Angelinasmiths
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Corporate Governance – Question Bank with Explained Answers at the end of Questions 2024
L.O.a: Describe corporate governance. 
1. Which of the following is the most appropriate definition of corporate governance? A. A 
system of defined roles for management and the majority shareholders. B. A system of 
checks and balances to minimize the conflicting interests among shareowners. 
C. A system of internal controls and procedures by which individual companies are 
managed. 
2. Analyst 1: Corporate governance is the system of internal controls and procedures by which 
individual compan...
- Exam (elaborations)
- • 8 pages •
L.O.a: Describe corporate governance. 
1. Which of the following is the most appropriate definition of corporate governance? A. A 
system of defined roles for management and the majority shareholders. B. A system of 
checks and balances to minimize the conflicting interests among shareowners. 
C. A system of internal controls and procedures by which individual companies are 
managed. 
2. Analyst 1: Corporate governance is the system of internal controls and procedures by which 
individual compan...
Financial Statement Analysis Applications – Question Bank with Explained Answers at the end of questions
LO.a: Evaluate a company’s past financial performance and explain how a company’s 
strategy is reflected in past financial performance. 
1. Projections of future financial performance based on past results would be least reliable 
when a company: 
A. is large and operating in a mature industry. 
B. has just entered the industry. 
C. is operating in a stable industry. 
2. An analyst uses the average net profit margin over the past three years of a heavy equipment 
manufacturing firm to foreca...
- Exam (elaborations)
- • 15 pages •
LO.a: Evaluate a company’s past financial performance and explain how a company’s 
strategy is reflected in past financial performance. 
1. Projections of future financial performance based on past results would be least reliable 
when a company: 
A. is large and operating in a mature industry. 
B. has just entered the industry. 
C. is operating in a stable industry. 
2. An analyst uses the average net profit margin over the past three years of a heavy equipment 
manufacturing firm to foreca...
Financial Reporting Quality – Question Bank with Explained Answer at the end of questions 2024
LO.a: Distinguish between financial reporting quality and quality of reported results 
(including quality of earnings, cash flow, and balance sheet items). 
1. The information provided by a high quality financial report will least likely: 
A. contain information that is relevant, neutral, and free from error. 
B. decrease company value. 
C. help in assessing the earnings quality of a firm. 
2. High quality financial reports least likely reflect: 
A. decision-useful information. 
B. earnings smoo...
- Exam (elaborations)
- • 13 pages •
LO.a: Distinguish between financial reporting quality and quality of reported results 
(including quality of earnings, cash flow, and balance sheet items). 
1. The information provided by a high quality financial report will least likely: 
A. contain information that is relevant, neutral, and free from error. 
B. decrease company value. 
C. help in assessing the earnings quality of a firm. 
2. High quality financial reports least likely reflect: 
A. decision-useful information. 
B. earnings smoo...
Non-Current (Long-Term) Liabilities – Question Bank with Explained Answers at the end of questions 2024
LO.a: Determine the initial recognition, initial measurement and subsequent measurement 
of bonds. 
1. A company raises debt in the form of bonds of £10 million face value. When bonds are 
issued, the company will record a: 
A. cash inflow from financing activities. 
B. cash outflow from financing activities. 
C. cash inflow from investing activities. 
2. Federal Motors reports using US GAAP. If at the time of its latest bond issue, it incurs 
€20,000 in printing, legal fees, commissions and ...
- Exam (elaborations)
- • 18 pages •
LO.a: Determine the initial recognition, initial measurement and subsequent measurement 
of bonds. 
1. A company raises debt in the form of bonds of £10 million face value. When bonds are 
issued, the company will record a: 
A. cash inflow from financing activities. 
B. cash outflow from financing activities. 
C. cash inflow from investing activities. 
2. Federal Motors reports using US GAAP. If at the time of its latest bond issue, it incurs 
€20,000 in printing, legal fees, commissions and ...
Income Taxes – Question Bank with Explained Answers at the end of questions 2024
LO.a: Describe the differences between accounting profit and taxable income, and define 
key terms, including deferred tax assets, deferred tax liabilities, valuation allowance, taxes 
payable, and income tax expense. 
1. A company’s income tax expense: 
A. is equal to income tax payable + (net increase in deferred tax liabilities – net increase 
in deferred tax assets). 
B. appears on the balance sheet. 
C. is equal to income tax payable + net increase in deferred tax assets and liabilities...
- Exam (elaborations)
- • 16 pages •
LO.a: Describe the differences between accounting profit and taxable income, and define 
key terms, including deferred tax assets, deferred tax liabilities, valuation allowance, taxes 
payable, and income tax expense. 
1. A company’s income tax expense: 
A. is equal to income tax payable + (net increase in deferred tax liabilities – net increase 
in deferred tax assets). 
