Notes To Financial Statements Flashcards
Define “specific price change”.
The change in the price of a specific good or service over a period of time.
Define “purchasing power gain”.
Gains that result from holding monetary assets during deflationary times or having monetary liabilities during inflationary times.
What are the disclosure requirements for noncurrent liabilities?
Combined aggregate amount of maturities on borrowings 5+ years after balance sheet, sinking fund requirements; the aggregate amount of payments for unconditional obligations to purchase fixed or minimum amounts of goods or services; the fair value of each financial debt instrument in the financial statements or in the notes; the nature of the firm’s liabilities, interest rates and maturity dates, conversion options, assets pledged as collateral, and restrictions.
Define “constant dollars”.
Measurements in the general price level as of a specific date.
What does the first footnote typically cover?
Summary of significant accounting policies.
What is a development stage enterprise?
An enterprise placing substantially all its efforts into the establishment of a new business.
Define “general prices”.
The term general prices refers to a market basket of items that the typical consumer purchases.
What is the Management Discussion & Analysis (MD&A) section?
Management Discussion & Analysis: a narrative written by management that is an integral part of the disclosure of the financial statements.
Define “purchasing power loss”.
Losses that result from holding monetary assets during inflationary times or having monetary liabilities during deflationary times.
Define “nominal dollars”.
Measurements in the price level in effect at a transaction date. These measurements are not adjusted for inflation.
Define “nonmonetary items”.
The specific price of nonmonetary items can change.
What is presented in the related party transaction disclosures?
Nature of relationship, description of all transactions for years presented, dollar amounts of transactions, and receivables to or from parties.
What is included in illegal acts for companies?
Illegal contributions and bribes.
Under International Financial Reporting Standards (IFRS), what should the Summary of Significant Accounting Policies include?
Judgments and key assumptions made in applying those policies;
Measurement bases used for recognition (e.g., historical cost, fair value);
Information enabling an assessment of the estimation uncertainty that could result in a material adjustment to the balances of assets and liabilities, which are point estimates in many cases.
Define “inflation”.
It is the increase in general prices for a period of time; deflation is the decrease in general prices.
