Financial Accounting Analysis
Exam Review
Course Introduction
Financial Accounting Analysis is designed to introduce students to the fundamental principles and concepts of financial accounting, emphasizing the interpretation and analysis of financial statements. This course examines the accounting cycle, the structure and purpose of balance sheets, income statements, and cash flow statements, as well as the regulatory environment governing financial reporting. Students will learn to assess financial performance and position, use ratios and other analytical tools, and understand the impact of accounting choices on reported results. By the end of the course, students will develop the skills necessary to critically analyze and use financial information in decision-making processes within organizations.
Recommended Textbook
Intermediate Accounting 2nd Edition Volume II by Kin Lo George Fisher
Available Study Resources on Quizplus
10 Chapters
935 Verified Questions
935 Flashcards
Source URL: https://quizplus.com/study-set/3125 Page 2
Chapter 11: Current Liabilities and Contingencies
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/61940
Sample Questions
Q1) Why is it important to distinguish current liabilities from long-term liabilities?
Q2) For the following transaction,provide all of the required journal entries from inception to liquidation.Assume a December 31 year end and that the company does not prepare interim statements.Round all amounts to nearest dollar. \(\begin{array}{lr}
\text { Face value of note payable } & \$ 200,000 \\
\text { Date of issue for note } & \text { May } 1,2016 \\
\text { Due date for note } & \text { May } 1,2017 \\
\text { Interest rate in the note } & 5 \% \\ & \text { (interest due at maturity) } \\
\text { Market rate of interest } & 5 \% \\ \text { Consideration received } & \text { Cash } \end{array}\)
Q3) Explain the meaning of "provision" and give an example.
Q4) Which statement about contingencies is correct?
A)It involves only potential economic outflows of resources.
B)It is a possible condition that depends upon the outcome of a future event.
C)It involves uncertainty about either the timing or amount of payment.
D)It is an existing condition that depends upon the outcome of a future event.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 12: Non-Current Financial Liabilities
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/61939
Sample Questions
Q1) Legally Yours,a law firm,sells $8,000,000 of four-year,8% bonds priced to yield 6.6%.The bonds are dated January 1,2018,but due to some regulatory hurdles are not issued until March 1,2018.Interest is payable on January 1 and July 1 each year.The bonds sell for $8,388,175 plus accrued interest.
In mid-June,Legally Yours earns an unusually large fee of $11,000,000 for one of its cases.They use part of the proceeds to buy back the bonds in the open market on July 1,2018 after the interest payment has been made.Legally Yours pays a total of $8,456,234 to reacquire the bonds and retires them.
Required:
Prepare journal entries to record:
a.The issuance of the bonds-assume that Legally Yours has adopted a policy of crediting interest expense for the accrued interest on the date of sale.
b.Payment of interest and related amortization on July 1,2018.
c.Reacquisition and retirement of the bonds.
Q2) What is meant by the "spread" charged by banks on loans?
Q3) What does an "AAA" credit rating mean?
Q4) Explain how non-current liabilities are measured after initial recognition.
Q5) Why do companies sell notes directly to the investing public?
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 13: Equities
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/61938
Sample Questions
Q1) Use the following facts to determine how much each of the three classes of shares receives of the $1,000,000 cash dividend.
Facts: In 2019 Blueberry Juice Inc.declared $1,000,000 in cash dividends.Its capital structure includes 300,000 common shares;200,000 cumulative preferred shares "A" each entitled to an annual dividend of $1.00;and 50,000 non-cumulative preferred shares "B" each entitled to an annual dividend of $3.00.The prescribed dividends on both series of preferred shares were paid in 2018;there are no dividends in arrears.
Q2) In which account would "transactions with non-owners" be reported?
A)Appropriated reserves.
B)Common shares.
C)Contributed surplus.
D)Par value of preferred shares.
Q3) Which statement about a "reverse stock split" is correct?
A)The economic position of the investors is diluted after a stock split.
B)The economic position of the investors is increased after a stock split.
C)The economic position of the investors is decreased after a stock split.
D)The economic position of the investors is unaffected after a stock split.
Q4) Contrast the different treatment between IFRS and ASPE with respect to property dividends.
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 14: Complex Financial Instruments
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/61937
Sample Questions
Q1) What is a "call" option?
A)A contract that gives the holder the right to sell an instrument at a pre-specified price.
B)A contract that is derived from some other underlying quantity,index,asset or event.
C)A contract that gives the holder the right to acquire an instrument at a pre-specified price.
D)A contract that gives the holder the right to buy or sell something at a specified price.
Q2) What is a "hedge"?
A)A financial instrument that is speculative and increases the risk for the company.
B)An instrument that moves in the opposite direction to another financial asset or liability.
C)An instrument that moves in the same direction as another financial asset or liability.
D)A financial instrument that is prohibited by accounting standards under IFRS and ASPE.
Q3) What are the similarities and differences between forwards and futures?
Q4) List three common stock compensation plans and describe them.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Earnings Per Share
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/61936
Sample Questions
Q1) Which statement is correct?
A)Diluted EPS decreases the comparability of financial statements.
B)Diluted EPS decreases the understandability of financial statements.
C)Diluted EPS addresses the moral hazard information asymmetry.
D)Diluted EPS is calculated in the same manner as basic EPS.
Q2) Tropical Island Inc.(TIl)was incorporated on January 1,2018.At that time it issued 300,000 ordinary shares;10,000,$10,8% preferred shares "A";and 100,000,$10,9% preferred shares "B." Net income for the year ended December 31,2018 was $1,600,000.TIl declares and pays a total of $68,000 in dividends.Both the preferred shares series A and B are cumulative in nature.Series A must be fully paid their current entitlement as well as any arrears before any monies are paid to the Series B shareholders. Required:
Compute basic BPS.
Q3) Explain why the IASB requires the disclosure of basic and diluted EPS.
Q4) Which statement is correct?
A)Basic EPS is based on the dilutive shares outstanding at the end of the year.
B)Basic EPS is based on the dilutive shares outstanding during the year.
C)Basic EPS is based on the ordinary shares outstanding at during the year.
D)Basic EPS is based on the ordinary shares outstanding at the end of the year.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 16: Accounting for Income Taxes
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/61935
Sample Questions
Q1) In the first two years of operations,a company reports taxable income of $115,000 and $165,000,respectively.In the first two years,the tax rates were 38% and 32% respectively.It is now the end of the third year,and the company has a loss of $160,000 for tax purposes.The company carries losses to the earliest year possible.The tax rate is currently 25%.
Required:
a.How much tax was paid in year 1 and year 2?
b.Compute the amount of income tax payable or receivable in the current (third)year.
Q2) Which statement is correct about the "taxes payable method"?
A)It is the accounting method used under both ASPE and IFRS.
B)It records an amount for income tax equal to the tax payments required.
C)It matches income with the associated income tax expense.
D)It records an amount for income tax equal to the net income before tax.
Q3) A company has a deferred tax liability of $112,500 at the beginning of the fiscal year relating to a taxable temporary difference of $450,000.The tax rate for the year increased from 25% to 35%.
Required:
Provide the journal entry to reflect the tax rate change.
Q4) Describe what is meant by a permanent difference.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 17: Pensions and Other Employee Future Benefits
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/61934
Sample Questions
Q1) A company has a defined benefit pension asset of $1,050,000 at the beginning of the year.The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000.
Required:
Determine the value of the defined benefit pension liability at year-end.
Q2) Gander Products has a defined contribution pension plan for its employees.The plan requires the company to contribute 6% of these employees' salaries to the pension.In 2016,total salary for employees covered by the pension plan totalled $40 million,of which 75% is attributable to employees involved in manufacturing while the remaining 25% of salaries relate to administrative staff.The company contributed $500,000 to the pension during the year.
Required:
Provide the summary journal entry for Gander's pension plan for 2016.
Q3) Which of the following component refers to the services provided by the employees in the current period in a defined benefit plan?
A)Current service cost.
B)Interest cost on pension obligations.
C)Income from plan assets.
D)Amortization of actuarial gains and losses.
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 18: Accounting for Leases
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/61933
Sample Questions
Q1) Why do lessors prefer financing lease treatment over operating lease treatment?
Q2) Which entry is needed by the lessee for an operating lease?
A)Recording of interest expense.
B)Recording of the lease obligation.
C)Recording of rental expense.
D)Recording of depreciation expense.
Q3) Assume that Souse agrees to lease a new machine from LAIRD on January 1,2017,for $40,000 per year,paid in advance (i.e. ,at the beginning of the year).Executory costs are $1,000.The lease term is 11 years and the asset's useful life is 10 years.There is no bargain purchase option.The guaranteed residual value is $10,000.Which statement is correct?
A)The executor costs will be included in the minimum lease payments.
B)The guaranteed residual will be excluded in the minimum lease payments.
C)This is an operating lease because there is no bargain purchase option.
D)This is a finance lease since the lease term is for most of the economic life of the asset.
Q4) Compare the impact of finance leases and operating leases to the balance sheet and income statement of the lessee.
Q5) List four examples of the risks and four examples of rewards of ownership.
Q6) List four major risks of ownership.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 19: Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/61932
Sample Questions
Q1) What is cash management?
A)Cash management includes the investment of excess cash in cash equivalents.
B)Cash management excludes the investment of excess cash in cash equivalents.
C)Cash management includes the investment of excess cash in equipment.
D)Cash management includes the investment of excess cash in joint ventures.
Q2) Which of the following is an operating activity?
A)Receipt of customer deposit.
B)Proceeds from mortgage issue.
C)Purchase of land.
D)Redemption of preferred shares.
Q3) Explain the options for recording interest and dividends received and interest and dividends paid on the cash flow statement according to IAS 7.
Q4) What are financing activities?
A)Activities involving the acquisition and disposal of long-term assets.
B)Activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.
C)Activities involving the principal revenue-producing activities of the entity.
D)Activities that do not involve cash.
Q5) Define cash and cash equivalents.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 20: Accounting Changes
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/61931
Sample Questions
Q1) What is the essential characteristic that distinguishes an error correction from a change in estimate?
Q2) Nadire Company has a December 31 year-end.The company uses the aging method to estimate bad debts at year-end.For interim reporting,the company uses the percentage- of-sales method because it is simpler. In March of 2019,the company identified a $109,000 receivable from Woodscreen Inc.as uncollectible.Upon further consideration,staff concluded that the write-off should have occurred in the 2018 fiscal year because the information about the uncollectibility of the account was available at the time.The general ledger accounts for 2018 have already been closed.
Required:
a.Record the entry to write-off the uncollectible account.
b.Record any adjusting journal entries necessary to correct the error in Nadire's accounts receivable.
Q3) Why is the retrospective approach conceptually appropriate for changes in accounting policy?
Q4) Give an example of a change in accounting policy which does not require retrospective treatment and explain why?
To view all questions and flashcards with answers, click on the resource link above.
Page 12