method 4.)Units of Production Depreciation -Method that charges a varying amount to depreciation expense for each period of an asset's useful life depending on its usage. -Most Common for Depletion

1.)Allocates a higher depreciation in the earlier years of the asset's life and lower depreciation in later year 2.)Depreciation computations that produce larger amounts of depreciation in the early years of an asset's life and progressively smaller amounts as the asset ages. 3.)Method that allocates an equal portion of the depreciable cost of plant asset (cost minus salvage) to each accounting period in its useful life. ~Most common method in Amortization 4.)Method that charges a varying amount to depreciation expense for each period of an asset's useful life depending on its usage. ~Most Common for Depletion

Amortization Is Goodwill Amortized? -*No Goodwill is not Amortized* ~ *But it always says that it is tested for impairment Annually*

1.)What you may see as an Intanglible Asset could be ~Copyrights ~Patents ~Franchises ~**GOODWILL (Good Will is *NOT Amortized*& in seen on almost every firms financial statements)

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date. The order in which everything is listed on the balance sheet is in order of liquidity Ex: Which is Why Cash & Cash Equivalents is at the top

How many conditions are there of being a Capital Lease & How Many of these conditions need to be met before a lease must be classified as a Capital Lease?

4 Conditions: 1.) Ownership: The lease transfers ownership of the property to the lessee by the end of the lease term. 2.) Bargain Price Option: The lease contains an option to purchase the leased property at a bargain price. 3.) Estimated Economic Life: The lease term is equal to or greater than 75 percent of the estimated economic life of the leased property. 4.) Fair Value: The present value of rental and other minimum lease payments, excluding that portion of the payments representing executory costs, equals or exceeds 90% of the fair market value of the leased property. Just 1 Condition needs to be met.

Unearned Revenue & Unearned Revenue Examples:

A liability created when a business collects cash from customers in advance of providing services or delivering goods. Unearned Revenue Examples: EX: Amazon Subscription Customers ~Amazon owes their ( over 100,000,000 )Prime customers a year of service after collecting payment for that year of service ~ Probable sacrifice of future economic resources so it qualifies as a liability

A.)Gross Property, Plant, and Equipment= B.)Total PP&E, NET= C.)When is Cost Recovery shown under PP&E?

A.) 1.Land and Buildings 2.Equipment and internal-use software 3.Other Corporate Assets 4. Construction in Process B.) Gross PP&E - Total Accumulated Depreciation =Total PP&E C.) Under Total Accumulated Depreciation

In December of 2014, and December 2012, We issued 6 billion and 3 billion dollars worth of unsecured senior notes. As of December 15, 2015 and 2014, the un amortized discount on the Notes was $89 Million and $96 Million. We also have other long-term debt with a carrying amount, including the current portion, of $312 Million and $881 Million as of December 31, 2015 and 2014. The face value of out total Long Term Debt obligations is as follows ( in millions).... A.)After getting the Long Term Debt Amount of $8.562 Million... You Less: _____________________? B.)After getting the Long Term Debt Amount of $8.562 Million... You Less: ( Subtract from Long Term Debt Amount) .... You get the __________________________ of $8,324 Million

A.) After getting the Long Term Debt Amount of $8.562 Million... You Less: ( Subtract from Long Term Debt Amount) B.) You get the (Face Value of Long Term Debt) of $8,324 Million

Accounts Receivable (AR) Notes Receivable (NR) Accounts Payable (AP) Notes Payable (NP)

Accounts Receivable (AR): -owed from customers -From ordinary business -Does not Contain Interest Notes Receivable (NR): -Arises from outside the ordinary course of business -Contains interest Accounts Payable (AP) -Arise in the ordinary course of business -What the company owe their suppliers -Example: Candy Bar Dealer on a Front from Distributor Friend in School Notes Payable (NP) -Arise from outside the ordinary course of business -Example: Possibly took out a bank loan for one reason or another.

Capital Lease Reasoning

An accounting approach that identifies a company's lease obligation as an asset on its balance sheet. This is done because although the company has not taken ownership of the asset, the transaction is still considered to be a beneficial economic exchange for the lease holder. Under this method, the expenses are higher in the early years and gradually decline over the term of the lease.

Which Lease Option is best described as one where ALL the benefits and risks of ownership and transferred substantially to the Lessee?

Capital Lease ~( Also known as a Finance Lease) Example: This is analogous to financing a car via an auto loan Why??: ~The car buyer is the owner of the car for all practical purposes but legally the financing company retains title until the loan is repaid. **The legal owner (the holder of the title) may still be the lessor.