B. appears on the balance sheet. 
C. is equal to income tax payable + net increase in deferred tax assets and liabilities...
Long-Lived Assets – Question Bank with Explained Answers at the end of questions 2024
LO.a: Distinguish between costs that are capitalized and costs that are expensed in the period 
in which they are incurred. 
1. A company recently purchased a warehouse property and related equipment for €20 million. 
The company incurred the following additional costs: 
• €1.0 million for repairs to the building’s roof 
• €0.3 million to modify the interior layout to meet their needs (moving walls and doors, 
inserting and removing partitions, etc.) 
• €0.2 million on an orienta...
- Exam (elaborations)
- • 22 pages •
LO.a: Distinguish between costs that are capitalized and costs that are expensed in the period 
in which they are incurred. 
1. A company recently purchased a warehouse property and related equipment for €20 million. 
The company incurred the following additional costs: 
• €1.0 million for repairs to the building’s roof 
• €0.3 million to modify the interior layout to meet their needs (moving walls and doors, 
inserting and removing partitions, etc.) 
• €0.2 million on an orienta...
Inventories – Question Bank with Explained Answers at the end of questions 2024
LO.a: Distinguish between costs included in inventories and costs recognized as expenses in 
the period in which they are incurred. 
1. A company manufactures copper wires and prepares its financial statements in accordance 
with IFRS. During its latest full fiscal year, the company recorded the following data: 
Inventory Item Amount € 
Raw material copper costs 200,000 
Storage of finished wires 50,000 
Wasted copper materials from abnormal 
production errors during the year 
25,000 
Transpor...
- Exam (elaborations)
- • 21 pages •
LO.a: Distinguish between costs included in inventories and costs recognized as expenses in 
the period in which they are incurred. 
1. A company manufactures copper wires and prepares its financial statements in accordance 
with IFRS. During its latest full fiscal year, the company recorded the following data: 
Inventory Item Amount € 
Raw material copper costs 200,000 
Storage of finished wires 50,000 
Wasted copper materials from abnormal 
production errors during the year 
25,000 
Transpor...
Financial Analysis Techniques – Question Bank with Explained Answers at the end of questions 2024
LO.a: Describe tools and techniques used in financial analysis, including their uses and 
limitations. 
1. The use of financial ratio analysis is most likely limited in which of the following situations? 
A. Comparing companies using different accounting methods. 
B. Providing a means of evaluating management’s ability. 
C. Providing insights into microeconomic relationships within a company that help analysts 
project earnings and free cash flow. 
2. Thiago Silva, an equity research analyst, ...
- Exam (elaborations)
- • 24 pages •
LO.a: Describe tools and techniques used in financial analysis, including their uses and 
limitations. 
1. The use of financial ratio analysis is most likely limited in which of the following situations? 
A. Comparing companies using different accounting methods. 
B. Providing a means of evaluating management’s ability. 
C. Providing insights into microeconomic relationships within a company that help analysts 
project earnings and free cash flow. 
2. Thiago Silva, an equity research analyst, ...
Understanding Cash Flow Statements – Question Bank with Explained Answers at the end of the questions 2024
LO.a: Compare cash flows from operating, investing, and financing activities and classify 
cash flow items as relating to one of those three categories given a description of the items. 
1. Which of the following activities will most likely increase the cash from investing activities for 
a company which manufactures and sells computers? 
A. Proceeds from issuance of corporate bonds. 
B. Proceeds from sale of manufacturing equipment. 
C. Proceeds from sale of computers. 
2. A company recorded th...
- Exam (elaborations)
- • 23 pages •
LO.a: Compare cash flows from operating, investing, and financing activities and classify 
cash flow items as relating to one of those three categories given a description of the items. 
1. Which of the following activities will most likely increase the cash from investing activities for 
a company which manufactures and sells computers? 
A. Proceeds from issuance of corporate bonds. 
B. Proceeds from sale of manufacturing equipment. 
C. Proceeds from sale of computers. 
2. A company recorded th...
Understanding Balance sheets – Question Bank with explained Answers at the end of questions 2024
LO.a: Describe the elements of the balance sheet: assets, liabilities, and equity. 
1. Which of the following statements is most accurate? 
A. A classified balance sheet is one which departs materially from accounting standards as 
per an auditor’s opinion. 
B. A classified balance sheet is grouped into current and non-current assets and liabilities. 
C. The excess of current assets over current liabilities is known as liquidity. 
2. An asset or liability is created on the balance sheet when r...
- Exam (elaborations)
- • 12 pages •
LO.a: Describe the elements of the balance sheet: assets, liabilities, and equity. 
1. Which of the following statements is most accurate? 
A. A classified balance sheet is one which departs materially from accounting standards as 
per an auditor’s opinion. 
B. A classified balance sheet is grouped into current and non-current assets and liabilities. 
C. The excess of current assets over current liabilities is known as liquidity. 
2. An asset or liability is created on the balance sheet when r...