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
The SEC requires how many years on the IS and BS
Balance Sheet is 2 yrs, the Income Statement is 3 yrs. This comparative informatino is not required by GAAP
Name the ten elements of financial statements as described in SFAC 6
Assets, Liabilities, Equity, Investments by owners, Distributions to owners, Comprehensive income, Revenue, Expenses, Gains, and Losses
Items that are unusual or infrequent are included in which section of the income statement
Income from conintuing operations
What is an extraordinary item per GAAP/IFRS
Both infrequent and unusualy, IFRS does not allow for extraordinary items
How should A/R be presented on the B/S
A/R should be shown at NRV. This is the A/R less AFDA
Name the 3 major sections of the Comprehensive Annual Financial Report (CAFR)
Introducotry, Financial, and Statistical
What is the calculation for comprehensive income
Ni + OCI
What makes financial information relevant
If it has Predictive Value and/or Confirmatory Value
Is restricted cash required to be presented separately on the B/S
Yes
Information that is a faithful representation has what three characteristics
Complete, Neutral, and Free from error
How are extraordinary items and discountinued items presented on the IS
Net of Tax
The SEC requires how many years on the IS and BS
Balance Sheet is 2 yrs, the Income Statement is 3 yrs. This comparative informatino is not required by GAAP
