Exam (elaborations)
CMA EXAM PART 1: SECTION A
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CMA EXAM PART 1: SECTION A
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CMA EXAM PART 1: SECTION APrimary users of financial statements - Answers -- Existing and potential investors
- Existing and potential landers and creditors
Secondary users of financial statements - Answers -- Customers
- Employees
- Gov. and Regulatory Agencies
- the general public
Statement of financial position (balance sheet) - Answers -An accounting statement that
records the values of a business's *assets*, *liabilities* and *shareholders' equity* at
one point in time
Income Statement - Answers -A financial statement that reports a company's revenues
and expenses and resulting net income or net loss for a specific period of time.
Statement of Cash Flows - Answers -Financial statement that reports cash receipts and
disbursements related to a firm's three major activities: operations, investments, and
financing.
Operating Cash Flow (OCF) - Answers -the cash flow a firm generates from normal
operations—from the production and sale of its goods and services.
investing cash flows - Answers -cash transactions involving purchase and sale of long-
term assets
financing cash flows - Answers -include cash transactions with lenders, such as
borrowing money and repaying debt, and with stockholders, such as issuing stock and
paying dividends
Statement of Comprehensive Income - Answers -An income statement in which a
company also reports other comprehensive income.
Including:
- foreign currency translation
- gains or losses prior service costs or credits related to a defined pension plan
- unrealized holding gains or losses on available for sale securities
- the effective portion of the gain or loss on a derivative
statement of stockholders' equity - Answers -Summarizes the changes in the balance in
each stockholders' equity account over a period of time.
Including:
- capital stock
- APIC
, - retained earnings
Assets - Answers -Economic resources (things of value) owned by a firm for future
economic benefits.
Liabilities - Answers -what a company owes
Equity - Answers -the owner's claims to the assets of the business after deducting
liabilities.
Includes:
- issued capital (stock)
- APIC
- retained earnings
- treasury stock
- Accumulated other comprehensive income
current assets - Answers -items that can or will be converted into cash within one year
Include:
- cash and cash equivalents
- Trade or accounts receivable
- short-term notes receivable
- receivables from loans due
- inventories
- marketable securities
- prepaid expenses
Revenue Recognition 5 step process - Answers -1. Identify the contract with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognize revenue when the reporting organization satisfies a performance
obligation
performance obligation - Answers -A promise in a contract to provide a product or
service to a customer. This promise may be explicit, implicit, or possibly based on
customary business practice.
gains - Answers -Increases in equity (net assets) from peripheral or incidental
transactions of an entity and from all other transactions and other events and
circumstances affecting the entity during a period except those that result from
revenues or investments by owners.
Losses - Answers -Decreases in equity (net assets) from peripheral or incidental
transactions of an entity and from all other transactions and other events and
circumstances affecting the entity during a period except those that result from
expenses or distributions to owners.
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