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CMGT 7330 > Lesson 2: Know Your Financial Statement > Flashcards

Lesson 2: Know Your Financial Statement Flashcards

1
Q

IFRS

A

INTERNATIONAL FINANCIAL REPORTING STANDARDS

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2
Q

ASPE

A

ACCOUNTING STANDARDS FOR PRIVATE ENTITIES

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3
Q

Significant Difference between IFRS and ASPE

A

EMPLOYEE BENEFITS

LEASES

REVENUE

AGRICULTURE

FINANCIAL INSTRUMENTS

INVESTMENT PROPERTY

RELATED PARTY TRANSACTIONS

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4
Q

Major Differences between IFRS and ASPE

A

FOREIGN EXCHANGE

INCOME TAXES

PROVISIONS

SUBSIDIARIES AND CONSOLIDATIONS

IMPAIRMENT OF NON-FINANCIAL ASSETS

JOINT ARRANGEMENTS AND ASSOCIATES

SHARE BASED PAYMENTS

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5
Q

Any transactions to be recorded in the system would always impact two different areas of the financial statement. And the amount of each entry has to be equal.

A

DOUBLE ENTRY SYSTEM

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6
Q

Double entry system examples

A

(1) REVENUE AND COLLECTION

WHEN BILLING OUT A CUSTOMER, THE ENTRY IS:
 DR. ACCOUNTS RECEIVABLE 100
         CR. REVENUE                          100

WHEN THE CUSTOMER MADE A PAYMENT, THE ENTRY IS:

DR. CASH                        100
          CR. ACCOUNTS RECEIVABLE            100

(2) INVOICES AND PAYMENTS

  WHEN AN INVOICE IS RECEIVED, THE ENTRY IS.

              DR. EXPENSE / JOB COST    50
                                       CR. ACCOUNTS PAYABLE                   50

   WHEN PAYMENT IS MADE. THE ENTRY IS  
             DR. ACCOUNTS PAYABLE           50
                                        CR. CASH        50

(3) LOANS AND MORTGAGES

     WHEN BORROWING FUNDS FROM THE BANK, THE ENTRY IS

                DR. CASH                      1000
                                      CR. MORTGAGE AND LOANS                 1000
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7
Q

Basis of accounting recognizes all transactions based on the time when cash is exchanged hands.

Widely used in smaller businesses.

A

CASH BASIS

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8
Q

Basis of accounting recognizes when revenue is earned and expenditures are consumed.

A

ACCRUAL BASIS

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9
Q

Level of assurance provided by an external auditor.

A
  • NOTICE TO READER / COMPILATION
  • REVIEW
  • AUDIT
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10
Q

No assurance is provided in terms of the accuracy of the financial statements. Auditors simply compile clients’ information and produce the financial statement.

A

NOTICE TO READER / COMPILATION

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11
Q

External auditors review financial statements based in inquiries only. Auditors will perform verifications through inquiries and variance analysis.

A

REVIEW

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12
Q

Highest level of assurance / requires examinations of source documentation on a sample basis.

A

AUDIT

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13
Q

Level of assurance required by the Bank

A

REVIEW

AUDIT

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14
Q

Is is a 12-month period ending date that the company uses for accounting purposes.

A

FISCAL YEAR END

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15
Q

It is a 12-month period ending date ending on the calendar year. Dec. 31

A

CALENDAR YEAR - END

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16
Q

The quarter end is driven by the fiscal year-end date. For example, if the Fiscal Year End is September 30,2023, the quarterly ends on December 31, 2022, March 31, 2023, and June 30,2023

A

FISCAL QUARTER END

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17
Q

The end of each month of the fiscal year.

A

MONTH END

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18
Q

One worksheet that combines the balances of the accounts that shows the debt and credit are equal.

A

TRIAL BALANCE

19
Q

A record of transactions of all accounts.

A

GENERAL LEDGER (GL)

20
Q

Booking of activities that are recorded directly to the general ledger.

A

GENERAL JOURNAL ENTRIES

21
Q

A subset of the general ledger that will flow into the general ledger accounts.

