CMA EXAM PART 1: SECTION A VERIFIED STUDY GUIDE
Primary users of financial statements - Answers - - Existing and potential investors
- Existing and potential landers and creditors
Secondary users of financial statements - Answers - - Customers
- Employees
- Gov. and Regulatory Agencies
- the general public
Statement of financial position (balance sheet) - Answers - An accounting statement
that records the values of a business's *assets*, *liabilities* and *shareholders' equity*
at one point in time
Income Statement - Answers - A financial statement that reports a company's revenues
and expenses and resulting net income or net loss for a specific period of time.
Statement of Cash Flows - Answers - Financial statement that reports cash receipts and
disbursements related to a firm's three major activities: operations, investments, and
financing.
Operating Cash Flow (OCF) - Answers - the cash flow a firm generates from normal
operations—from the production and sale of its goods and services.
investing cash flows - Answers - cash transactions involving purchase and sale of long-
term assets
financing cash flows - Answers - include cash transactions with lenders, such as
borrowing money and repaying debt, and with stockholders, such as issuing stock and
paying dividends
Statement of Comprehensive Income - Answers - An income statement in which a
company also reports other comprehensive income.
Including:
- foreign currency translation
- gains or losses prior service costs or credits related to a defined pension plan
- unrealized holding gains or losses on available for sale securities
- the effective portion of the gain or loss on a derivative
statement of stockholders' equity - Answers - Summarizes the changes in the balance in
each stockholders' equity account over a period of time.
Including:
, - capital stock
- APIC
- retained earnings
Assets - Answers - Economic resources (things of value) owned by a firm for future
economic benefits.
Liabilities - Answers - what a company owes
Equity - Answers - the owner's claims to the assets of the business after deducting
liabilities.
Includes:
- issued capital (stock)
- APIC
- retained earnings
- treasury stock
- Accumulated other comprehensive income
current assets - Answers - items that can or will be converted into cash within one year
Include:
- cash and cash equivalents
- Trade or accounts receivable
- short-term notes receivable
- receivables from loans due
- inventories
- marketable securities
- prepaid expenses
Operating Cycle - Answers - The average time required to purchase inventory, sell it on
account, and then collect cash from customers—that is, go from cash to cash.
noncurrent assets - Answers - assets that will be used or turned into cash beyond one
year
Include:
- restricted cash items
- long-term receivables and investments
- property, plant, and equipment
- Intangible assets
Current Liabilities - Answers - Obligations that a company expects to pay within the next
year or operating cycle, whichever is longer.
Include:
- trade and accounts payable
- unearned revenue
- Accrued expense
- Short term notes payable
Primary users of financial statements - Answers - - Existing and potential investors
- Existing and potential landers and creditors
Secondary users of financial statements - Answers - - Customers
- Employees
- Gov. and Regulatory Agencies
- the general public
Statement of financial position (balance sheet) - Answers - An accounting statement
that records the values of a business's *assets*, *liabilities* and *shareholders' equity*
at one point in time
Income Statement - Answers - A financial statement that reports a company's revenues
and expenses and resulting net income or net loss for a specific period of time.
Statement of Cash Flows - Answers - Financial statement that reports cash receipts and
disbursements related to a firm's three major activities: operations, investments, and
financing.
Operating Cash Flow (OCF) - Answers - the cash flow a firm generates from normal
operations—from the production and sale of its goods and services.
investing cash flows - Answers - cash transactions involving purchase and sale of long-
term assets
financing cash flows - Answers - include cash transactions with lenders, such as
borrowing money and repaying debt, and with stockholders, such as issuing stock and
paying dividends
Statement of Comprehensive Income - Answers - An income statement in which a
company also reports other comprehensive income.
Including:
- foreign currency translation
- gains or losses prior service costs or credits related to a defined pension plan
- unrealized holding gains or losses on available for sale securities
- the effective portion of the gain or loss on a derivative
statement of stockholders' equity - Answers - Summarizes the changes in the balance in
each stockholders' equity account over a period of time.
Including:
, - capital stock
- APIC
- retained earnings
Assets - Answers - Economic resources (things of value) owned by a firm for future
economic benefits.
Liabilities - Answers - what a company owes
Equity - Answers - the owner's claims to the assets of the business after deducting
liabilities.
Includes:
- issued capital (stock)
- APIC
- retained earnings
- treasury stock
- Accumulated other comprehensive income
current assets - Answers - items that can or will be converted into cash within one year
Include:
- cash and cash equivalents
- Trade or accounts receivable
- short-term notes receivable
- receivables from loans due
- inventories
- marketable securities
- prepaid expenses
Operating Cycle - Answers - The average time required to purchase inventory, sell it on
account, and then collect cash from customers—that is, go from cash to cash.
noncurrent assets - Answers - assets that will be used or turned into cash beyond one
year
Include:
- restricted cash items
- long-term receivables and investments
- property, plant, and equipment
- Intangible assets
Current Liabilities - Answers - Obligations that a company expects to pay within the next
year or operating cycle, whichever is longer.
Include:
- trade and accounts payable
- unearned revenue
- Accrued expense
- Short term notes payable
