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CFI FMVA – Questions & Complete Solutions (Rated A+)
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CFI FMVA – Questions & Complete Solutions (Rated A+)
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CFI FMVA – Questions & Complete Solutions (Rated A+)Income statement accounting Right Ans - Accrual - revenues & costs
recorded as a business earns or incurs them, not as it receives and pays
money
It includes them in the relevant period's income statement and matches them
as closely as possible
CF makes no difference whatsoever - IS where sale happens
=> How do you decide when sale happens? RECOGNIZE REV UPON DELIVERY
OF GOOD/SERVICE PERFORMED
Why are profits and cash flow not the same thing? Right Ans - Accounting
differences
The idea of matching over time Right Ans -
CFS Accounting Right Ans - Only records transactions when cash is
received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method Right Ans - record income and expenditures at the
time the money changes hands
Cash accounting method Right Ans - An accounting method in which
income and expenditures are recorded at the time the money changes hands.
Accrual Accounting Right Ans - recording in each fiscal period applicable
expenses, whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting Right Ans - reporting income when it is earned
and expenses when they are incurred
Accrual Basis Accounting Right Ans - the method of accounting that
recognizes revenue when it is earned and matches expenses to the revenues
they helped produce
,Accrual Basis Accounting Right Ans - Accounting basis in which companies
record, in the periods in which the events occur, transactions that change a
company's financial statements, even if cash was not exchanged.
accrued expenses Right Ans - expenses incurred in one fiscal period but not
paid until a later fiscal period
accrued expenses Right Ans - expenses incurred but not yet paid in cash or
recorded
Cash flow from operating activities Right Ans - The net amount of cash
provided from operating activities.
cash flow from financing activities Right Ans -
The idea of matching over time Right Ans -
CFS Accounting Right Ans - Only records transactions when cash is
received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method Right Ans - record income and expenditures at the
time the money changes hands
Cash accounting method Right Ans - An accounting method in which
income and expenditures are recorded at the time the money changes hands.
Accrual Accounting Right Ans - recording in each fiscal period applicable
expenses, whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting Right Ans - reporting income when it is earned
and expenses when they are incurred
Accrual Basis Accounting Right Ans - the method of accounting that
recognizes revenue when it is earned and matches expenses to the revenues
they helped produce
,Accrual Basis Accounting Right Ans - Accounting basis in which companies
record, in the periods in which the events occur, transactions that change a
company's financial statements, even if cash was not exchanged.
accrued expenses Right Ans - expenses incurred in one fiscal period but not
paid until a later fiscal period
accrued expenses Right Ans - expenses incurred but not yet paid in cash or
recorded
Cash flow from operating activities Right Ans - The net amount of cash
provided from operating activities.
cash flow from financing activities Right Ans - The section of the statement
of cash flows that reports cash flows from transactions affecting the equity
and debt of the business.
cash flow from financing activities Right Ans - items related to debt,
dividends, and issuing or repurchasing shares
cash flow from investing activities Right Ans - The section of the statement
of cash flows that reports cash flows from transactions affecting investments
in noncurrent assets.
cash flow from investing activities Right Ans - involves any cash in or out of
the company due to investment in or disposal of fixed assets.
Contributed surplus Right Ans - Amount paid for shares in excess of their
par value
Contributed surplus Right Ans - money that has been invested in the firm
by outside parties
Contributed surplus Right Ans - A source of contributed capital that can
result from certain types of equity transactions, including the reacquisition of
shares.
Straightline depreciation Right Ans - Allocates equal amounts of plant
assets net cost to depreciation during its useful life.
, Accounts Receivable Right Ans - Amounts to be received in the future due
to the sale of goods or services
Accounts Payable Right Ans - Amounts to be paid in the future for goods or
services already acquired
Cash Flow Accounting System Right Ans - An accounting system entering
expenses and revenues only when cash is received or paid out.
authorised share capital Right Ans - Maximum number of shares that a
company can issue, as specified in the firm's memorandum of association
outstanding share capital Right Ans - Issued share capital less the par value
of shares that are held in the company's treasury.
inventory Right Ans - the quantity of goods that a firm has on hand
inventory Right Ans - a complete list of items such as property, goods in
stock, or the contents of a building.
Working Capital Right Ans - current assets - current liabilities
Net Working Capital Right Ans - current assets minus current liabilities
current assets Right Ans - cash and other assets expected to be exchanged
for cash or consumed within a year
Current Liabilities Right Ans - liabilities due within a short time, usually
within a year
Current assets include Right Ans - cash, marketable securities, accounts
receivable, and inventories
Current liabilities include Right Ans - notes payable, accounts payable,
unearned revenues, and accrued liabilities such as taxes, salaries and wages,
and interest.
Current liabilities include Right Ans - Accounts Payable
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