International Financial Statement Analysis Workbook. Elaine Henry

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СКАЧАТЬ Financial statements need to reflect certain basic features: fair presentation, going concern, accrual basis, materiality and aggregation, no offsetting, and consistency.

      ● Financial statements must be prepared at least annually and must include comparative information from the previous period.

      ● Financial statements must follow certain presentation requirements including a classified balance sheet, minimum information on the face of the financial statements and in the notes.

      ● Characteristics of a Coherent Financial Reporting Framework: Effective frameworks share three characteristics: transparency, comprehensiveness, and consistency. Effective standards can, however, differ on appropriate valuation bases, the basis for standard setting (principle or rules based), and resolution of conflicts between balance sheet and income statement focus.

      ● Comparison of IFRS with Alternative Reporting Systems: A significant number of the world's listed companies report under either IFRS or US GAAP.

      ● Although these standards are moving toward convergence, there are still significant differences in the framework and individual standards.

      ● In most cases, a user of financial statements will lack the information necessary to make specific adjustments required to achieve comparability between companies that use IFRS and companies that use US GAAP. Instead, an analyst must maintain general caution in interpreting comparative financial measures produced under different accounting standards and monitor significant developments in financial reporting standards.

      ● Monitoring Developments: Analysts can remain aware of ongoing developments in financial reporting by monitoring three areas: new products or types of transactions; actions of standard setters, regulators, and other groups; and company disclosures regarding critical accounting policies and estimates.

      PROBLEMS

      1. Which of the following is most likely not an objective of financial statements?

      A. To provide information about the performance of an entity.

      B. To provide information about the financial position of an entity.

      C. To provide information about the users of an entity's financial statements.

      2. International financial reporting standards are currently developed by which entity?

      A. The IFRS Foundation.

      B. The International Accounting Standards Board.

      C. The International Organization of Securities Commissions.

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

      A. The Securities and Exchange Commission.

      B. The Financial Accounting Standards Board.

      C. The Public Company Accounting Oversight Board.

      4. Which of the following statements about desirable attributes of accounting standards boards is most accurate? Accounting standards boards should:

      A. concede to political pressures.

      B. be guided by a well articulated framework.

      C. be adequately funded by companies to which the standards apply.

      5. A core objective of the International Organization of Securities Commissions is to:

      A. eliminate systematic risk.

      B. protect users of financial statements.

      C. ensure that markets are fair, efficient, and transparent.

      6. According to the Conceptual Framework for Financial Reporting (2010), which of the following is not an enhancing qualitative characteristic of information in financial statements?

      A. Accuracy.

      B. Timeliness.

      C. Comparability.

      7. Which of the following is not a constraint on the financial statements according to the Conceptual Framework (2010)?

      A. Understandability.

      B. Benefit versus cost.

      C. Balancing of qualitative characteristics.

      8. The assumption that an entity will continue to operate for the foreseeable future is called:

      A. accrual basis.

      B. comparability.

      C. going concern.

      9. The assumption that the effects of transactions and other events are recognized when they occur, not when the cash flows occur, is called:

      A. relevance.

      B. accrual basis.

      C. going concern.

      10. Neutrality of information in the financial statements most closely contributes to which qualitative characteristic?

      A. Relevance.

      B. Understandability.

      C. Faithful representation.

      11. Valuing assets at the amount of cash or equivalents paid or the fair value of the consideration given to acquire them at the time of acquisition most closely describes which measurement of financial statement elements?

      A. Current cost.

      B. Historical cost.

      C. Realizable value.

      12. The valuation technique under which assets are recorded at the amount that would be received in an orderly disposal is:

      A. current cost.

      B. present value.

      C. realizable value.

      13. Which of the following is not a required financial statement according to IAS No. 1?

      A. Statement of financial position.

      B. Statement of changes in income.

      C. Statement of comprehensive income.

      14. Which of the following elements of financial statements is most closely related to measurement of performance?

      A. Assets.

      B. Expenses.

      C. Liabilities.

      15. Which of the following elements of financial statements is most closely related to measurement of financial position?

      A. Equity.

      B. Income.

      C. СКАЧАТЬ