IFIC Chapter 9 questions well answered
to pass
True Value - correct answer ✔✔-if the "true" value differs from the current market price, this is an
indication of a buying or selling opportunity
-comes form information about earnings (or profits) of these companies
-the value of a share is primarily influenced by the company's expected future earnings
Financial Statements - correct answer ✔✔-Financial statements of publicly traded companies in Canada
are produced according to International Financial Reporting Standards (IFRS). IFRS requires an extensive
and detailed disclosure by the company to explain why particular accounting treatments are utilized.
4 Essential Financial Statements - correct answer ✔✔-the Statement of Financial Position
-the Statement of Comprehensive Income
-the Statement of Changes in Equity
-the Statement of Cash flow
Statement of Financial Position - correct answer ✔✔-shows a company's financial position at a specific
date. In annual reports, that date is the last day of the company's fiscal year
-shows what the company owns and what is owing to it (assets)
-shows assets, liabilities, and shareholders equity
Assets - correct answer ✔✔-what the company owns and what is owing to it
-the company's total assets are equal to the sum of equity plus the company's liabilities
-assets are classified as either current or fixed, with the dividing point usually being one year
Equity - correct answer ✔✔-represents the shareholders' interest in the company and what the
company owes (called liabilities)
-equity represents the excess of the company's assets over its liabilities.
, Liabilities - correct answer ✔✔-what the company owes
-classified as either current or long-term, with a one-year dividing line.
Current Assets - correct answer ✔✔-assets that are expected to be converted to cash within one year,
although this conversion might be indirect.
-ex: trade receivables, cash
Fixed Assets - correct answer ✔✔-assets that are expected to last longer than one year. These are long-
term assets used in the day-to-day operations of a company to produce the goods or services the
company sells. They are not intended to be sold.
-ex: are automobiles, trucks, factories, computers, other office equipment, land
Depreciation/Amoritization - correct answer ✔✔-with the exception of land, assets wear out over time
or otherwise lose their usefulness. This used-up amount is known as depreciation or amortization.
-used for fixed assets
-the term "net" means that depreciation has been removed from the original value of the fixed assets.
Current Liabilities - correct answer ✔✔-liabilities that are expected to be paid within one year
-ex: trade payable, note payable, accrued charges
Accrued Charges - correct answer ✔✔-wages earned by employees but not yet paid, or taxes payable to
the federal or provincial governments
Trade Payable - correct answer ✔✔-represent the goods the company has bought for which payment has
not yet been made
Note Payable - correct answer ✔✔-represent loans that must be paid off by the company within one
year
Trade Receivable - correct answer ✔✔-represent the amounts owed to the company by clients who have
bought goods but haven't paid for them yet.
to pass
True Value - correct answer ✔✔-if the "true" value differs from the current market price, this is an
indication of a buying or selling opportunity
-comes form information about earnings (or profits) of these companies
-the value of a share is primarily influenced by the company's expected future earnings
Financial Statements - correct answer ✔✔-Financial statements of publicly traded companies in Canada
are produced according to International Financial Reporting Standards (IFRS). IFRS requires an extensive
and detailed disclosure by the company to explain why particular accounting treatments are utilized.
4 Essential Financial Statements - correct answer ✔✔-the Statement of Financial Position
-the Statement of Comprehensive Income
-the Statement of Changes in Equity
-the Statement of Cash flow
Statement of Financial Position - correct answer ✔✔-shows a company's financial position at a specific
date. In annual reports, that date is the last day of the company's fiscal year
-shows what the company owns and what is owing to it (assets)
-shows assets, liabilities, and shareholders equity
Assets - correct answer ✔✔-what the company owns and what is owing to it
-the company's total assets are equal to the sum of equity plus the company's liabilities
-assets are classified as either current or fixed, with the dividing point usually being one year
Equity - correct answer ✔✔-represents the shareholders' interest in the company and what the
company owes (called liabilities)
-equity represents the excess of the company's assets over its liabilities.
, Liabilities - correct answer ✔✔-what the company owes
-classified as either current or long-term, with a one-year dividing line.
Current Assets - correct answer ✔✔-assets that are expected to be converted to cash within one year,
although this conversion might be indirect.
-ex: trade receivables, cash
Fixed Assets - correct answer ✔✔-assets that are expected to last longer than one year. These are long-
term assets used in the day-to-day operations of a company to produce the goods or services the
company sells. They are not intended to be sold.
-ex: are automobiles, trucks, factories, computers, other office equipment, land
Depreciation/Amoritization - correct answer ✔✔-with the exception of land, assets wear out over time
or otherwise lose their usefulness. This used-up amount is known as depreciation or amortization.
-used for fixed assets
-the term "net" means that depreciation has been removed from the original value of the fixed assets.
Current Liabilities - correct answer ✔✔-liabilities that are expected to be paid within one year
-ex: trade payable, note payable, accrued charges
Accrued Charges - correct answer ✔✔-wages earned by employees but not yet paid, or taxes payable to
the federal or provincial governments
Trade Payable - correct answer ✔✔-represent the goods the company has bought for which payment has
not yet been made
Note Payable - correct answer ✔✔-represent loans that must be paid off by the company within one
year
Trade Receivable - correct answer ✔✔-represent the amounts owed to the company by clients who have
bought goods but haven't paid for them yet.
