Ch. 5 (IFSA) Summary

Question 1

The “___” of the balance sheet lists assets, liabilities, and equity in a single column. The “account format” follows the pattern of the traditional general ledger accounts, with assets at the left and liabilities and equity at the right of a central dividing line.

Answer 1

report format

Question 2

The “report format” of the balance sheet lists assets, liabilities, and equity in ___. The “account format” follows the pattern of the traditional general ledger accounts, with assets at the left and liabilities and equity at the right of a central dividing line.

Answer 2

a single column

Question 3

The “report format” of the balance sheet lists assets, liabilities, and equity in a single column. The “___” follows the pattern of the traditional general ledger accounts, with assets at the left and liabilities and equity at the right of a central dividing line.

Answer 3

account format

Question 4

The “report format” of the balance sheet lists assets, liabilities, and equity in a single column. The “account format” follows ___, with assets at the left and liabilities and equity at the right of a central dividing line.

Answer 4

the pattern of the traditional general ledger accounts

Question 5

The “report format” of the balance sheet lists assets, liabilities, and equity in a single column. The “account format” follows the pattern of the traditional general ledger accounts, with ___.

Answer 5

assets at the left and liabilities and equity at the right of a central dividing line

Question 6

___ should distinguish between current and noncurrent assets and between current and noncurrent liabilities unless a presentation based on liquidity provides more relevant and reliable information.

Answer 6

The balance sheet

Question 7

The balance sheet should distinguish between ___ and between ___ unless a presentation based on liquidity provides more relevant and reliable information.

Answer 7

current and noncurrent assets / current and noncurrent liabilities

Question 8

The balance sheet should distinguish between current and noncurrent assets and between current and noncurrent liabilities unless ___.

Answer 8

a presentation based on liquidity provides more relevant and reliable information

Question 9

Assets expected to be liquidated or used up within one year or one operating cycle of the business, whichever is greater, are classified as ___.

Answer 9

current assets

Question 10

Assets ___, are classified as current assets.

Answer 10

expected to be liquidated or used up within one year or one operating cycle of the business, whichever is greater

Question 11

Assets ___, are classified as noncurrent assets.

Answer 11

not expected to be liquidated or used up within one year or one operating cycle of the business, whichever is greater

Question 12

Assets not expected to be liquidated or used up within one year or one operating cycle of the business, whichever is greater, are classified as ___.

Answer 12

noncurrent assets

Question 13

Liabilities ___, are classified as current liabilities.

Answer 13

expected to be settled or paid within one year or one operating cycle of the business, whichever is greater

Question 14

Liabilities expected to be settled or paid within one year or one operating cycle of the business, whichever is greater, are classified as ___.

Answer 14

current liabilities

Question 15

Liabilities ___, are classified as noncurrent liabilities.

Answer 15

not expected to be settled or paid within one year or one operating cycle of the business, whichever is greater

Question 16

Liabilities not expected to be settled or paid within one year or one operating cycle of the business, whichever is greater, are classified as ___.

Answer 16

noncurrent liabilities

Question 17

___ reported on a balance sheet may be measured on the basis of fair value or historical cost.

Answer 17

Asset and liability values

Question 18

Asset and liability values reported on ___ may be measured on the basis of fair value or historical cost.

Answer 18

a balance sheet

Question 19

Asset and liability values reported on a balance sheet may be measured on the basis of ___ or historical cost.

Answer 19

fair value

Question 20

Asset and liability values reported on a balance sheet may be measured on the basis of fair value or ___.

Answer 20

historical cost

Question 21

___ are an integral part of the U.S. GAAP and IFRS financial reporting processes. They provide important required detailed disclosures, as well as other information provided voluntarily by management. This information can be invaluable when determining whether the measurement of assets is comparable to other entities being analyzed.

Answer 21

The notes to financial statements

Question 22

___ are long-term assets with physical substance that are used in company operations.

Answer 22

Tangible assets

Question 23

Tangible assets are ___.

Answer 23

long-term assets with physical substance that are used in company operations

Question 24

___ are amounts paid by a company to acquire certain rights that are not represented by the possession of physical assets.