Operating Leas SCF (Statement of Cash Flows)

Cash flow from operations will include the total lease payment for the specified accounting period.

Current Liabilities Vs. Long-Term Liabilities Obligations that a company expects to pay within the next year or operating cycle, whichever is longer. Long-Term Liabilities Obligations not due to be paid within one year or the operating cycle, whichever is longer.

Current Liabilities are obligations that a company (expects to pay within the next year) or operating cycle, whichever is longer & Long-Term Liabilities are obligations (not due to be paid within one year) or the operating cycle, whichever is longer. Current Under 1 year & Long-Term over a year or Op. Cycle

Are Deferred Taxes about whats going to happen in the future or past?

Deferred Taxes are about whats going to happen in the FUTURE

Pre-Paid Expenses & Examples

Expenses that have been paid but not yet incurred -found under assets Pre-Paid Expenses examples would be... 1.) Outstanding Rent 2.) Insurance 3.) Anything Paid at the beginning of the period

FIFO ( First in First Out) Inventory Cost Flow Method FIFO Valuation is a cost flow assumption that the first goods purchased are also the first goods sold.

FIFO Valuation is a cost flow assumption that the first goods purchased are also the first goods sold. Keeps Inventory Fresh (Grocery Store)

Affect/Effects of All Cost Flow Methods on Inventory

FIFO-purchases at the end of the period have no effect on cost of goods sold or net income. -heavier tax burden if used for tax purposes in periods of inflation. LIFO-During inflation environment, cost of goods is higher whereas remaining inventory balance in lower. -*Through LIFO, the main advantage lies in reporting lower profits, which in turn, allows businesses to pay less tax* Average Cost- Specific Identification-

Capital Lease Example:

For example, assume that a company has a lease obligation of $500,000 for 10 years, with an interest rate of 10%. The company must make 10 payments of $81,372.70. These payments are comprised of both the interest payments and the principal payments. The interest payments are 10% of the lease balance. For example, the first interest expense is $50,000 ($500,000 x .10). The yearly payment less the interest expense is the principal payment, which reduces the lease balance. The lease is also amortized according to the company's respective amortization schedule. Assuming a straight-line schedule, the yearly amortization will be $50,000 ($500,000/10 years). Finally, the total annual capital lease expense that is realized by the company is equal to the interest expense plus the amortization, which is $100,000 ($50,000 + $50,000) for the first year. This annual expense will continue to decrease over the life of the lease.

What is GAAP

Generally Accepted Accounting Principles

If a company is in an environment of *Rising Costs*... & If a company is in an environment of *Declining Costs*...

If a company is in an environment of Rising Costs... -You should Prefer LIFO If a company is in an environment of Declining Costs... -You Should Prefer FIFO *RISING COSTS = LIFO* *DECLINING COSTS = FIFO*

Stated Rate of Interest

Interest Rate listed on the face of the bond

When is the Specific Identification Inventory Cost Flow Method appropriate & when is it not?

It *IS* appropriate hen you have Highly Unique Items and when it is cost worthy to determine the cost of individual items of inventory It is *NOT* appropriate when you have items that are Perfect Substitutes for one another Use Any of the other 3 cost flow methods (LIFO, FIFO, Average Cost) when not dealing with highly unique item

If a company has a lease arrangement that is called a lease but in substance is a purchase...

It is a Capital Lease

Examples of some Other Long Term Liabilities

Long-term Capital Lease Obligation Long-term Finance Lease Obligation Construction Liabilities Tax Contingencies Long-term Deferred Tax Liabilities Other _______________________________________________________________________ = Total Other Long Term Liabilities

What is the Audit Report and the purpose of the Audit Function?

Looking for an Unqualified Opinion as opposed to a Qualified Opinion. The purpose of the audit is to determine whether or not the financial statement are prepared in accordance with GAAP.

Accounts Receivable, NET and other

More specifically, Accounts Receivable NET means that what that represents is the "Gross Receivables" NET of allowance for doubtful accounts

What is Operating Leases considered?

Off Balance Sheet Financing

What is a Cash Equivalent?

Short term highly liquid debt usually with a maturity with 90 days or less

Why will the Current Portion of Long Tern Debt be taken out of the reported Long Term Debt on the balance sheet?

