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BMAL 590 Business Finance_3 Exam Questions and Answers
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BMAL 590 Business Finance_3 ExamQuestions and Answers
General iiAccepted iiAccounting iiPrinciples ii(GAAP) ii- iiAnswers ii-the iirules iicreated iiby
iithe iiU.S. iigovernment iifor iiaccounting. iiThis iirequires iipublic iicompanies iito iigenerate
iifinancial iistatements.
Financial iiAccounting iiStandards iiBoard ii(FASB) ii- iiAnswers ii-a iibody iithat iiexamines
iicontroversial iiaccounting iitopics iiand iiissues iistandards iithat, iiin iiterms iiof iitheir iiimpact
iion iiaccounting iipractices, iialmost iihave iithe iiforce iiof iilaw.
Securities iiand iiExchange iiCommission ii(SEC) ii- iiAnswers ii-regulates iipublicly iitraded
iiU.S. iicompanies iias iiwell iias iithe iination's iistock iiand iibonds iimarkets. iiIt iimandates
iithat iicompanies iigenerate iifinancial iistatements iifollowing iiinternational iiaccounting
iistandards ii(IAS).
Public iiCompany iiAccounting iiOversight iiBoard ii(PCAOB) ii- iiAnswers ii-Effectively iigives
iithe iiEC iiauthority iito iioversee iithe iiaccounting iiprofessions iiactivities.
4 iiKey iiFinancial iiStatements iirequired iiby iithe iiSEC iiare ii- iiAnswers ii-1. iibalance iisheet
2. iiincome iistatement
3. iistatement iiof iiretained iiearnings
4. iistatement iiof iicash iiflows
International iiFinancial iiReporting iiStandards ii(IFRS) ii- iiAnswers ii-used iiin iimany
iicountries iias iithe iiregulatory iibasis iifor iithe iipreparation iiof iifinancial iistatements.
iiDesigned iito iiprovide iicommon iiglobal iilanguage iifor iifinancial iireporting, iiso iithat
iipublished iiinformation iiis iicomparable iiacross iiinternational iiboundaries.
Balance iiSheet ii- iiAnswers ii-Presents iia ii'snapshot' iiview iiof iithe iicompany's iifinancial
iiposition iiat iia iispecific iimoment iiin iitime. iiA iifirm's iiassets iimust iiequal iithe iicombined
iivalue iiof iiits iiliabilities iiand iithe iistockholders' iiequity. iiAssets ii= iiLiabilities ii+
iiStockholders' iiEquity. ii
Balance iisheet iientries: ii
1. iiAssets- iiThe iimost iiliquid iiasset ii(cash) iiappears iifirst iiand iithe iileast iiliquid ii(fixed
iiassets) iicome iilast. ii
2. iiCurrent iiLiabilities iiare iithose iithat iimust iibe iipaid iiwithin iione iiyear iiand iiinclude
iiaccounts iipayable, iinotes iipayable, iiand iiaccrued iiexpenses. iiLong iiterm iiliabilities ii-
iiare iidue iiafter iimore iithan iia iiyear iiand iiinclude iideferred iitaxes iiand iilong iiterm iidebt. ii
, 3. iiStockholders iiEquity ii- iiis iithe iiowners' iiresidual iishare iiof iithe iibusiness, iiincluding
iitheir iioriginal iiinvestment iiplus iiany iimoney iithe iifirm iihas iiearned iiand iiretained iisince
iiits iiinception. iiIncludes iipreferred iistock, iicommon iistock, iipaid-in-capital iiin iiexcess iiof
iipar, iiand iiretained iiearnings.
Liabilities ii- iiAnswers ii-are iidebts iithat iithe iifirm iiowes iito iiothers.
Current iiLiabilities ii- iiAnswers ii-are iithose iithat iimust iibe iipaid iiwithin iione iiyear iiand
iiinclude iiaccounts iipayable, iinotes iipayable, iiand iiaccrued iiexpenses. iiIncludes ii
Accounts iiPayable iiare iithe iiamounts iiowed iifor iicredit iipurchases iiby iithe iifirm.
Notes iiPayable iiare iioutstanding iishort-term iiloans, iitypically iifrom iicommercial iibanks.
Accrued iiExpenses iiare iicosts iithat iihave iibeen iiincurred iiby iithe iifirm iithat iihave iinot iiyet
iibeen iipaid.
Long iiterm iiliabilities ii- iiAnswers ii-are iidue iiafter iimore iithan iia iiyear iiand iiinclude
iideferred iitaxes iiand iilong iiterm iidebt. iiInclude iideferred iitaxes iiand iilong-term iidebt.
Assets ii- iiAnswers ii-Everything iithat iican iibe iiused iito iibenefit iithe iibusiness iior iigive iithe
iicompany iithe iiright iito iireceive iibenefits.
Liquidity ii- iiAnswers ii-is iithe iilength iiof iitime iiit iitakes iito iiconvert iiaccounts iiinto iicash
iiduring iithe iinormal iicourse iiof iibusiness.
Balance iiSheet iiAssets ii- iiAnswers ii-Cash iiand iicash iiequivalents iiare iiassets iisuch iias
iichecking iiaccount iibalances iiat iicommercial iibanks iithat iican iibe iiused iidirectly iias
iimeans iiof iipayment.
Marketable iisecurities iirepresent iiliquid iishort-term iiinvestments, iiwhich iifinancial
iianalysts iiview iias iia iiform iiof ii"near iicash." iiThey iiinclude iiTreasury iinotes, iicommercial
iipaper, iiand iiothers.
Accounts iireceivable iirepresent iithe iiamount iicustomers iiowe iithe iifirm iifrom iisales
iimade iion iicredit.
Inventories iiinclude iiraw iimaterials, iiwork iiin iiprocess ii(partially iifinished iigoods), iiand
iifinished iigoods iiheld iiby iithe iifirm.
Intangible iiassets iiinclude iiitems iisuch iias iipatents, iitrademarks, iicopyrights, iior iimineral
iirights iientitling iithe iicompany iito iiextract iioil iiand iigas iion iispecific iiproperties
Gross iiproperty, iiplant, iiand iiequipment ii(PP&E) iiis iithe iioriginal iicost iiof iiall iireal
iiproperty, iistructures, iiand iilong-lived iiequipment iiowned iiby iithe iifirm.
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