Answer 24

Intangible assets

Question 25

Intangible assets are ___.

Answer 25

amounts paid by a company to acquire certain rights that are not represented by the possession of physical assets

Question 26

A company should assess whether the useful life of an ___ is finite or infinite and, if finite, the length of its life.

Answer 26

intangible asset

Question 27

A company should assess whether the useful life of an intangible asset is ___ and, if finite, the length of its life.

Answer 27

finite or infinite

Question 28

A company should assess whether the useful life of an intangible asset is finite or infinite and, if finite, ___.

Answer 28

the length of its life

Question 29

Under IFRS and U.S. GAAP, ___ should be capitalized and tested for impairment annually.

Answer 29

goodwill

Question 30

Under IFRS and U.S. GAAP, goodwill should be ___ and tested for impairment annually.

Answer 30

capitalized

Question 31

Under IFRS and U.S. GAAP, goodwill should be capitalized and ___.

Answer 31

tested for impairment annually

Question 32

___ is not amortized.

Answer 32

Goodwill

Question 33

Goodwill is not ___.

Answer 33

amortized

Question 34

___ are contracts that give rise to both a financial asset of one entity and a financial liability of another entity.

Answer 34

Financial instruments

Question 35

Financial instruments are ___ that give rise to both a financial asset of one entity and a financial liability of another entity.

Answer 35

contracts

Question 36

Financial instruments are contracts that give rise to both ___ and a financial liability of another entity.

Answer 36

a financial asset of one entity

Question 37

Financial instruments are contracts that give rise to both a financial asset of one entity and ___.

Answer 37

a financial liability of another entity

Question 38

___ come in a variety of instruments, including - derivatives - hedges - marketable securities

Answer 38

Financial instruments

Question 39

Financial instruments come in a variety of instruments, including - ___ - hedges - marketable securities

Answer 39

derivatives

Question 40

Financial instruments come in a variety of instruments, including - derivatives - ___ - marketable securities

Answer 40

hedges

Question 41

Financial instruments come in a variety of instruments, including - derivatives - hedges - ___

Answer 41

marketable securities

Question 42

There are five potential components that comprise the ___ section of the balance: - contributed capital - minority interest - retained earnings - treasury stock - accumulated comprehensive income

Answer 42

owners’ equity

Question 43

There are five potential components that comprise the owners’ equity section of the balance: - ___ - minority interest - retained earnings - treasury stock - accumulated comprehensive income

Answer 43

contributed capital

Question 44

There are five potential components that comprise the owners’ equity section of the balance: - contributed capital - ___ - retained earnings - treasury stock - accumulated comprehensive income

Answer 44

minority interest

Question 45

There are five potential components that comprise the owners’ equity section of the balance: - contributed capital - minority interest - ___ - treasury stock - accumulated comprehensive income

Answer 45

retained earnings

Question 46

There are five potential components that comprise the owners’ equity section of the balance: - contributed capital - minority interest - retained earnings - ___ - accumulated comprehensive income

Answer 46

treasury stock

Question 47

There are five potential components that comprise the owners’ equity section of the balance: - contributed capital - minority interest - retained earnings - treasury stock - ___

Answer 47

accumulated comprehensive income

Question 48

___ reflects information about the increases or decreases to a company’s net assets or wealth.

Answer 48

The statement of changes in equity

Question 49

The statement of changes in equity reflects information about the increases or decreases to a company’s ___.

Answer 49

net assets or wealth

Question 50

___ is used by analysts and managers to assess company performance and status. Another valuable analytical technique is common-size (relative) analysis, which is achieved through the conversion of all balance sheet items to a percentage of total assets.

Answer 50

Ratio analysis

Question 51

Ratio analysis is used by analysts and managers to assess company performance and status. Another valuable analytical technique is ___, which is achieved through the conversion of all balance sheet items to a percentage of total assets.

Answer 51

common-size (relative) analysis

Question 52

Ratio analysis is used by analysts and managers to assess company performance and status. Another valuable analytical technique is common-size (relative) analysis, which is achieved through the conversion of ___.

Answer 52

all balance sheet items to a percentage of total assets