CFI CBCA Reading Business Financial
Information Exam Questions And Actual
Answers.
Course Objectives - Answer Understand the basics of the three main financial statements and
key financial terms
Learn the different components of financial statements
Understand how the three financial statements link together
Understand the different levels of accountant's reports and the comfort each provides
Calculate and interpret the key lending ratios
Understanding the Basics - Answer 01. Explain the format of the three main financial
statements
02. Review key terms you will need to know
The Three Key Financial Statements - Answer Balance Sheet
Income Statement
Statement of Cash Flows
The financial statements are - Answer are a record of the financial activities of a business.
The balance sheet is often referred to as - Answer a snapshot at a point in time. It
demonstrates the financial strength of a business.
The income statement represents - Answer the business activities that have been transacted
from the beginning of the fiscal year to a particular period and through to the end of the fiscal
year.
Number of transactions: - Answer 0 - 99999
The income statement may also be referred to as - Answer "the statement of operations"
"the profit and loss statement"
,Gross Profit - Answer Revenues less cost of sales
Expenses after Gross profit - Answer Indirect operating expenses
Depreciation and amortization - Answer The reduction in value of noncurrent assets
Operating Income - Answer Operating profit or earnings before interest and taxes (EBIT)
Net profit or net earnings - Answer Net Income Before Extraordinary Items
Operating Activities - Answer • Receipts from customers
• Payments to suppliers
Investing Activities - Answer • Sale and purchase of property, plant and equipment • Buying
and selling investments
Financing Activities - Answer • Issuing shares
• Paying dividends
• Issuing bonds
• Loan repayments
The Importance of Note Disclosures - Answer Accounting Policies
Significant Assumptions
Commitments and Contingent Liabilities
Subsequent Events
Conclusion - Answer 01. Explain the format of the three main financial statements
02. Review key terms you will need to know
3. Identify and review some of the more typical notes to the financial statements
Reading the Balance Sheet and Statement of Equity - Answer 01. Understand the key
components of the balance sheet
, Balance Sheet Known as - Answer the Statement of Financial Position
Equity Statement Known as - Answer the Statement of Equity or Statement of Changes in
Equity
A company will hold external investments for two reasons: - Answer 1. Excess cash
2. Accumulating cash to make a large purchase
External investments: - Answer Attract passive investment income
Investments in equity or debt instruments to be held for capital gains and/or income.
Internal investments: - Answer Investment in subsidiaries, associates, and joint ventures
Deferred Income Taxes - Answer Resulting from differences in tax vs accounting treatment
Goodwill - Answer If a company is purchased for more than the fair value of its assets less
liabilities (net assets), then the difference between the purchase price and fair value is recorded
as goodwill.
E.g. Brand, customers, intellectual capital
Purchase Price X - Fair Value of Net Assets Acquired (X) = Goodwill X
Intangible assets - Answer are items of value that are used to generate revenues and have no
physical substance.
Trademarks, Patents, Copyrights
Commitments - Answer are future obligations that a company has agreed to.
Examples of commitments: - Answer • Future non-cancelable lease payment commitments •
Long-term contractual obligations with suppliers for future purchases
(Notes to the Financial Statements)
Information Exam Questions And Actual
Answers.
Course Objectives - Answer Understand the basics of the three main financial statements and
key financial terms
Learn the different components of financial statements
Understand how the three financial statements link together
Understand the different levels of accountant's reports and the comfort each provides
Calculate and interpret the key lending ratios
Understanding the Basics - Answer 01. Explain the format of the three main financial
statements
02. Review key terms you will need to know
The Three Key Financial Statements - Answer Balance Sheet
Income Statement
Statement of Cash Flows
The financial statements are - Answer are a record of the financial activities of a business.
The balance sheet is often referred to as - Answer a snapshot at a point in time. It
demonstrates the financial strength of a business.
The income statement represents - Answer the business activities that have been transacted
from the beginning of the fiscal year to a particular period and through to the end of the fiscal
year.
Number of transactions: - Answer 0 - 99999
The income statement may also be referred to as - Answer "the statement of operations"
"the profit and loss statement"
,Gross Profit - Answer Revenues less cost of sales
Expenses after Gross profit - Answer Indirect operating expenses
Depreciation and amortization - Answer The reduction in value of noncurrent assets
Operating Income - Answer Operating profit or earnings before interest and taxes (EBIT)
Net profit or net earnings - Answer Net Income Before Extraordinary Items
Operating Activities - Answer • Receipts from customers
• Payments to suppliers
Investing Activities - Answer • Sale and purchase of property, plant and equipment • Buying
and selling investments
Financing Activities - Answer • Issuing shares
• Paying dividends
• Issuing bonds
• Loan repayments
The Importance of Note Disclosures - Answer Accounting Policies
Significant Assumptions
Commitments and Contingent Liabilities
Subsequent Events
Conclusion - Answer 01. Explain the format of the three main financial statements
02. Review key terms you will need to know
3. Identify and review some of the more typical notes to the financial statements
Reading the Balance Sheet and Statement of Equity - Answer 01. Understand the key
components of the balance sheet
, Balance Sheet Known as - Answer the Statement of Financial Position
Equity Statement Known as - Answer the Statement of Equity or Statement of Changes in
Equity
A company will hold external investments for two reasons: - Answer 1. Excess cash
2. Accumulating cash to make a large purchase
External investments: - Answer Attract passive investment income
Investments in equity or debt instruments to be held for capital gains and/or income.
Internal investments: - Answer Investment in subsidiaries, associates, and joint ventures
Deferred Income Taxes - Answer Resulting from differences in tax vs accounting treatment
Goodwill - Answer If a company is purchased for more than the fair value of its assets less
liabilities (net assets), then the difference between the purchase price and fair value is recorded
as goodwill.
E.g. Brand, customers, intellectual capital
Purchase Price X - Fair Value of Net Assets Acquired (X) = Goodwill X
Intangible assets - Answer are items of value that are used to generate revenues and have no
physical substance.
Trademarks, Patents, Copyrights
Commitments - Answer are future obligations that a company has agreed to.
Examples of commitments: - Answer • Future non-cancelable lease payment commitments •
Long-term contractual obligations with suppliers for future purchases
(Notes to the Financial Statements)
