Financial Statements Flashcards
Which Personal Financial Statements are required?
Statement of Financial Condition & Statement of Changes in Net Worth
How are assets and liabilities valued in a Personal Financial Statement?
Estimated current value
How are estimated taxes that would be paid if all assets were converted into cash and all liabilities paid presented on a Personal Financial Statement?
Presented on Statement of Financial Condition between Liabilities and Net Worth
What is the general presentation on a statement of financial condition?
Assets
- Liabilities
- Estimated taxes on assets sold
: Net Worth
How is life insurance presented on a Personal Financial Statement?
Only shown if there is cash surrender value
It is shown net of loans against the policy
How are business interests shown on a Personal Financial Statement?
Business Interests that constitute a large percentage of total assets should be separated from other investments
What is the discreet view in an Interim Financial Statement?
Interim period is a separate accounting period - not GAAP
Same accounting principles used for annual reporting should be used.
What is the integral view in an Interim Financial Statement?
Interim period is a part of the annual period - GAAP
Gross profit method may be used to estimate COGS and inventory
Temporary declines in inventory aren’t recognized
How are discontinued operations & extraordinary items reported in Interim Financial Statements?
Aren’t prorated
Fully recognized in Interim Period as incurred
If it occurs in Q3 - it’s recognized in Q3
How are cumulative gains and losses reported in Interim Financials?
Reported as if they occurred in the first quarter
How is inventory valuation handled in Interim Financials?
If inventory experiences a decline in value during an interim period - the loss is recognized in the interim period
If the loss is expected to be only temporary - no loss is recognized
What is one of the primary problems with interim reporting?
The matching principle gets messed up - Expenses incurred in one period may benefit future periods
For whom is Segment Reporting required?
Publicly traded companies
What factors cause a segment to be significant and therefore to be reported separately?
Revenue of segment is 10% or more of total
Profit is 10% or more of total
Segment assets are 10% or more of total
75% Test - All segment revenues must equal 75% of total external revenues
What is the disclosure requirement regarding sales of 10% or more for one customer?
If 10% or more of enterprise revenue comes from one customer - the segment making the sales must be disclosed
Balance Sheet assesses the company’s
liquidity and financial flexibility
Related party disclosures:
Disclose:
sale to affiliated companies
loans to officers
agreement as surety for a loan
non monetary exchanges by affiliates
Related party disclosures - EXCLUDE
salaries of officers
officers expenses
transactions eliminated in combined/consolidated FS
Principal market
greatest volume and level of activity
Most advantageous market
maximizes price received
SEC form 8-k
material events
Required minimum disclosures in IFRS income statement
income,
finance costs,
share of profits and losses using the equity method,
tax expense,
discontinued operations,
profit or loss,
noncontrolling interests in profits and losses, and the net profit (loss) attributable to equity holders of the parent.
Fair value method applies to
The fair value option applies to all financial assets including
available-for-sale,
held-to-maturity,
equity method investments.
The fair value option also applies to certain
financial liabilities,
firm commitments that involve financial instruments,
written loan commitments,
nonfinancial insurance contracts that can be settled by paying a third party,
warranties that can be settled by paying a third party,
host financial instrument that is an embedded nonfinancial derivative instrument separated from a nonfinancial hybrid instrument.
Fair value method does not apply to
consolidations, pensions, share-based payments, stock options, other postemployment benefits (OPEB), exit or disposal activities, leases, or financial instruments that are a component of equity.
Form 10-k
annual audited report
