FINANCIAL REPORTING AND ANALYSIS QUESTIONS
What is the objective of financial reporting?
A. Show cash flows of company
B. Give stockholders incentive to invest
C. Companies have to
D. To provide information about a company's performance, financial position, and
changes in financial position - Answer -D. To provide information about a company's
performance, financial position, and changes in financial position
Past and present reports used to form expectations about a company's future profit and
cash flows is called - Answer -Financial Statement Analysis
What are the 5 financial statements used? - Answer -1. Balance sheet
2. income statement
3. statement of comprehensive income
4. changes in equity-gains and losses excluded from income statement
5. cash flows
The primary purpose of cash flows is to give ____ and ____ the ability to evaluate a
company's ____, ____, and ___ ______. - Answer -Creditors, Investors
liquidity, solvency, and financial flexibility
What are the 3 components in the cash flow statement? - Answer -1. Operating
2. Investing
3. Financing
Cash flow of Operations compromise which of the following?
a. Purchase of long term assets, investments, and other investments
b. Cash transactions of normal business functions
c. Activities related to obtaining or repaying capital
d. Issuance of stockholder equity - Answer -b. Cash transactions of normal business
functions
Cash flow of Investing compromise which of the following?
a. Purchase of long term assets, investments, and other investments
b. Cash transactions of normal business functions
c. Activities related to obtaining or repaying capital
d. Issuance of stockholder equity - Answer -a. Purchase of long term assets,
investments, and other investments
Cash flow of Finance compromise which of the following?
a. Purchase of long term assets, investments, and other investments
b. Cash transactions of normal business functions
, c. Activities related to obtaining or repaying capital
d. Issuance of stockholder equity - Answer -c. Activities related to obtaining or repaying
capital
What report goes below the financial statements to give additional information? -
Answer -The Report Footnotes
Reports footnotes provide additional information which allows analysts to do more in-
depth analysis. Footnotes provide a basis of preparation of the reports, accounting
methods, and estimates and additional information. T/F - Answer -True
What does MD&A stand for? - Answer -Management discussion and analysis
What is an example of something that would be included in the MD&A?
a. Trends and the identification of significant events
b. Discussion of inflation and changing prices impacting company
c. Uncertainty
d. all of the above - Answer -d. all of the above
What is an audit? - Answer -An independent review of all financial reports. An auditor
will give an opinion on the status of a company's financials, confirm assets & liabilities,
and will determine errors in financial statements.
The 3 elements of a standard auditor opinion are.. - Answer -1. Financial statement
prepared by management and management's responsibility
2. Generally accepted audit standards were used and contain no errors
3. Statements prepared in accordance with accepted auditing standards
What is an unqualified opinion? - Answer -Audit reveals company is free from material
omissions or erros
What is a qualified opinion? - Answer -Audit reveals company is statements make
exceptions to accounting principals
What is an adverse opinion? - Answer -Audit reveals statements are materially non
conforming with accounting standards.
What is an disclaimer of opinion? - Answer -The auditor is unable to express an
opinion.
What opinion does an auditor provide on the processes by which a company ensures
accurate financial statements are done? - Answer -Opinion on internal control
What is an interim report? - Answer -Reports in between annual reports.
Are interim reports reviewed for audit purposes? - Answer -No
What is the objective of financial reporting?
A. Show cash flows of company
B. Give stockholders incentive to invest
C. Companies have to
D. To provide information about a company's performance, financial position, and
changes in financial position - Answer -D. To provide information about a company's
performance, financial position, and changes in financial position
Past and present reports used to form expectations about a company's future profit and
cash flows is called - Answer -Financial Statement Analysis
What are the 5 financial statements used? - Answer -1. Balance sheet
2. income statement
3. statement of comprehensive income
4. changes in equity-gains and losses excluded from income statement
5. cash flows
The primary purpose of cash flows is to give ____ and ____ the ability to evaluate a
company's ____, ____, and ___ ______. - Answer -Creditors, Investors
liquidity, solvency, and financial flexibility
What are the 3 components in the cash flow statement? - Answer -1. Operating
2. Investing
3. Financing
Cash flow of Operations compromise which of the following?
a. Purchase of long term assets, investments, and other investments
b. Cash transactions of normal business functions
c. Activities related to obtaining or repaying capital
d. Issuance of stockholder equity - Answer -b. Cash transactions of normal business
functions
Cash flow of Investing compromise which of the following?
a. Purchase of long term assets, investments, and other investments
b. Cash transactions of normal business functions
c. Activities related to obtaining or repaying capital
d. Issuance of stockholder equity - Answer -a. Purchase of long term assets,
investments, and other investments
Cash flow of Finance compromise which of the following?
a. Purchase of long term assets, investments, and other investments
b. Cash transactions of normal business functions
, c. Activities related to obtaining or repaying capital
d. Issuance of stockholder equity - Answer -c. Activities related to obtaining or repaying
capital
What report goes below the financial statements to give additional information? -
Answer -The Report Footnotes
Reports footnotes provide additional information which allows analysts to do more in-
depth analysis. Footnotes provide a basis of preparation of the reports, accounting
methods, and estimates and additional information. T/F - Answer -True
What does MD&A stand for? - Answer -Management discussion and analysis
What is an example of something that would be included in the MD&A?
a. Trends and the identification of significant events
b. Discussion of inflation and changing prices impacting company
c. Uncertainty
d. all of the above - Answer -d. all of the above
What is an audit? - Answer -An independent review of all financial reports. An auditor
will give an opinion on the status of a company's financials, confirm assets & liabilities,
and will determine errors in financial statements.
The 3 elements of a standard auditor opinion are.. - Answer -1. Financial statement
prepared by management and management's responsibility
2. Generally accepted audit standards were used and contain no errors
3. Statements prepared in accordance with accepted auditing standards
What is an unqualified opinion? - Answer -Audit reveals company is free from material
omissions or erros
What is a qualified opinion? - Answer -Audit reveals company is statements make
exceptions to accounting principals
What is an adverse opinion? - Answer -Audit reveals statements are materially non
conforming with accounting standards.
What is an disclaimer of opinion? - Answer -The auditor is unable to express an
opinion.
What opinion does an auditor provide on the processes by which a company ensures
accurate financial statements are done? - Answer -Opinion on internal control
What is an interim report? - Answer -Reports in between annual reports.
Are interim reports reviewed for audit purposes? - Answer -No
