Study Plan for FNC1
Financial Accounting Concepts and Procedures – Chapters 1-4 and Chapter 10
1. Understand Basic Accounting Concepts and Principles
2. Know what items are shown on a Balance Sheet, Income Statement, and Statement of Owners Equity
a. Items shown on Balance Sheet shows a companies:
iii. Stockholder's (or owner's) equity
b. Items shown on Income Statement:
i. The income statement shows revenues
iii. Gains and losses
iv. It does NOT show cash receipts & cash disbursements
c. Items shown on Statement of Owner's Equity:
i. Paid-in Capital
ii. Retained Earnings
iii. Treasury Stock
iv. Accumulated Other Comprehensive Income ...view middle of the document...
A mortgage is an example.
d. Debentures – Unsecured bonds that are not backed by assts. Backed only by the good will of the bond issuer.
2. Make sure you understand Bond issue prices, Bonds issued at Par Value, at a Discount, and at a Premium.
a. Bond at Par Value – A bond issued at par has no discount or premium. AKA, bond maturity value. An example would be a $1,000 bond issued for $1,000
b. Bond at Discount – A price below maturity, par, value. An example would be a $1,000 bond issued for $980, a $20 discount.
c. Bond at Premium – A price above maturity, par, value. An example would be $1,000 bond issued for $1,015, a premium of $15.
3. Understand how to record interest expense when bonds are issued at par value, a discount, and a premium.
Stocks and Dividends – Chapters 13
1. Make sure you understand dividends and dividend policies
i. Paid to shareholders
ii. Cash, property, stock, servers
iii. Each state permits when they are paid
iv. Paid in: retained earnings, net profits and surplus
b. Dividend Policies:
i. It’s the decision to pay out earnings versus retaining and reinvesting them. It includes the following elements:
1. High or low payout?
2. Stable or irregular dividends?
3. How frequent?
Statement of Cash Flows – Chapter 16
1. Know what a Statement of Cash Flows is
a. Statement of Cash Flow – Shows how cash amount has changed during the time interval shown in the heading of the statement.
2. Understand the Direct and Indirect Method for preparing a Statement of Cash Flows
a. Direct Method – AKA income statement method – Reports cash receipts and cash disbursements from operating activities. The direct method deducts from operating cash receipts and cash disbursement statement.
b. Indirect Method – Cash Flows from Operating Net Income.
i. + Depreciation expense
ii. + Loss on sale of long term assets
iii. – Gain on sale of long term assets
iv. – Increases in current assets other than cash
v. + Decreases in current assets other than cash
vi. + Increases in current liabilities
vii. – Decreases in current liabilities
3. Know the Categories shown on a Statement of Cash Flows.
4. Study the exhibit on page 940 for the indirect method. Know what gets added in and subtracted out from each section
Financial Statement Analysis and Ratios – Chapter 17
1. Know how to calculate a Horizontal and Vertical Analysis
a. Horizontal Analysis – Provides comparison from one period to the next, using financial statements from at least two distinct periods. Each line item has an entry in a current period column and a prior period column. These two entries are compared to show both the dollar difference and percentage change between the two periods.
b. Vertical Analysis – Shows relationship among components of one financial statement measured as percentages. On a Balance Sheet each asset is shown as percentage of total assets.
2. Understand the relationship of Accounts when performing a Horizontal and...