Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Corporate Financial Reporting > Session 3 > Flashcards

Session 3 Flashcards

1
Q

Which is the most (technically) basic of the the major financial statements?

A

Balance Sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The three categories for cash inflows and outflows

A

Operations
Investing
Financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Net income is in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Depreciation and amortization expense is in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Gains are in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Losses are in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Change in current assets is in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Change in liabilities is in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Change in investment accounts is in which cash flow category?

A

Investing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Change in Long Term Assets is in which cash flow category?

A

Investing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Change in Long Term Liability Accounts is in which cash flow category?

A

Financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Change in equity accounts (excluding net income) is in which cash flow category?

A

Financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Dividend income is in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Interest income is in which cash flow category?

A

Operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Dividends paid is in which cash flow category?

A

Financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Change in Short Term and Long Term Notes/Bonds payable is in which cash flow category?

A

Financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Explain Operating activities

A

Transactions related to the day-to-day operations of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Explain Investing activities

A

Acquisitions and divestitures of investments (e.g. other firms’ securities) and long-term assets (e.g. PPE)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Explain Financing activities

A

Issuances and payments toward equity, borrowing, and long-term liabilities, and firm’s own dividends.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Buying Inventory cash flow category

A

Operating

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Buying equipment cash flow category

A

Investing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Borrowing via accounts payable cash flow category

23
Q

Borrowing via long-term notes payable cash flow category

24
Q

Selling (issuing/treasury) your own stock cash flow category

25
Selling stock of another firm (investment) cash flow category
Investing
26
Buying your own stock cash flow category
Financing
27
Buying stock of another corporation cash flow category
Investing
28
Paying (your own) dividends cash flow category
Financing
29
Receiving dividends from other corporations
Operating
30
Loans to other entities (e.g. buying their bonds)
Investing
31
How are dividends treated regarding the cash flow categories?
Dividends paid out to shareholders is a Financing activity while dividends received is an operating activity
32
What does the indirect method to the Statement of Cash Flows always start with?
Net income
33
Which method of the Statement of Cash Flows provides a lot more information?
Indirect Method (Schedule B)
34
Which method of Statement of Cash Flows is rarely used?
Direct Method. Schedule A
35
What two financial statements are needed to prepare the Statement of Cash Flows?
Income Statement and Balance Sheet Net income is adjusted to yield cash flows from Operations, and balance sheet changes are reviewed to yield cash flows for both Investing and Financing activities.
36
Explain how to prepare the Operations section of the Statement of Cash Flows
Begin with Net Income (from I/S) + Depreciation and Amortization Expense +/- Cash generated (used) current assets and current liabilities +/- Other noncash expenses/losses/gains = Net cash flows from operating activities
37
What is Amortization?
Depreciation for intangible assets like purchased patents or trademarks
38
When an asset account increases, what is the adjustment to cash?
Cash decreases
39
When an asset account decreases, what is the adjustment to cash?
Cash increases
40
When a liability account increases, what is the adjustment to cash?
Cash increases
41
When a liability account decreases, what is the adjustment to cash?
Cash decreases
42
When an equity account increases, what is the adjustment to cash?
Cash increases
43
when an equity account decreases, what is the adjustment to cash?
Cash decreases
44
Free Cash Flow equation
Cash Flow from Operations (Operating Cash) (Cash Flow Statement) - Capital Expenditure (Balance Sheet)
45
Analysis of financial reports typically involves examining financial ratios and variables...
Over time (time-series) Across firms (cross-sectional)
46
What is a Common-Size Financial Statement?
A percentage statement usually stated in terms of total assets, or net sales, or revenues. Generally helps promote comparisons with other companies
47
Return on Assets equation
Net Profit Margin X Total Asset Turnover Or simplified: Net Income / Average Total Assets
48
Net Profit Margin equation and definition
Net Income / Sales Measures the ability of the firm to control the level of expenses relative to sales.
49
Total Assets Turnover ratio
Sales / Average Total Assets Measures the ability of the firm to generate sales from a particular level of investment assets, or conversely, to control the amount of assets it uses to generate a particular level of sales.
50
Accounts Receivable Turnover equation
Sales / Average A/R Like to see this trend up.
51
Inventory Turnover equation
Cost of Goods Sold / Average Inventory Like to see this trend up.
52
ART
Accounts Receivable Turnover
53
Average A/R Received Days equation
365 / ART
54
Average Days in Inventory equation
365 / Inventory Turnover

Corporate Financial Reporting (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions