FINANCIAL STATEMENT ANALYSIS
FINAL EXAM 100% VERIFIED 2025
, What best describes the role of financial statement analysis? - ANSWERSForm
expectations about a company's future performance and financial position.
The income statement is best used to evaluate a company's __________ -
ANSWERSFinancial performance. Financial results from business activities.
Unaudited information about significant events and uncertainties affecting a company's
liquidity, capital resources, and results of operations can be found in what section of
public company's filings? - ANSWERSMD&A (management discussion and analysis)
According to the financial statement analysis framework, what is the first step to take
prior to undertaking any analysis? - ANSWERSArticulate the purpose and context of the
analysis
Why are the notes that accompany the financial statements required? -
ANSWERS*Provide information necessary to understand the financial statements
-Support what you put in the financial statements.
-Basis on which they report the information.
Under US GAAP, assets on the balance sheet are generally listed in order of
__________ - ANSWERSliquidity
US generally accepted accounting principles (under US GAAP) are currently developed
by which entity? - ANSWERSFinancial Accounting Standards Board (FASB)
What is the objective of financial reporting? - ANSWERSTo provide information useful
to users in making decisions about providing resources relating to equity and debt
instruments.
The assumption that the effects of transactions and other events are recognized when
they occur, not when the cash flows occur, is called___________ - ANSWERSAccrual
basis accounting
What does the revenue recognition principle state? - ANSWERSRevenue should be
recognized in the period earned independent of cash flows
During periods of rising prices, which inventory method would provide the lowest cost of
goods sold (COGS) - ANSWERSFIFO
Cash received from customers for products to be delivered in the future is recorded as: -
ANSWERSasset and liability
FINAL EXAM 100% VERIFIED 2025
, What best describes the role of financial statement analysis? - ANSWERSForm
expectations about a company's future performance and financial position.
The income statement is best used to evaluate a company's __________ -
ANSWERSFinancial performance. Financial results from business activities.
Unaudited information about significant events and uncertainties affecting a company's
liquidity, capital resources, and results of operations can be found in what section of
public company's filings? - ANSWERSMD&A (management discussion and analysis)
According to the financial statement analysis framework, what is the first step to take
prior to undertaking any analysis? - ANSWERSArticulate the purpose and context of the
analysis
Why are the notes that accompany the financial statements required? -
ANSWERS*Provide information necessary to understand the financial statements
-Support what you put in the financial statements.
-Basis on which they report the information.
Under US GAAP, assets on the balance sheet are generally listed in order of
__________ - ANSWERSliquidity
US generally accepted accounting principles (under US GAAP) are currently developed
by which entity? - ANSWERSFinancial Accounting Standards Board (FASB)
What is the objective of financial reporting? - ANSWERSTo provide information useful
to users in making decisions about providing resources relating to equity and debt
instruments.
The assumption that the effects of transactions and other events are recognized when
they occur, not when the cash flows occur, is called___________ - ANSWERSAccrual
basis accounting
What does the revenue recognition principle state? - ANSWERSRevenue should be
recognized in the period earned independent of cash flows
During periods of rising prices, which inventory method would provide the lowest cost of
goods sold (COGS) - ANSWERSFIFO
Cash received from customers for products to be delivered in the future is recorded as: -
ANSWERSasset and liability
