FR&A - Balance Sheets

Question 1

Accounts Payable

Answer 1

Amounted that a business owes to its vendors for goods and services that were purchased from them but which have not yet been paid.

Question 2

Accrued Expenses

Answer 2

Liabilities related to expenses that have been incurred but not yet paid as of the end of an accounting period - an example of an accrued expense is rent that has been incurred but not yet paid, resulting in a liability “rent payable”

Question 3

Amortised Cost

Answer 3

The historical cost (initially recognized cost) of an asset, adjusted for amortisation and impairment.

Question 4

Assets

Answer 4

Resources controlled by an enterprise as a result of past events and from which future economic benefits to the enterprise are expected to flow.

Question 5

Available for Sale

Answer 5

Under US GAAP debt securities. It classified as either held to maturity or held for trading securities. The investor is willing to sell but not actively planning to sell. In general, available for sale debt securities are reported at fair value on the balance sheet, with unrealized gains included as a component of other comprehensive income

Question 6

Balance Sheet

Answer 6

The financial statement that presents an entities current financial position by disclosing resources the entity controls (its assets) and the claims on those resources (its liabilities and equity claims) as of a particular point in time (the date of the balance sheet)

Question 7

Balance sheet ratios

Answer 7

Financial ratios involving balance sheet items only.

Question 8

Capital structure

Answer 8

The mix of debt and equity that a company uses to finance its business; a companies specific mixture of long term financing.

Question 9

Classified balance sheet

Answer 9

A balance sheet organized so as to o troop together various assets and liabilities into sub categories

Question 10

Contra Account

Answer 10

An account that offers another account

Question 11

Current assets

Answer 11

Assets that are expected to be consumed or converted into cash in the near future, typically one year or less

Question 12

Current Liabilities

Answer 12

Short-term obligations, such as accounts payable, wages payable, or accrued liabilities, that are expected to be settled in the near future, typically one year or less.

Question 13

Deferred income

Answer 13

A liability account for money that has been collected for goods or services that have not yet been delivered; payment received in advance of providing a good or service

Question 14

Deferred revenue

Answer 14

A liability account for money that has been collected for goods and services that have not yet been delivered; a payment received in advance of providing a good or service

Question 15

Deferred tax assets

Answer 15

A balance sheet asset that arises when an excess amount is paid for income taxes relative to accounting profit. The taxable income is higher than accounting profit and income tax payable exceeds tax expense. The difference during the course of future operations when expense exceeds income tax payable

Question 16

Deferred Tax liabilities

Answer 16

A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminate the liability over the course of future operations when income tax payable exceeds tax expense.

Question 17

Derivatives

Answer 17

A financial instrument whose value depends on the value of some underlying asset or factor

Question 18

Equity

Answer 18

Assets less liabilities; the residual interest in the assets after subtracting the liabilities

Question 19

Fair Value

Answer 19

The amount at which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in an arm’a length transaction; the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

Question 20

Goodwill

Answer 20

An intangible asset that represents the excess of the purchase price of an acquired company over the value of the net assets acquired

Question 21

Held-to-Maturity

Answer 21

Debt (fixed income) securities that a company intends to hold to maturity; these are presented at their original cost, updated for any amortization or discounts premiums

Question 22

Income tax payable

Answer 22

The income tax owed by the company on the basis of taxable income

Question 23

Intangible assets

Answer 23

Assets lacking physical substance, such as patents and trademarks

Question 24

Investment property

Answer 24

Property used to earn rental income or capital appreciation (or both)

Question 25

Liabilities

Answer 25

Present obligations of an enterprise arising from past events, the settlement of which is expected to result in an outflow if resources embodying economic benefits; creditors claims on the resources of a company

Question 26

Liquidity

Answer 26

The ability to purchase or sell an asset quickly and easily at a price close to fair market value. The ability to meet short-term obligations using assets that are most readily converted into cash

Question 27

Liquidity ratios

Answer 27

Financial ratios measuring the companies ability to meet its short-term obligations

Question 28

Non-current assets

Answer 28

Assets that are expected to benefit the company over an extended period of time (usually more than one year)

Question 29

Non-current liabilities

Answer 29

Obligations that broadly represent a probable sacrifice of economic benefits in periods generally greater than one year in the future

Question 30

Owners Equity

Answer 30

The excess of assets over liabilities; the residual interest of shareholders in the assets of an entity after deducting the entities liabilities

Question 31

Prepaid Expense

Answer 31

A normal operating expense that has been paid in advance of when it is due

Question 32

Property, plant, and equipment

Answer 32

Tangible assets that are expected to be used for more than one period in either the production of supply of goods and services, or for administrative purposes

Question 33

Shareholders equity

Answer 33

Assets less liabilities, the residual interest in the assets after subtracting the liabilities

Question 34

Solvency

Answer 34

With respect to financial statement analyst, the ability of a company to fulfill its long term obligations

Question 35

Solvency ratios

Answer 35

Ratios that measure a companies ability to meet its long-term obligations

Question 36

Statement of changes in equity

Answer 36

A financial statement that reconciles the beginning of period and end of period balance sheet values of shareholders equity; provides information about all factors affecting shareholders equity

Question 37

Statement of financial condition

Answer 37

The financial statement that presents an entities current financial position by disclosing resources the entity controls (its assets) and the the claims on those resources (L and E) as of a particular point in time

Question 38

Statement of financial position

Answer 38

Balance sheet

Question 39

Trade payables

Answer 39

Amounts that a business owes to its vendors for goods and services that were purchased from them but which have not yet been paid

Question 40

Unearned revenue

Answer 40

A liability account for money that has been collected for goods or services that have not yet been delivered; payment received in advance of providing a good or service

Question 41

Working capital

Answer 41

The difference between current assets and current liabilities