WEEK 5 (REPORTING FINANCIAL PERFORMANCE) Flashcards
Define intraperiod tax allocation
Refers to the allocation of income taxes within a fiscal period
What is the objective of reporting performance?
To report the level of success pf a company’s operations for a specific time period
What does a balance sheet capture in financial statements?
Reports financing and investing activities
What does an income statement capture in financial statements?
Reports operating and performance activities
What does a statement of cash flows capture in a financial statement?
Reports the interrelationship between all three business activities
What is the statement of income/earnings under ASPE?
Income statement
What are the two versions of a statement of income/earnings under IFRS
Two separate statements: Statement of profit or loss and statement of other comprehensive income
One combined statement: Statement of financial performance
What is the difference between single-step and multi-step income statements
Multi-step income statements are separated by operating and non-operating activities
Define non-operating activities
One-time events that can affect revenues, expenses, or cash flow but fall outside of the company’s routine or core business
Uses and limitations of statements of income
Uses:
Evaluate past performance and profitability
Assist in predicting future performance
Assess potential risks or uncertainty in achieving future net cash flows
Limitations:
Items are excluded if they cannot be reliably measured
Amounts reported are affected by the accounting method used
Use of estimated in measuring income
Financial reporting bias
Characteristics of high quality earnings
Nature of the content and presentation
(have fundamental and enhancing qualitative characteristics)
What do discontinues operations include?
Components that have been disposed of or are held for sale
How do we measure income under IFRS?
Comprehensive income “all inclusive approach”
How do we measure income under ASPE?
Net income
Does OCI affect retained earnings?
No
