QUIZ 5 CFAS

Related parties include all of the following, except

• Affiliates

• Associates

• Individuals owning, directly or indirectly, an interest in the voting power of the reporting entity that gives them significant influence over the entity.

• Two entities that have a common director

Which is not a required minimum related party disclosure?

• The amount of the related party transaction.

• The amount of the outstanding balance.

• The amount of similar transaction with unrelated parties to establish that comparable related party transactions have been entered into arm’s length.

• Allowance for doubtful accounts related to the outstanding balance.

Which of the following is a related party transaction?

• Sold a car to the uncle of the entity’s finance director.

• Sold goods to another entity owned by the daughter of the entity’s managing director.

• Took out a huge bank loan.

• All of these are related party transactions.

Events after the end of reporting period are favorable or unfavorable events that

• Occur between the end of the reporting period and the date of the next annual financial statements.

• Occur between the end of the reporting period and the date of the next interim or annual financial statements.

• Occur between the end of the reporting period and the date when the financial statements are authorized for issue.

• Occur between the end of the reporting period and the date of the next interim financial statements.

The financial statements are authorized for issue

• When the board of directors reviews the financial statements and authorize them for issue.

• When the financial statements are made available to shareholders.

• When the shareholders approve the financial statements at their annual meeting.

• When the approved financial statements are filed with a regulatory body.

Events after the reporting period that provide evidence about conditions that existed at the current year-end and affect the realizability of accounts receivable should be

• Discussed only in the management commentary.

• Disclosed only in the notes.

• Used to record an adjustment to doubtful accounts expense.

• Used to record an adjustment to retained earnings.

At the end of the current reporting period, an entity carried a receivable from a major customer. The customer declared bankruptcy after the end of reporting period but before the issuance of financial statements. What should be reported at the current year-end?

• Disclose the fact that the customer has declared bankruptcy.

• Make a provision for this post-reporting period event.

• Ignore the event.

• Reverse the sale pertaining to this receivable.

It is the change in equity during a period resulting from transactions and other events, other than changes resulting from transactions with owners in their capacity as owners.

• Comprehensive income

• Other comprehensive income

• Profit or loss

• Retained earnings

What is the purpose of reporting comprehensive income?

• To report transactions with owners

• To report a measure of overall entity performance

• To replace net income with a better measure

• To combine income from continuing operations with income from discontinued operations

The income statement would help in which of the following?

• Evaluate liquidity

• Evaluate solvency

• Estimate amount, timing, and uncertainty of future cash flows

• Estimate future financial flexibility