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标题: Financial Reporting and Analysis 【Reading 24】Sample [打印本页]
作者: Kingpin804    时间: 2012-3-26 11:08     标题: [2012 L1] Financial Reporting and Analysis 【Session 7 - Reading 24】Sample

Which of the following statements about financial statements and reporting standards is least accurate?
A)
Financial statements could potentially take any form if reporting standards didn’t exist.
B)
The objective of financial statements is to provide economic decision makers with useful information.
C)
Reporting standards focus mostly on format and presentation and allow management wide latitude in assumptions.


Given the variety and complexity of possible transactions, and the estimates and assumptions a firm must make when presenting its performance, financial statements could potentially take any form if reporting standards didn’t exist. Reporting standards ensure that the information is “useful to a wide range of users,” including security analysts, by making financial statements comparable to one another and narrowing the range within which management’s estimates can be seen as reasonable. Reporting standards limit the range of assumptions management can make.
作者: karoliukas    时间: 2012-3-26 11:10

Which description of the objective of financial statements is most accurate? The objective of financial statements is:
A)
to provide economic decision makers with useful information about a firm’s financial performance and changes in financial position.
B)
to provide securities analysts with objective data about a firm’s financial prospects.
C)
to provide a wide range of users with information about a firm’s financial prospects.


The objective of financial statements is to provide economic decision makers with useful information about a firm’s financial performance and changes in financial position. Assessing its prospects is the responsibility of analysts. Financial statements fall under the purview of the FASB in the US, not the IASB. The SEC does not set the objectives of financial statements, it is a regulatory authority.
作者: karoliukas    时间: 2012-3-26 11:10

Which of the following statements about financial reporting standards is least accurate? Reporting standards:
A)
are disclosed on Form 8K by publicly traded firms in the United States.
B)
narrow the range within which management estimates can be seen as reasonable.
C)
ensure that the information is “useful to a wide range of users.”


Reporting standards ensure that the information is “useful to a wide range of users,” including security analysts, by making financial statements comparable to one another and narrowing the range within which management’s estimates can be seen as reasonable. Securities & Exchange Commission Form 8K addresses acquisitions, divestitures, etc. and not reporting standards.
作者: karoliukas    时间: 2012-3-26 11:11

Which of the following is least likely to be considered a stated goal of the International Accounting Standards Board (IASB)?
A)
Remain neutral in the debate on the use of global accounting standards to avoid appearance of a conflict of interest.
B)
Develop global accounting standards requiring transparency, comparability, and high quality in financial statements.
C)
Account for the needs of emerging markets and small firms when implementing global accounting standards.



The IASB has four stated goals:
1. Develop global accounting standards requiring transparency, comparability, and high quality in financial statements.
2. Promote the use of global accounting standards.
3. Account for the needs of emerging markets and small firms when implementing global accounting standards.
4. Achieve convergence between various national accounting standards and global accounting standards.
作者: karoliukas    时间: 2012-3-26 11:12

When a publicly traded U.S. company prepares a proxy statement for its shareholders prior to the annual meeting or other shareholder vote, it also files the statement with the SEC as Form:
A)
DEF-14A.
B)
8-K.
C)
144.



Form DEF-14A: When a company prepares a proxy statement for its shareholders prior to the annual meeting or other shareholder vote, it also files the statement with the SEC as Form DEF-14A.
Form 8-K: Companies must file this form to disclose material events including significant asset acquisitions and disposals, changes in management or corporate governance, or matters related to its accountants, financial statements, or the markets on which its securities trade.
Form 144: A company can issue securities to certain qualified buyers without registering the securities with the SEC, but must notify the SEC that it intends to do so.
作者: karoliukas    时间: 2012-3-26 11:12

Professional organizations of accountants and auditors that establish financial reporting standards are called:
A)
Regulatory authorities.
B)
International organizations of securities commissions.
C)
Standard setting bodies.


Standard-setting bodies are professional organizations of accountants and auditors that establish financial reporting standards. Regulatory authorities are government agencies that have the legal authority to enforce compliance with financial reporting standards. Regulatory authorities, such as the Securities and Exchange Commission (SEC) in the U.S. and the Financial Services Authority (FSA) in the United Kingdom, are established by national governments. Most national authorities belong to the International Organization of Securities Commissions (IOSCO).
作者: karoliukas    时间: 2012-3-26 11:13

Desirable attributes of accounting standard-setting bodies least likely include:
A)
operating independently of interested stakeholders.
B)
having clear and consistent standard-setting processes.
C)
making decisions that are in the public interest.


Although standard-setting bodies should not be compromised by special interests, seeking input from stakeholders is considered a desirable attribute.
作者: karoliukas    时间: 2012-3-26 11:13

The process of developing one universally accepted set of accounting standards is best described as:
A)
convergence.
B)
unification.
C)
IASB.


Developing one universally accepted set of accounting standards is referred to as “convergence.” The IASB is an accounting standard setting body involved in the process.
作者: karoliukas    时间: 2012-3-26 11:14

Which of the following is most likely to be considered a barrier to developing one universally recognized set of reporting standards?
A)
Reluctance of firms to adhere to a single set of reporting standards.
B)
GATT already requires sufficient agreement.
C)
Different standard-setting bodies of different countries disagree on the best treatment of a particular issue.


A principal obstacle to agreement on a single set of reporting standards is that various standard-setting bodies and regulatory authorities disagree on what the standards should be. Firms generally support the idea because it would reduce the cost of reporting. GATT is the General Agreement on Tariffs and Trade and does not relate to financial reporting.
作者: karoliukas    时间: 2012-3-26 11:14

The term “convergence” is most accurately used to describe:
A)
the reduction of the premium on a bond as it nears maturity.
B)
when expected return and required return are equal.
C)
the process of developing one universally accepted set of accounting standards.


