CFA-Chartered Financial Analyst New Exam
Questions And Answers 100% Correct
Comprehensive Income - ANSWER It is a more inclusive measure that includes all
changes in equity except for owner contributions and distributions. That is,
comprehensive income is the sum of net income and other comprehensive income.
Other Comprehensive Income - ANSWER Are all costs and gains from items not in the
income statement. Items such as:
1. Foreign currency translation gains and losses.
2. Adjustments for minimum pension liability.
3. Unrealised gains and losses from cash flow hedging derivatives
4. Unrealised gains and Losses on Available-for-sale securities
Available-for-sale securities They are not expected to be held to maturity. The
appreciation or loss is reported on the Stock Holder's Equity as a component of
comprehensive income.
Barter Transactions - ANSWER Revenue from barter transactions can only be
recognized if its fair value can be estimated from historical data on similar non-barter
transactions.
Aggressive Revenue Reporting - ANSWER is when revenue is reported earlier, which
will inflate current period revenue reporting, Percentage of Completion method is more
aggressive than completed contract method.
Basic EPS - ANSWER = [Net Income - Preferred Dividends]/ [Weighted Avg. Number of
Shares Outstanding]
Assets - ANSWER Resources controlled as a result of past transactions that are
expected to provide future economic benefit
, Liabilities - ANSWER Obligations as a result of past events that are expected to require
an outflow of economic resources
Equity - ANSWER The owners' residual interest in the assets after deducting the
liabilities. Also known as: Stockholders' equity, shareholders' equity, or net assets
What are some of the limitations of the balance sheet in financial analysis? - ANSWER
For example, some assets are reported at historical cost, some are reported at
amortized cost and others may be reported at fair value. There are numerous valuation
bases. Even if the balance sheet was reported at fair value, the value may have changed
since the balance sheet date. Also, there are a number of assets and liabilities that do
not
appear on the balance sheet but certainly have value. For example, the value of a firm's
employees and reputation is not reported on the balance sheet.
Liquidity - ANSWER The ability to meet short-term obligations
Solvency - ANSWER The ability to meet long-term obligations.
Classified Balance Sheet - ANSWER Shows assets and liabilities in current/noncurrent
format - Useful to evaluate liquidity
Liquidity-based format - ANSWER under IFRS - lists the assets and liabilities according
to liquidity
CA
Current Assets - ANSWER Cash and those items that are going to be readily converted
to cash within one year or operating cycle
Operating Cycle - ANSWER Time it takes to produce/purchase the inventory to sell
product to collect cash
Working Capital - ANSWER Current Assets - current liabilities
Questions And Answers 100% Correct
Comprehensive Income - ANSWER It is a more inclusive measure that includes all
changes in equity except for owner contributions and distributions. That is,
comprehensive income is the sum of net income and other comprehensive income.
Other Comprehensive Income - ANSWER Are all costs and gains from items not in the
income statement. Items such as:
1. Foreign currency translation gains and losses.
2. Adjustments for minimum pension liability.
3. Unrealised gains and losses from cash flow hedging derivatives
4. Unrealised gains and Losses on Available-for-sale securities
Available-for-sale securities They are not expected to be held to maturity. The
appreciation or loss is reported on the Stock Holder's Equity as a component of
comprehensive income.
Barter Transactions - ANSWER Revenue from barter transactions can only be
recognized if its fair value can be estimated from historical data on similar non-barter
transactions.
Aggressive Revenue Reporting - ANSWER is when revenue is reported earlier, which
will inflate current period revenue reporting, Percentage of Completion method is more
aggressive than completed contract method.
Basic EPS - ANSWER = [Net Income - Preferred Dividends]/ [Weighted Avg. Number of
Shares Outstanding]
Assets - ANSWER Resources controlled as a result of past transactions that are
expected to provide future economic benefit
, Liabilities - ANSWER Obligations as a result of past events that are expected to require
an outflow of economic resources
Equity - ANSWER The owners' residual interest in the assets after deducting the
liabilities. Also known as: Stockholders' equity, shareholders' equity, or net assets
What are some of the limitations of the balance sheet in financial analysis? - ANSWER
For example, some assets are reported at historical cost, some are reported at
amortized cost and others may be reported at fair value. There are numerous valuation
bases. Even if the balance sheet was reported at fair value, the value may have changed
since the balance sheet date. Also, there are a number of assets and liabilities that do
not
appear on the balance sheet but certainly have value. For example, the value of a firm's
employees and reputation is not reported on the balance sheet.
Liquidity - ANSWER The ability to meet short-term obligations
Solvency - ANSWER The ability to meet long-term obligations.
Classified Balance Sheet - ANSWER Shows assets and liabilities in current/noncurrent
format - Useful to evaluate liquidity
Liquidity-based format - ANSWER under IFRS - lists the assets and liabilities according
to liquidity
CA
Current Assets - ANSWER Cash and those items that are going to be readily converted
to cash within one year or operating cycle
Operating Cycle - ANSWER Time it takes to produce/purchase the inventory to sell
product to collect cash
Working Capital - ANSWER Current Assets - current liabilities
