Introduction to Financial Statement Analysis

Question 1

The ability to meet short- term obligations is generally referred to as , and the ability to ______ meet long- term obligations is generally referred to as _______.

Answer 1

liquidity, solvency

Question 2

What does IFRS stand for?

Answer 2

International Financial Reporting Standards

Question 3

________ includes all items that impact owners’ equity but are not the result of transactions with shareowners. Some
of these items are included in the calculation of net income, and some are included in ______.

Answer 3

Comprehensive income, othercomprehensive income (OCI).

Question 4

_________ is the ability of the company to react and

adapt to financial adversity and opportunities.

Answer 4

Financial flexibility

Question 5

What is MD&A?

Answer 5

Management’s Discussion and Analysis

Question 6

International standards on auditing (ISAs) have been developed by the __________.

Answer 6

International

Auditing and Assurance Standards Board (IAASB)

Question 7

An _______ audit opinion states that the financial statements give a “true and fair view” (international) or are “fairly presented”
(international and US) in accordance with applicable accounting standards.

Answer 7

unqualified

Question 8

A _______ audit opinion is one in which there is some scope limitation or
exception to accounting standards. Exceptions are described in the audit report with
additional explanatory paragraphs so that the analyst can determine the importance
of the exception.

Answer 8

qualified

Question 9

An _______ audit opinion is issued when an auditor determines that
the financial statements materially depart from accounting standards and are not
fairly presented.

Answer 9

adverse

Question 10

A _________ occurs when, for some reason, such

as a scope limitation, the auditors are unable to issue an opinion.

Answer 10

disclaimer of opinion