Moving towards agreement on a single set of accounting standards is referred to as “convergence.”
作者: karoliukas    时间: 2012-3-26 11:15

Which of the following is least likely a qualitative characteristic accounting information must possess in order to provide useful information to an analyst, according to the IASB Conceptual Framework?
A)
Faithful representation.
B)
Relevance.
C)
Conservatism.


Qualitative characteristics that accounting information must possess according to the IASB Conceptual Framework are relevance and faithful representation, which are enhanced by the characteristics of timeliness, verifiability, understandability, and comparability. Conservatism may be a desirable characteristic, but is not one of the qualitative characteristics specified in the IASB Conceptual Framework.
作者: karoliukas    时间: 2012-3-26 11:15

According to the IFRS framework, timeliness is a characteristic that enhances:
A)
both relevance and faithful representation.
B)
faithful representation.
C)
relevance.


In the IFRS framework, timeliness, comparability, verifiability, and understandability are characteristics that enhance the two fundamental qualitative characteristics, relevance and faithful representation.
作者: karoliukas    时间: 2012-3-26 11:16

Which of the following is a company least likely required to present according to International Accounting Standard (IAS) No. 1?
A)
A summary of accounting policies.
B)
Disclosures of material events.
C)
Statement of changes in owners’ equity.

International Accounting Standard (IAS) No. 1 defines which financial statements are required and how they must be presented. The required financial statements are:


• Balance sheet.


• Statement of comprehensive income.


• Cash flow statement.


• Statement of changes in equity.


• Explanatory notes, including a summary of accounting policies.

Disclosures of material events that affect the company are required by the Securities and Exchange Commission (Form 8-K) for firms that are publicly traded in the United States.
作者: karoliukas    时间: 2012-3-26 11:19

Required financial statements, according to International Accounting Standard (IAS) No. 1, include a(n):
A)
balance sheet and explanatory notes.
B)
income statement and working capital summary.
C)
cash flow statement and auditor’s report.


Financial statements that are required by IAS No. 1 include a balance sheet, a statement of comprehensive income, a cash flow statement, a statement of changes in owners’ equity, and explanatory notes that include a summary of the company’s accounting policies. IAS No. 1 does not require an auditor’s report or a working capital summary.
作者: karoliukas    时间: 2012-3-26 11:20

Which of the following statements about the elements of financial statements under the FASB and IASB frameworks is least accurate?
A)
The word “probable” is used by the FASB to define assets and liabilities.
B)
The IASB framework lists income and expenses as the elements related to performance.
C)
The IASB framework does not allow the values of assets to be adjusted upward.


Differences in financial statement elements include: (1) The IASB framework lists income and expenses as the elements related to performance, while the FASB framework uses revenues, expenses, gains, losses, and comprehensive income. (2) FASB defines an asset as a future economic benefit, where IASB defines it as a resource from which a future economic benefit is expected. (3) The word “probable” is used by the FASB to define assets and liabilities. (4) The FASB framework does not allow the values of most assets to be adjusted upward.
作者: karoliukas    时间: 2012-3-26 11:20

Disagreements that inhibit development of a coherent financial reporting framework are least likely to involve which of the following?
A)
Transparency.
B)
Valuation.
C)
Standard setting.


There is widespread agreement that transparency is desirable in financial reporting. Disagreements that inhibit development of a single framework often arise around issues of measurement, valuation, and standard setting.
作者: karoliukas    时间: 2012-3-26 11:21

Which of the following is least likely to be considered a characteristic of a coherent financial reporting framework?
A)
Transparency.
B)
Stability.
C)
Comprehensiveness.


Financial reporting should be transparent and comprehensive. Stability of accounting information is not a characteristic of a coherent reporting framework.
作者: karoliukas    时间: 2012-3-26 11:21

Management disclosure of the likely impact of implementing recently issued accounting standards is least likely to:
A)
conclude that the standard does not apply.
B)
state that the impact of the standard is impossible to determine.
C)
conclude that the standard will not affect the financial statements materially.


A disclosure that is required for public companies is the likely impact of implementing recently issued accounting standards. Management can discuss the impact of adopting the standard, conclude that the standard does not apply or will not affect the financial statements materially, or state that they are still evaluating the effects of the new standards. Analysts should be aware of the uncertainty that this last statement implies.
作者: karoliukas    时间: 2012-3-26 11:21

An analyst can find a company’s significant accounting methods and estimates in:
A)
both the footnotes to the financial statements and Management’s Discussion and Analysis.
B)
only the footnotes.
C)
both the footnotes and in the auditor’s opinion.


Companies that prepare financial statements under IFRS or U.S. GAAP must disclose their accounting policies and estimates in the footnotes and address those policies and estimates where significant judgment was required in Management’s Discussion and Analysis. The auditor’s opinion discusses whether policies have been applied appropriately, but does not include the estimates and policies themselves.
作者: karoliukas    时间: 2012-3-26 11:22

An analyst is least likely to use disclosures of accounting policies and estimates to evaluate:
A)
what policies are likely to be modified in future periods.
B)
whether the disclosures have changed since the prior period.
C)
what policies are discussed.


Companies that prepare financial statements under IFRS or U.S. GAAP must disclose their accounting policies and estimates in the footnotes and Management’s Discussion and Analysis. An analyst should use these disclosures to evaluate what policies are discussed, whether they cover all the relevant data in the financial statements, which policies required management to make estimates, and whether the disclosures have changed since the prior period.
作者: terpsichorefan    时间: 2013-3-20 23:33

thanks for sharing



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