Financial Reporting - Intro and Standards

Which of the following best describes the role of financial statement analysis?

• To provide information about a company’s performance

• To provide information about a company’s changes in financial position

• To form expectations about a company’s future performance and financial position

An auditor determines that a company’s financial statements are prepared in accordance with applicable accounting standards except with respect to inventory reporting. This exception is most likely to result in an audit opinion that is:

• adverse.

• qualified.

• unqualified.

Interim financial reports released by a company are most likely to be:

• monthly.

• unaudited.

• unqualified.

Which of the following sources of information used by analysts is found outside a company’s annual report?

• Auditor’s report

• Peer company analysis

• Management’s discussion and analysis

Accounting policies, methods, and estimates used in preparing financial statements are most likely to be found in the:

• auditor’s report.

• management commentary.

• notes to the financial statements.

The financial statement that presents a shareholder’s residual claim on assets is the:

• balance sheet.

• income statement.

• cash flow statement.

The income statement is best used to evaluate a company’s:

• financial position.

• sources of cash flow.

• financial results from business activities.

An independent audit report is most likely to provide:

• absolute assurance about the accuracy of the financial statements.

• reasonable assurance that the financial statements are fairly presented.

• a qualified opinion with respect to the transparency of the financial statements.

US generally accepted accounting principles are currently developed by which entity?

• The Securities and Exchange Commission.

• The Financial Accounting Standards Board.

• The Public Company Accounting Oversight Board.

Which of the following disclosures regarding new accounting standards provides the most meaningful information to an analyst?

• The impact of adoption is discussed.

• The standard will have no material impact.

• Management is still evaluating the impact.