Exam (elaborations)
Chapter 7 and 8 CISI Accounting Exam Questions and Answers
- Course
- Institution
Chapter 7 and 8 CISI Accounting Exam Questions and Answers
[Show more]
Content preview
Chapter 7 and 8 CISI Accounting ExamQuestions and Answers
2 main motivations of stock lending? - Answer -1. Cash-driven - Lender is able to
increase returns on a portfolio by receiving a fee in return for lending their stock to the
borrower.
2. Securities-driven - The borrowing firm needs a specific securities to cover a trading
position. e.g. Could be trying to short a stock.
Pre-borrowing meaning? - Answer -Means to anticipate a short sale by entering an
agreement with another firm/company to pre-borrow their securities.
If a short sale does not occur within 3 days then the securities must be returned to the
lender. If a short sale does occur then the securities are borrowed as normal and
applied to a short position the following day.
When do UK firms have to disclose short positions? - Answer -UK firms must disclose
short positions when their net short positions amount to:
0.1% of issued share capital in a listed company.
The net short positions are publicly disclosed when they reach 0.5% of the issued share
capital of a listed company.
Benefits of stock lending? - Answer -Increases liquidity of the securities market.
Reduces the potential for failed settlements and penalties.
Provides extra security to lenders through collateralising a loan.
Supports trading and investment strategies otherwise hard to execute, such as shorting
and use of derivatives.
Allows investors to earn income by lending securities.
Facilitates hedging and arbitrage, therefore helping to improve market efficiency.
, International Sustainability Standards Board (ISSB) - Answer -ISSB = more recently
created standard-setting board.
Designed to meet the needs of international investors with global investment portfolios
for high quality, transparent, reliable and comparable reporting by companies on
climate/ESG matters.
International Accounting Standards Board (IASB) - Answer -IASB = Committed to
developing a single set of high quality, understandable and enforceable global
accounting standards for general purpose financial statements.
Co-operates with national accounting standard setters to achieve converging (matching)
accounting standards across the world.
Standards issued by the IASB are designated "International Financial Reporting
Standards" (IFRSs)
Difference between US and other developed countries accounting standards? - Answer
-Many developed countries require the IASB standards to be used for listed companies.
However, the US retains its own GAAP (Generally Accepted Accounting Principles) that
is gradually converging with IFRS.
Group versus company accounts? - Answer -If a company invests in another company
then the original investment cost and the dividends received from this will appear in the
financial statement of the investing company.
However, if the investment is so significant that the investing company controls the
other company, then the preparation of group financial statements (group accounts or
consolidated financial statements) is needed.
Investing company= parent company
Other company = Subsidiary
Group account statements? - Answer -The parent company must prepare/present a set
of group accounts in addition to its individual company financial statements if it owns a
controlling stake in another company.
Group accounts present the financial statements as if the parent and the subsidiaries
were a single entity rather than distinct individual companies. E.g. assets and liabilities
are grouped together.
Issues with group accounting/combining accounts? - Answer -Goodwill - If the cost of
the investment exceeded the net assets of the subsidiary, the excess is described as
"Goodwill" and appears as an asset in the group financial statement.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ALVINK2022. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
78310 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now