Financial Accounting & Reporting

Question 1

What are the required classifications under IFRS for the Statement of Financial Position?

Answer 1

Current and Noncurrent Assets and Liabilities

Question 2

What are the B/S measurements

Answer 2

1. Historical Costs
2. Depreciated Historical Costs
3. Market (Fair) Value
4. Realizable Value
5. Present Value

Question 3

Market (Fair) Value Definition

Answer 3

The selling price (exit price) for assets and amounts currently required to retire a liability

Question 4

Net Realizable Value Definition

Answer 4

the amount the firm expects to receive for the sale or collection of the item
Ex: AR & Inventories

Question 5

What is Present Value used to measure

Answer 5

mainly for non-current debt

Question 6

Current Ratio Equation

Answer 6

Current Assets (CA)/Current Liabilities (CL) 
Many analysts use a minimum value of 2. Frequently used as a measure of liquidity

Question 7

Quick (acid-test) Ratio Equation

Answer 7

Cash + Short Term Investments + AR/Current Liabilities (CL)

Question 8

What are the 2 main types of owner’s equity?

Answer 8

1. Contributed Capital (common stock, preferred stock, contributed capital in excess of par), treasury stock (a contra account)
2. Retained Earnings (total net income to date less total dividends to date.)

Question 9

Contra vs. Adjunct Accounts

Answer 9

Contra accounts are opposite the associated account whereas adjunct accounts have the same balance structure (debit or credit) as the associated account.

Question 10

What are valuation accounts?

Answer 10

accounts used to increase or decrease the book value of an item to a measure of current value.
(Not all contra or adjunct accounts are valuation accounts, but all valuation accounts are contra or adjunct accounts).

Question 11

Goodwill

Answer 11

the difference between a firm’s market capitalization and their market value of net identifiable assets

Question 12

Control Accounts

Answer 12

accounts that report the aggregate balance of several subsidiary accounts

Question 13

Length of time determining what is in current assets / current liabilities

Answer 13

the operating cycle or 1 year, whichever is longer

Question 14

IFRS Inventory Valuation

Answer 14

Inventory is carried at lower of cost or net realizable value. Recovery of previous write downs is allowed.

Question 15

Reportable operating segment - Ad division is significant if it satisfies one of the 3 10% tests, which are:

Answer 15

1. At least 10% of total combined segment revenues
2. At least 10% of operating profit
3. At least 10% of Total combined Segment Assets

Question 16

Equation to adjust accrual net income to Cash Flow from operations

Answer 16

^Cash=^L+^E-^Other Assets