Test in Intermediate


J

Janice Davis

Well, I am about to have my first MAJOR test in intermediate. I have read the chapters; done the instructor chapter work; and reworked some of the problems. I feel somewhat ready only because I know this test when I see it will probably KILL me. After all it is a test on APPLICATION not memorization. Which is something I have strived to do. Apply my knowledge not memorize everything. Two areas I think I will be hit hardest on is the Multi-step Income statement (you know, the order in which EI are to be listed.) and probably the balance sheet ie separating current liabilities from non-current liabilities, and current assets, long-term investments, ppe, intangibles, and other assets. Oh, and then there are the applicable "notes" to the balance sheet. Any suggestions or tips on making it easier to list these things correctly?

TIA
Janice
 
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J

John

Well, I am about to have my first MAJOR test in intermediate. I have read the chapters; done the instructor chapter work; and reworked some of the problems. I feel somewhat ready only because I know this test when I see it will probably KILL me. After all it is a test on APPLICATION not memorization. Which is something I have strived to do. Apply my knowledge not memorize everything. Two areas I think I will be hit hardest on is the Multi-step Income statement (you know, the order in which EI are to be listed.) and probably the balance sheet ie separating current liabilities from non-current liabilities, and current assets, long-term investments, ppe, intangibles, and other assets. Oh, and then there are the applicable "notes" to the balance sheet. Any suggestions or tips on making it easier to list these things correctly?

TIA
Janice


one suggestion - get a year-end annual report from a real company (preferably one you are familiar with or have worked for) and review those financial statements.
 
E

Eurogroover

The following is enough to get you through the CPA exam.

My Company
Multiple Step Income Statement
For the Year Ended December 31, 2003

Net Sales xx
COGS (xx)
Gross Margin xxxx

General and Administrative Expenses (xx)
Selling Expenses (xx)
Depreciation Expense (xx)
Other Expenses and Losses
Interest Expense (xx)
Loss on Sale of Fixed Assets (xx)
Revenues and Gains
Interest Income xx
Gain on Sale of Fixed Assets xx
Income Before Unusual or
Infrequent items and Tax xxxx
Unusual and Infrequent Items
GAIN (LOSS) on Marketable Securities xx
Income Before Tax xxxx
Tax Rate xx
Net Income After Tax xxxx

===============================================================================

My Company
Balance Sheet
As of December 31, 2003

Assets: Liabilities and Stockholders' Equity

Current Assets: Current Liabilities:

Cash xx Accounts Payable xx
Accounts Receivable xx Notes Payable xx
Notes Receivable xx Salaries Payable xx
Inventory xx Interest Payable xx
Trading Securities xx Tax Payable xx
Prepaid Expense xx Unearned Revenue xx
Long Term Debt xx
Investments:
Long Term Liabilities:
Available for Sale
Securities xx Bonds Payable xx
Held to Maturity xx Deferred Income Tax Liablity xx

Property, Plant and Stckholders' Equity:
Equipment (Fixed Assets)
Capital Stock
Land xx Preferred Stock xx
Building xx Common Stock xx
Eguipment xx Additional Paid in Capital xx
Accumulated Depreciation (xx) Retained Earnings xx
Other Comprehensive Income xx
Intangible Asstes: Treasury Stock (xx)

Goodwill xx
Patents xx
Copyrights xx

Other Assets:

Bond Issue Costs
 
M

Mike

Question:

How do you treat Treasury Stock in the balance sheet? Do you list it
separately and subtract it from Common Stock, or is it automatically
deducted from Common Stock?
 
M

Manhattaner32

There are three ways of accounting for treasury stock:

1. Cost Method: The gross cost of the shares reacquired is charged to a
contra-equity (treasury) stock.

2. Par value method: The treasury stock account is charged only for the
par value of the shares reacquired. Other paid in capital are debited in
proportion to the amounts recognized upon the original issuance of the
shares.

3. Constructive retirement method: Similiar to the par value method,
except that the aggregate par value of the reacquired shares is charged to
the stock account rather than to the treasury stock account.

I'm fairly certain that most companies use the cost method, but I'm sure
I'll be corrected if I'm wrong on this.

Regards,
Matt P., CPA

In both
 
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M

Manhattaner32

Just a follow-up. If a treaury stock account is used, it is presented
separtely on the balance sheet.
 

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