Financial Reporting and Analysis

Question 1

Whats the difference between the general ledger and the general journal?

Answer 1

The general ledger contains all the same entries as the general journal but they are stored by account as opposed to by date in the general journal. The general journal, not the general ledger, is the first step in the accounting system flow.

Question 2

If a manager is attempting to hide an expenditure for which he has paid cash he might record fictitious?

Answer 2

pre-paid asset

Question 3

True or False?

Firms are not required to provide a reconciliation between cash flow and income statement items

Answer 3

true

Question 4

True or False?
The total cash flow in a year is equal to the change in cash and cash equivalents recorded in the beginning and end-year balance sheets

Answer 4

True

Question 5

Which of the following is a requirement of presentation under International Finance Reporting Standards?

a) Assets and liabilities for related items should be offset against each other
b) current and noncurrent assets should normally be combined unless an IFRS requires other wise
c) The previous year’s data should normally be provided for items in the financial statements

Answer 5

Assets and liabilities cannot be offset against each other unless permitted or required by IFRS. Current and noncurrent assets should normally be separated. Comparative data should be provided for the previous year for items in the financial statements so “ the previous year’s data” is correct

Question 6

Under International Accounting Standards what items are required to be included in the financial statements?

Answer 6

• a balance sheet
• an income statement
• a statement of changes in equity
• a cash flow statement
• notes of significant accounting policies and other explanatory notes

Question 7

Which of the following is least likely to be identified as a main objective of the International Organization of Securities Commissions? ( IOSCO)

a) protecting investors
b) reducing systematic risk
c) ensuring harmonization of accounting standards globally

Answer 7

C- ensuring harmonization of accounting standards globally

Question 8

The method by which a company calculates depreciation is usually described in its:

a) balance sheet
b) auditor’s report
c) notes to the financial statements

Answer 8

c- notes to the financial statements

Exp- A company’s accounting policies, including how depreciation is calculated, would usually be included in the notes to the financial statements

Question 9

What is the difference between deferred revenue and accrued revenue?

Answer 9

Deferred revenue is unearned revenue, when companies receive cash before they earn the related revenue. This is a liability on the balance sheet. Accrued revenue is revenue that has been earned but not yet paid. It is an asset on a balance sheet.

Question 10

Name the four types of audit opinions and describe.

Answer 10

Unqualified - FS have been fairly presented.
Qualified - FS have been fairly presented but there are some exceptions requiring commentary.
Adverse opinion - FS have not been presented fairly and significantly deviate from acceptable accounting standards.
A Disclaimer of Opinion - the auditor is not able to provide an opinion.

Question 11

Name the four types of other comprehensive income under U.S. GAAP.

Answer 11

Foreign currency translation adjustements.
Minimum pension liability adjustements.
Unrealized gains or losses on derivatives contracts, those considered as hedges.
Unrealized holding gains and losses on available for sale securities.

Question 12

Name the one type of change recognized in addition to the four under U.S. GAAP for other comprehensive income, under IFRS.

Answer 12

certain changes in the value of long-lived assets that are measured in the revaluation model (as opposed to the cost model)