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Flashcards in Financial Statements Deck (25)
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Which Personal Financial Statements are required?

Statement of Financial Condition & Statement of Changes in Net Worth


How are assets and liabilities valued in a Personal Financial Statement?

Estimated current value


How are estimated taxes that would be paid if all assets were converted into cash and all liabilities paid presented on a Personal Financial Statement?

Presented on Statement of Financial Condition between Liabilities and Net Worth


What is the general presentation on a statement of financial condition?

- Liabilities
- Estimated taxes on assets sold
: Net Worth


How is life insurance presented on a Personal Financial Statement?

Only shown if there is cash surrender value

It is shown net of loans against the policy


How are business interests shown on a Personal Financial Statement?

Business Interests that constitute a large percentage of total assets should be separated from other investments


What is the discreet view in an Interim Financial Statement?

Interim period is a separate accounting period - not GAAP

Same accounting principles used for annual reporting should be used.


What is the integral view in an Interim Financial Statement?

Interim period is a part of the annual period - GAAP

Gross profit method may be used to estimate COGS and inventory

Temporary declines in inventory aren't recognized


How are discontinued operations & extraordinary items reported in Interim Financial Statements?

Aren't prorated

Fully recognized in Interim Period as incurred

If it occurs in Q3 - it's recognized in Q3


How are cumulative gains and losses reported in Interim Financials?

Reported as if they occurred in the first quarter


How is inventory valuation handled in Interim Financials?

If inventory experiences a decline in value during an interim period - the loss is recognized in the interim period

If the loss is expected to be only temporary - no loss is recognized


What is one of the primary problems with interim reporting?

The matching principle gets messed up - Expenses incurred in one period may benefit future periods


For whom is Segment Reporting required?

Publicly traded companies


What factors cause a segment to be significant and therefore to be reported separately?

Revenue of segment is 10% or more of total

Profit is 10% or more of total

Segment assets are 10% or more of total

75% Test - All segment revenues must equal 75% of total external revenues


What is the disclosure requirement regarding sales of 10% or more for one customer?

If 10% or more of enterprise revenue comes from one customer - the segment making the sales must be disclosed


Balance Sheet assesses the company's

liquidity and financial flexibility


Related party disclosures:


sale to affiliated companies
loans to officers
agreement as surety for a loan
non monetary exchanges by affiliates


Related party disclosures - EXCLUDE

salaries of officers
officers expenses
transactions eliminated in combined/consolidated FS


Principal market

greatest volume and level of activity


Most advantageous market

maximizes price received


SEC form 8-k

material events


Required minimum disclosures in IFRS income statement


finance costs,

share of profits and losses using the equity method,

tax expense,

discontinued operations,

profit or loss,

noncontrolling interests in profits and losses, and the net profit (loss) attributable to equity holders of the parent.


Fair value method applies to

The fair value option applies to all financial assets including

equity method investments.

The fair value option also applies to certain

financial liabilities,
firm commitments that involve financial instruments,
written loan commitments,
nonfinancial insurance contracts that can be settled by paying a third party,
warranties that can be settled by paying a third party,
host financial instrument that is an embedded nonfinancial derivative instrument separated from a nonfinancial hybrid instrument.


Fair value method does not apply to

share-based payments,
stock options,
other postemployment benefits (OPEB),
exit or disposal activities,
leases, or
financial instruments that are a component of equity.


Form 10-k

annual audited report