Study Unit 1 - Financial Statements Flashcards
(22 cards)
What are the four parts of a full set of financial statements?
Financial position, comprehensive income, changes in equity, cash flows
What do the notes to financial statements include?
Accounting policies and required GAAP disclosures
What should notes to financial statements NOT do?
They should not correct improper presentation or replace statement recognition
What do the notes cover?
Financial statement items, the reporting entity, and unrecognized events affecting cash flows
What is supplemental information like MD&A used for?
To add context and additional insight to the financial statements and notes
How are current assets defined?
Assets expected to be realized in cash, sold, or consumed during the normal operating cycle or within one year
What determines the period used for classifying current assets?
The longer of the operating cycle or one year
Name common examples of current assets.
Cash, cash equivalents, securities, receivables, inventories, prepaid expenses
What defines noncurrent investments and funds?
Nonoperating items held beyond one year or the operating cycle
Name three examples of noncurrent assets.
Long-term investments, restricted funds, and capital assets not currently used
What is included in property, plant, and equipment (PPE)?
Buildings, equipment, land, leasehold improvements, construction in progress
What are intangible assets?
Nonfinancial assets without physical substance (e.g., patents, goodwill)
Name two examples of ‘other noncurrent assets.’
Deferred tax assets and long-term receivables
How are current liabilities defined?
Obligations expected to be settled using current assets or creating new current liabilities
Give examples of current liabilities.
Trade payables, accrued expenses, unearned revenues, short-term notes, current portions of long-term debt
Under what condition are noncurrent obligations classified as current?
If violations make them callable by creditors
When can current obligations be excluded from current liabilities?
If they are refinanced on a noncurrent basis and the entity shows intent and ability
What is working capital?
The difference between current assets and current liabilities
Name examples of noncurrent liabilities.
Long-term notes/bonds, lease liabilities, postretirement obligations, deferred revenue, deferred tax liabilities
What is equity?
The residual interest after subtracting liabilities from assets
What are the components of equity?
Contributed capital, retained earnings, accumulated other comprehensive income, noncontrolling interest
What is treasury stock?
A company’s own repurchased common stock, shown as a reduction in equity
