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CISI Corporate Finance > FSA > Flashcards

FSA Flashcards

9 Questions

1
Q

Most jurisdictions require companies to file …… accounts in accordance with local accounting standards.

1- Annual
2- Quarterly
3- Monthly

A

Annual

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2
Q

If the company has its shares quoted on a stock exchange, a more comprehensive set of audited annual accounts will be required, usually compliant with either US ……….. (for the companies listed on exchange in the US) or …………. (for companies listed on other major stock exchanges)

1- GAAP, IFRS
2- IFRS, GAAP

A

GAAP, IFRS

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3
Q

Quoted companies are also required to make unaudited interim financial disclosures either …….(Canada, Japan, and the US) or ……. (Australia, the EU and the UK)

1- Quarterly, Annually
2- Annually, Half yearly
3, Half yearly, Quarterly
3- Quarterly, Half yearly

A

Quarterly, Half yearly

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4
Q

As quoted companies normally have a number of subsidiaries, the accounts are required to be produced on a …….. basis, i.e., treating the group of companies as if it was a single ……. for accounting purposes.

A

Consolidated Basis, Entity

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5
Q

Profit and loss account, maybe shown as one single document, or it may be divided into two parts (the income statement and the statement of comprehensive income), this is the statement showing the company’s total income and expenses for the last financial year, and its profit or loss for that year

A

The statement of comprehensive income

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6
Q

The statement of the company’s assets and liabilities as at the end of the financial year

A

The statement of financial position also referred to as the balance sheet

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7
Q

The statement showing the sources and uses of cash during the financial year, and the net cash position at the end of that year

A

The statement of cash flows

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8
Q

A breakdown of the different elements contributing to changes in the company’s equity over the year, and notes to the financial statements - which provide breakdowns of the more complex items, as well as explanations and additional information, such as the company’s accounting policies.

A

The statement of changes in equity

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9
Q

True or False

Narrative reporting include:
1. The chairman’s statement
2. Reports by the CEO and other directors
3. A strategic report containing a fair review of the company’s business
4. An audit report
5. A director’s report

A

True

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10
Q

True or False

Companies that are traded on a stock exchange must publish these accounts by the deadline specified by the exchange, usually between six and eight months after the year-end.

A

False
Four and Six months

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11
Q

IFRS have been adopted by an increasingly wide number of countries and markets. with the exception of those companies quoted on US stock Exhange.

Who has developed the IFRS?

A

International Accounting standards board (IABS)

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12
Q

Generally, a parent will be treated as controlling its subsidiary if it owns more than … of the subsidiary’s shares (a simple majority)

  1. 20%
  2. 49%
  3. more than 50%
A

more than 50%

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13
Q

A company may be treated as an associate if the parent company owns or controls a significant shareholding (generally, ….)

  1. 10%-30%
  2. 50%-80%
  3. 20%-49%
A

20%-49%

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14
Q

Parent does not have a significant shareholding. instead, the parent is a passive minority shareholder that holds less than 20% shares, with only the right to receive dividends. The company is classified as:

  1. Associate
  2. Subsidiary
  3. Investment
A
  1. Investment
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15
Q

True or False

The parent company if a group of companies must produce both consolidated financial statements, showing the contribution of its subsidiaries, associates, and investments, and company accounts.

A

True

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16
Q

True or False

Minority interest represents the proportion of the subsidiary’s earnings which belong to the third party owning the minority interest in the subsidiary

A

True

17
Q

Company M owns 90% of the shares in its subsidiary, Company T. Company M has profit after tax of
$100,000; Company T has profit after tax of $50,000. In summary, Company M’s profit will be shown in
the consolidated accounts as follows:

A

Consolidated Accounts 150,000

Less:minority interest* (5000)

Profit attributable to Company M’s ordinary shareholders 145,000

18
Q

Provides a snapshot of the company’s financial position at a particular date

  1. Income statement
  2. Balance sheet
  3. Cash flow
A
  1. Balance sheet
19
Q

True or False

Intangible Assets are assets which are capable of being touched and observed, such as buildings, machinery, plant, vehicles, office equipment and computers.

A

False

Tangible Assets

20
Q

True or False

In the UK, all tangible fixed assets with a limited economic life must be depreciated (or written down) over their useful economic lives.

A

True

21
Q

True or False

Intangible Assets cannot be touched or observed such as patents, trademarks, licences and other intellectual propertty.

A

True

22
Q

True or False

Goodwill arises when the parent company acquires a subsidiary for a price which is lower than the fair value of the subsidiary net tangible assets

A

False

Greater than the fair value of the subsidiary net tangible assets

23
Q

True or False

If the company has a surplus on a retirement benefit scheme, this surplus maybe shown in current assets

A

False

Non-current assets

24
Q

True or False

Inventory consists of three items:
1. Raw materials: which have been bought but, as at the balance sheet date, not yet used in producing goods.
2. (WIP): products in the process of being manufactured
3. Finished Goods: products which have been made, but not yet sold as the year-end

A

True

25
Q

True or False

Receivables represents amounts owned by customers for goods provided or services rendered

A

False

Receivables represents amounts (owning from) customers for goods provided or services rendered

26
Q

Explain the relationship between Inventory, Receivables and Cash?

A

Inventory: raw materials, unfinished goods, finished goods which are unsold, these will be turned into receivables
Receivables: Finished goods which have been sold but not paid for. these will be sold later for cash
Cash: received in exchange for finished goods, sold and paid for

27
Q

True or False

An increase in Accounts Receivable and Inventory is a decrease in cash flow

A

True

28
Q

True or False

An increase in Accounts Payable is a decrease in cash flow

A

False

29
Q

Which one is not a non-current asset?

  1. Property, Plant and Equipment
  2. Intangible Assets
  3. Cash and Cash Equivalents
  4. Investments In Associates
  5. Financial Investments
  6. Retirement Benefit Surplus
A
  1. Cash and Cash Equivalents
30
Q

Which one is not a current asset?

  1. Inventories
  2. Property, Plant and Equipment
  3. Trade and Other Receivables
  4. Other Financial Assets
  5. Cash and Cash Equivalents
A
  1. Property, Plant and Equipment
31
Q

Which one is not a current liability?

  1. Bank overdrafts
  2. Bank loans
  3. Trade and other payables
  4. Financial instruments
  5. Other financial liabilities
  6. Current tax
A
  1. Financial instruments
32
Q

A company has a current assets of 1,067.3 and current liabilities of 832.9

What are the net current assets?

A

234.4

33
Q

Which one is not a non-current liability?

  1. Bank loans
  2. Borrowings
  3. Deferred income
  4. Financial Instruments
  5. Deferred tax liabilities
  6. Retirement benefit obligations
A
  1. Bank loans
34
Q

This includes bank loans, bonds, debentures or mortgages due for repayment in more than one year?

  1. Borrowing (debt)
  2. Bank loans
  3. Bank overdrafts
A
  1. Borrowing (debt)
35
Q

Situation when the company anticipates an expense arising in the future, but when the amount and timing of that expense is not yet certain.

  1. Borrowing (debt)
  2. Provision
  3. Retirement benefit obligations
A
  1. Provision
36
Q

When a company has a deficit on its pension scheme (i.e., its future liabilities outweigh the value of the assets in the scheme), this is shown in long-term liabilities?

  1. Borrowing (debt)
  2. Provision
  3. Retirement benefit obligations
A
  1. Retirement benefit obligations
37
Q

True or False

Borrowings, Provisions, and Retirement benefit obligations fall under non-current liabilities

A

True

38
Q
A

CISI Corporate Finance (2 decks)

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