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CFA level 1 Financial reporting and analysis,Review Questions and Answers.
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CFA level 1 Financial reporting and analysis,Review Questions and Answers.
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CFA level 1 Financial reporting andanalysis,Review Questions and Answers.
The role of financial statement analysis is best described as?
Using financial reports prepared by analysts to make economic decisions
Evaluating a company for the purpose of making economic decisions Answer - evaluating a company for the
purpose of making economic decisions
What type of audit opinion is preferred when analyzing financial statements?
Qualified
Adverse
Unqualified Answer - An unqualified opinion is a clean opinion and indicates that the financial statements
present the company's performance and financial position fairly in accordance with a specified set of
accounting standards
An independent audit report is most likely to provide?
Reasonable assurance that the financial statements are fairly presented
A qualified opinion with respect to the transparency of the financial statements Answer - It provides
reasonable assurance that the financial statements are fairly presented, meaning that there is a high
probability that the audited statements are free from material error, fraud or illegal acts that have direct effect
on the financial statements
, Interim financial reports released by a company are most likely to be:
Monthly
Unaudited
Unqualified Answer - Interim reports are typically provided semiannually or quarterly and present the four
basic financial statements and condensed notes. They are not audited. Unqualified is a type of audit opinion.
TRR Enterprises sold products to customers on 30 June 2006 for a total price of €10,000. The terms of the sale
are that payment is due in 30 days. The cost of the products was €8,000. The most likely net change in TRR's
total assets on 30 June 2006 related to this transaction is:
€0.
€2,000.
€10,000. Answer - The sale of products without receipt of cash results in an increase in accounts receivable (an
asset) of 10,000. The balance in inventory (an asset) decreases by 8,000. The net increase in assets is 2,000.
This would be balanced by an increase in revenue of 10,000 and an increase in expenses (costs of goods sold)
of 8,000
The statement of cash flows presents the flows into which three groups of business activities?
Operating, Non-operating, and Financing
Operating, Investing, and Financing
Operating, Non-operating, and Investing Answer - The three sections of the statement of cash flows are
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