So it will not be reported twice because it is already being reported in Current Liabilities

LIFO ( Last in First Out) Inventory Cost Flow Method

The LIFO method operates under the assumption that the last item of inventory purchased is the first one sold. The trouble with the LIFO scenario is that it is rarely encountered in practice. If a company were to use the process flow embodied by LIFO, a significant part of its inventory would be very old, and likely obsolete A company does not actually have to experience the LIFO process flow in order to use the method to calculate its inventory valuation. By shifting high-cost inventory into the cost of goods sold, a company can reduce its reported level of profitability, and thereby defer its recognition of income taxes. Since income tax deferral is the only justification for LIFO in most situations, it is banned under international financial reporting standards (though it is still allowed in the United States under the approval of the Internal Revenue Service).

Effective Rate of Interest

The annual rate of return that is actually earned (or charged) during the period the funds are held (or borrowed)

Liquidity

The ease and speed in which it can be turned into cash without a significant loss in value.

Operating Lease IS ( Income Statement)

The operating-lease payment will be treated as an operating expense.

Face Value of Long Term Debt & Example

Total Debt - Current Portion of Long term Debt % of notes due on (Date) 1, 000 ( All the way through out 1,000 the duration of the loan) 1,000 Other Long Term Debt 312 _____________________________________________________________________ Total Debt 3,312 (LESS) Current Portion of Long Term Debt ( 200) ____________________________________________________________________ Face Value of Long Term Debt 3,112

Auditing Process is critical to the economy because?

Without this, less exchanges will take place. -Therefore, the economy will suffer.

Are *Accrued Expenses and Other* found on balance sheet?

YES

When the Effective Rate is HIGHER than the Coupon Rate is the note going to be issues at a.) Par b.) Premium c.) Discount **EEEXXXAAAMMM QQQUUUEEESSSTTTIIIOOONNN**

c.) DISCOUNT ****** EXAM QUESTION "Said another way... The interest rates have risen(^^^) so the prices have dropped (vv)" **EEEXXXAAAMMM QQQUUUEEESSSTTTIIIOOONNN**

Contra Asset Account

An account that is offset against an asset account on the balance sheet

Long-Term Debt

Any loan or debt obligation with a maturity of more than a year

Why would PP&E, NET be reported as Fair Market Value

-If there was a permanent Impairment & they are required to write the asset down to Fair Market Value - Another potential departure from Historical Cost accounting

How is inventory value recorded & what does it tell us?

-Inventory is carried at the lower of Cost or Fair Market Value -How much finished products a firm possesses that have not been sold yet

Capital Lease Obligations

-Leases of property, plant, and equipment financially strutted so that they are economically the same as debt-financed purchases -on the long-term liability section of the balance sheet

If a firm was in a law suit, but it looked like they were going to win, would they have to report it on their financial statements and why?

-No ~ If at EOY ( End of Year) it was under 50%; Don't Record the Liability -It would be recorded under commitment and contingency Liabilities ( Long Term Asset) at the bottom of the Balance Sheet( Because it is the least Liquid ( ability to convert to cash )

Unearned Revenue

A liability created when a business collects cash from customers in advance of providing services or delivering goods.

Capital Lease SCF ( Statement of Cash Flows)

Cash flow from operations will include the total lease payment for the specified accounting period.

What do Capital Leases capture?

Disguised Purchases

Current assets

Expected to be converted into cash or used up within a year or in their operating cycle; which ever is longer.

Other Long-Term Liabilities & examples:

Other Long-Term Liabilities- Various obligations, such as warranty and deferred compensation liabilities and long-term tax liabilities, that will be satisfied at least a year in the future. -Balance sheet item that includes obligations which are not going to be paid off within the year or operating cycle, but are not included in the "long term liabilities" category (it might include items such as deferred credits, customers deposits or some estimated tax liabilities) ~Bonds payable. ~Long-term loans. ~Pension liabilities. ~Post Retirement healthcare liabilities. ~Deferred compensation. ~Deferred revenues. ~Deferred income taxes. ~Customer deposits.

Fair Market Value is more Relevant than Cost (T/F)

TRUE

Operating Lease BS ( Balance Sheet)

The operating-lease payment will be treated as an operating expense.

What is the similarities and difference between 10-K and 10-Q? Both are forms that are reported to FCC ( Financial Statements): ~ 10-K is annual report ~10-Q is quarterly report

Both are forms that are reported to FCC ( Financial Statements): ~ 10-K is annual report ~10-Q is quarterly report

When is a company considered to have significant control of another and what does this power mean?

When a company holds approximately *20%* or more of another company's stock, it is considered to have significant control, which signifies the power one company can exert over another which includes *representation on the board of directors, partaking in policy development, and the interchanging of managerial personnel.*

How management classifies Marketable Securities...

Will Drive how they are reported