A

SUBLEDGER

22
Q

Flow of information (GENERAL)

A

JOURNAL ENTRIES

SUBLEDGER

GENERAL LEDGER

 TRIAL BALANCE

    FINANCIAL REPORT
23
Q

Captures a company’s asset and liabilities position at a given time.

A

BALANCE SHEET

24
Q

Key sections of a Balance Sheet

A

ASSET

LIABILITIES

EQUITY

25
Q

Ownership or control over something that can provide short term and / or long term future benefit.

A

ASSET

26
Q

Benefits that be consider asset

A

IMMEDIATE LIQUIDITY (CASH AND DEPOSITS)

THE RIGHT TO FUTURE CASHFLOW (ACCOUNTS RECEIVABLE, INVENTORY)

INTANGIBLE RIGHTS (PATENT AND TRADEMARKS)

LONG TERM ESTABLISH (BUILDING, LAND, EQUIPMENT, VEHICLE)

27
Q

Obligations that will be settled immediately or in the future with economic benefit or specific performances.

A

LIABILITIES

28
Q

Ways to settle liabilities

A

CASH (ACCOUNTS PAYABLE, BANK INDEBTEDNESS, SHORT TERM LINE OF CREDIT )

SPECIFIC FUTURE PERFORMANCE (DEPOSIT)

FUTURE CASH FLOW (LONG TERM DEBT, MORTGAGE, CAPITAL LEASE)

29
Q

Represents the net stake that a shareholder has in the company.

Total assets - total liabilities = total equity (deficit)

Represents the cumulation of wealth (deficit) in this company.

Each year, equity is increase by net profit or reduced by net loss generated from operations.

A

EQUITY

30
Q

It captures the profit and loss positions of the company during a given period.

Revenue.

Cost of good sold / Direct cost

Gross margin

Overhead costs

Other income / expense

Income taxes

Net income / loss

Review sample income statement

A

INCOME STATEMENT

31
Q

Regular types of notes disclosures.

A

FIXED ASSETS SCHEDULE

SHARE CAPITAL

NATURE OF BUSINESS

ACCOUNTING POLICIES

MAJOR DEBT / LOAN DETAILS

RELATED PARTY TRANSACTIONS

CONTINGENCIES

SUBSEQUENT EVENT

32
Q

A continuity schedule that shows the costs and amortization of the assets.

A

FIXED ASSETS SCHEDULE

33
Q

Original share capital contribution to the company.

A

SHARE CAPITAL

34
Q

Usually a high level of business activities and incorporation date / location.

A

NATURE OF BUSINESS

35
Q

Choice of key accounting policies.

A

ACCOUNTING POLICIES

36
Q

A list of loans and the key terms including expiry date, interest date, and security.

A

MAJOR DEBT / LOAN DETAILS

37
Q

Any transactions that involve non-arms length parties.

A

RELATED PARTY TRANSACTIONS

38
Q

Potential risks and lawsuits.

A

CONTINGENCIES

39
Q

Any major events that occurred during the year - end and the report issuance date.

A

SUBSEQUENT EVENT

40
Q

It captures all the costs spent on a job including general condition, labour, material, contract, misc

A

JOB COST REPORT

41
Q

Monthly review include

A

PAST MONTH JOB COST DETAILS - REVISION OF CODING MAY OCCUR

PAST MONTH BILLING - REVIEW OUTSTANDING RECEIPTS’ STATUS FROM CUSTOMERS

COMMITMENT REPORT - REVIEW COST UP TO DATE AND COMMITMENT BALANCE

BUDGET REVIEW - REVIEW CHANGE ORDERS TO ENSURE ACCOUNTING RECORDS AND OPERATIONAL SYSTEMS’ RECORDS ARE CONSISTENT.

OVERHEAD REVIEW - FOR ALL OVERHEAD ITEMS ON INCOME STATEMENT, PROJECT MANAGER IS TO PROVIDE EXPLANATIONS ON WHY THEY ARE NOT RECOVERABLE

42
Q

A set of accounting standards that govern how particular types of transactions and events should be reported in financial statement.

Developed by International Accounting Standards Board

A

IFRS

43
Q

Made-in- Canada standards

A

ASPE

CMGT 7330 (9 decks)

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