Exam (elaborations)

BMAL-590 Business Finance Questions With Solutions

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Course
BMAL 590

Institution
BMAL 590

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Uploaded on November 12, 2024
Number of pages 55
Written in 2024/2025
Type Exam (elaborations)
Contains Questions & answers

Institution BMAL 590
Course BMAL 590

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BMAL-590 Business Finance Questions With
Solutions

Securities and Exchange Commission (SEC) The agency of the U.S. government that

oversees U.S. financial markets and accounting standard-setting bodies.

regulates publicly traded U.S. companies as well as the nation's stock and bond markets. It

mandates that companies generate financial statements following international accounting

standards (IAS)

The SEC requires four key financial statements:

(1) the balance sheet

(2) the income statement

(3) the statement of retained earnings

(4) the statement of cash flows

Public Company Accounting Oversight Board (PCAOB) The group charged with

determining auditing standards and reviewing the performance of auditing firms. It effectively

gives the SEC authority to oversee the accounting profession's activities

Established by the Sarbanes-Oxley Act of 2002

,BMAL-590 Business Finance Questions With
Solutions

International Financial Reporting Standards (IFRS) used in many countries as the

regulatory basis for the preparation of financial statements. They are designed to provide a

common global language for financial reporting, particularly in the European Union, so

published financial information is comparable across international boundaries.

A firm's balance sheet presents a "snapshot" view of the company's financial position at a

specific moment in time.

By definition, a firm's assets must equal the combined value of its liabilities and stockholders'

equity.

The basic balance sheet equation is Assets = Liabilities + Stockholders' Equity. Thus, creditors

and equity investors finance all of a firm's assets.

The balance sheet consist of three sections that list a firm's assets and liabilities as well as the

claims of the stockholders.

ssets and liabilities appear in descending order of liquidity,

,BMAL-590 Business Finance Questions With
Solutions

Liquidity The length of time it takes to convert accounts into cash during the normal

course of business. The most liquid asset (cash) appears first, and the least liquid (fixed assets)

comes last.

Current assets are those that are easy to sell and turn into cash, while fixed assets are physical

assets like buildings and equipment.

Assets include everything that can be used to benefit the business or give the company the

right to receive benefits

Current Liabilities those that must be paid within one year and include accounts payable,

notes payable, and accrued expenses

Long-term liabilities due after more than a year and include deferred taxes and long-term

debt.

, BMAL-590 Business Finance Questions With
Solutions
stockholders' equity The last entry on the balance sheet, stockholders' equity is the owners'

residual share of the business, including their original investment plus any money the firm has

earned and retained since its inception.

Stockholders' equity includes preferred stock, common stock, paid-in-capital in excess of par,

and retained earnings. However, the net worth of the firm includes only the common stock, paid-

in-capital in excess of par, and retained earning.

Balance Sheet Assets -organized in order of liquidity:

1. Current Assets

-includes all cash and items expected to be converted into cash in next 12 months

A. Cash and Equivalents - money market

B. Accounts Receivable - amounts due from customers

C. Inventory - cost of raw materials

D. Prepaid Expenses - rents, taxes, prepaid advertising

2. Fixed Assets

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Exam (elaborations)

BMAL-590 Business Finance Questions With Solutions

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