Subdivisions Flashcards

1
Q

What are the 3 categories of Cash Flows ? Explain each one

A

Operating: inflows/outflows of cash from business operations. ( income statement)
Investing: Changes in cash from acquistions/disposals of long term assets & investments
Financing: cash flows related to liabilities and equity ( balance sheet)

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2
Q

What are the Qualitative Characteristic

A
  • Relevance: it is relevant if it makes a difference to a decision maker.
  • Faithful Representation: if an economic condition is then reported measure and the condition is in a agreement
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3
Q

What are the 4 Enhancing Characteristics of the Qualitative Characteristic

A

Comparability- Users should be able to identify similarities & differences across the board
Verifiability- Different observers could reach similar conclusions based on the info
Timeliness- received in time to make a difference in the decision making
Understandability- The user comprehends the info within the decision context at hand

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4
Q

What is the conceptual framework intended to establish?

A

The objectives and concepts for use in developing standards of financial accounting and reporting

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5
Q

What makes up the Qualitative Characteristics of Relevance

A

Predictive Value: helps users increase the chance forecasting the outcome of past/ present events
Confirmatory value - if it confirms or changes past/present expectations based on previous evaluations
Material - It is persuasive and will have an impact on decision makers

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6
Q

What makes up the Qualitative Characteristics of Faithfully Representation

A

Completeness- includes all data neccesary to be faithful
neutral- freedom from basis
free from error - There is no omissions or errors

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7
Q

What are level 2 observable inputs that could be used in determining FV?

A
  1. Quoted prices in an active market for similar assets
  2. Quoted prices in an inactive market for identical assets
  3. Interest rates that are observable at commonly quoted intervals
  4. Companies Historical Performances
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8
Q

What are the five sources noted in the applicable standard ?

A
  1. Nature of a firms operation
  2. Use of estimates in F/S
  3. Vulnerability to significant concentrations
  4. Certain significant estimates
  5. The entity’s ability to exist as a going concern
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9
Q

What are the four concentrations?

A
  1. Concentration in revenue
  2. Concentrations in sources of supply
  3. Concentration in the market for the firms products
  4. Concentration in the volume of business - customer/ supplier
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10
Q

Operating Activities

A

The cash inflows and outflows items are associated with net income

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11
Q

What are examples of Operating Activities?

A

Cash received from - customers, dividends, interest ( inflows)
Cash paid to - suppliers, employees, interest and income tax (outflows)

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12
Q

Investing Activities

A

The cash inflows and outflows that relates to investments/ disposal of noncash assets

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13
Q

What are examples of Investing Activities?

A

Cash Received from- Sale of Long Term Asset, collection loan principal, disposal of debt/equity securities, sales of other assets(Property, plant, equipment, patents) inflows
Cash Paid - Purchases of long term asset, lending money, investment in debt/equity securities, and purchase of other assets
outflows

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14
Q

Financing Activities

A

The cash inflows/outflows that relates to how the entity is financed

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15
Q

What are examples of Financing Activities?

A

Cash Received - sale on own stock, proceeds from borrowing (bonds,notes), retirement of debt (inflows)
Cash Paid- Repurchase of treasury stock, paying back lenders(principal payments), Payment of dividends (outlfows)

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16
Q

What are the required disclosures involved with risk and uncertainties ?

A
Nature of operations
Uses of estimates 
Certain significant  estimates 
significant concentrations 
Management going concern
17
Q

When a company is disposing of a plant asset because it is not a source of revenue for the entity what is the first step?

A

The first step is to record depreciated up to the date of disposal.

18
Q

The sale of a plant asset when cash is received when is it a gain or loss

A

Gain - Cash from the sales exceeds net book value ( asset cost - a/d)
Loss- cash from sales is less than net book value

19
Q

If there is no cash received because the asset is destroyed or etc what type of loss is it ?

A

Ordinary loss - reported in the income statement part of the continuing operations