Financial Statement Analysis

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What type of financial statement is usually identified as a statement of changes in stockholders’ equity?

Balance sheet

Cash flow statement

Income statement

Statement of changes in stockholders’ equity (correct)

Where should changes in equity that are identified as “other comprehensive income” be reported according to GAAP?

In the balance sheet

In a financial statement (correct)

In the notes

In the income statement

What is the primary purpose of the supplemental and note disclosures in financial statements?

To provide a forecast of future financial performance

To replace the financial statements

To expand and supplement the information included in all of the financial statements (correct)

To provide a summary of the financial statements

What is the balance sheet primarily used to represent?

The position of the enterprise at a point in time Signup and view all the answers

What is the primary purpose of the other financial statements (excluding the balance sheet)?

To explain the financial impact of various activities occurring throughout the year Signup and view all the answers

What is the format of the comparative balance sheet for Tiger Co. presented in the example?

Account form Signup and view all the answers

What is the name of the company presented in the comparative balance sheet?

Tiger Co. Signup and view all the answers

What is the total net working capital and noncurrent assets for Tiger Co. in 20X2?

$4,739 Signup and view all the answers

Under what condition is the offsetting of assets and liabilities in the balance sheet allowed?

When a right of setoff exists Signup and view all the answers

What is the total stockholders' equity for Tiger Co. in 20X1?

$3,234 Signup and view all the answers

What is the condition for the right of setoff to exist where the reporting entity intends to set off?

The reporting entity intends to set off Signup and view all the answers

What is the amount of noncurrent liabilities for Tiger Co. in 20X2?

$1,264 Signup and view all the answers

What is the primary purpose of disclosing quantitative information about derivative instruments?

To provide a more complete picture of an entity's activities Signup and view all the answers

What is the definition of a foreign currency?

Any currency that is not the functional currency of an organization Signup and view all the answers

How are monetary assets and liabilities denominated in foreign currency remeasured at each subsequent balance sheet date?

Using the current exchange rate at the end of each reporting period Signup and view all the answers

Where are foreign currency transaction gains or losses reported?

In the income statement Signup and view all the answers

How are nonmonetary assets and liabilities initially measured in a foreign currency transaction?

Using the exchange rate on the transaction date Signup and view all the answers

What is the exchange rate used to remeasure nonmonetary assets and liabilities at each subsequent balance sheet date?

The same exchange rate as the one used on the initial transaction date Signup and view all the answers

What is a type of cash inflow from investing activities?

Cash receipts from sales of equity securities of other enterprises Signup and view all the answers

What is a type of cash outflow from financing activities?

Cash payments of dividends or other distributions to owners Signup and view all the answers

What is a type of cash inflow from financing activities?

Cash proceeds from issuing bonds, mortgages, notes, and other short‐ and long‐term debt instruments Signup and view all the answers

What is a category of cash outflows from investing activities?

Cash payments for loans made by the enterprise and payments to acquire debt instruments of other entities Signup and view all the answers

What is a type of cash inflow from investing activities?

Cash receipts from sales of equity securities of other enterprises Signup and view all the answers

What is a type of cash outflow from financing activities?

Cash repayments of amounts borrowed Signup and view all the answers

When an excess occurs, how should the current-period distribution up to the excess be classified?

As a return of investment and classified as cash inflows from investing activities Signup and view all the answers

On what basis should distributions received be classified according to the nature of the distribution approach?

Based on the nature of the activity or activities of the investee that generated the distribution Signup and view all the answers

What should an entity report if it elects to apply the nature of the distribution approach, but lacks information to apply that approach?

A change in accounting principle Signup and view all the answers

What is not addressed by this amendment?

Equity method investments measured using the fair value option Signup and view all the answers

How should a transferor’s beneficial interest obtained in a securitization of financial assets be disclosed?

As a noncash activity Signup and view all the answers

What disclosure is required when an entity changes its accounting principle due to the lack of available information?

Disclosure that a change in accounting principle has occurred with respect to the affected investee(s) Signup and view all the answers

Financial Statement Analysis

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Questions and Answers

What type of financial statement is usually identified as a statement of changes in stockholders’ equity?

Where should changes in equity that are identified as “other comprehensive income” be reported according to GAAP?

What is the primary purpose of the supplemental and note disclosures in financial statements?

What is the balance sheet primarily used to represent?

What is the primary purpose of the other financial statements (excluding the balance sheet)?

What is the format of the comparative balance sheet for Tiger Co. presented in the example?

What is the name of the company presented in the comparative balance sheet?

What is the total net working capital and noncurrent assets for Tiger Co. in 20X2?

Under what condition is the offsetting of assets and liabilities in the balance sheet allowed?

What is the total stockholders' equity for Tiger Co. in 20X1?

What is the condition for the right of setoff to exist where the reporting entity intends to set off?

What is the amount of noncurrent liabilities for Tiger Co. in 20X2?

What is the primary purpose of disclosing quantitative information about derivative instruments?

What is the definition of a foreign currency?

How are monetary assets and liabilities denominated in foreign currency remeasured at each subsequent balance sheet date?

Where are foreign currency transaction gains or losses reported?

How are nonmonetary assets and liabilities initially measured in a foreign currency transaction?

What is the exchange rate used to remeasure nonmonetary assets and liabilities at each subsequent balance sheet date?

What is a type of cash inflow from investing activities?

What is a type of cash outflow from financing activities?

What is a type of cash inflow from financing activities?

What is a category of cash outflows from investing activities?

What is a type of cash inflow from investing activities?

What is a type of cash outflow from financing activities?

When an excess occurs, how should the current-period distribution up to the excess be classified?

On what basis should distributions received be classified according to the nature of the distribution approach?

What should an entity report if it elects to apply the nature of the distribution approach, but lacks information to apply that approach?

What is not addressed by this amendment?

How should a transferor’s beneficial interest obtained in a securitization of financial assets be disclosed?

What disclosure is required when an entity changes its accounting principle due to the lack of available information?

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