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23 Cards in this Set
- Front
- Back
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What is Quality of Earnings? |
Refers to how solid the earnings numbers in the income statement are. Considers two aspects: content and presentation; where content refers to information which is unbiased, and presentation refers to info which is transparent |
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What is Earnings Management? |
The process of targeting certain earnings levels or desired earnings trends and then working backwards to determine what has to be done to ensure these targets are met |
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What is one of the best ways to detect earnings management? |
compare earnings with cash flows as cash flows are less subject to manipulation |
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What are two ways of measuring income? |
Net Income and Comprehensive Income |
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Which accounting standard generally supports the Net Income method of measuring income? |
ASPE |
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What is the net income method of measuring income? |
Revenues and Gains less expenses and losses both |
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What the the Comprehensive Income Method of measuring income? |
Net Income plus other comprehensive income (OCI) |
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Which accounting standard generally supports the comprehensive income method of measuring income? |
IFRS |
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What are some gains and losses that are represented in the OCI method of income measurement? |
Unrealized Gains/ Losses on securities Foreign Exchange gains/losses |
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Which account is OCI closed out to? |
AOCI - Accumulated Other Comprehensive Income |
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What method of income measurement allows for the calculation of EPS? |
Net Income Method |
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What are discontinued operations? |
Components of an entity that have been disposed of or classified as "held for sale" |
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What is the general definition of a Component |
a group of assets which is able to gernerate its own net cash flows and be operationally distinct |
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How would an asset held for sale be shown on the statement of financial position? (IFRS) |
All assets held for sale will be shown as current assets and would no longer be depreciated |
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What is Intraperiod Tax Allocation? When is it used (3)? |
When irregular items are shown net of tax on the income statement. Used in: Income from continuing operations, discontinued operation, OCI. |
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Which reporting standard closes out to Statement of Retained Earnings? |
ASPE |
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Which reporting standard closes out to statement of Changes in Equity? |
IFRS |
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What is included in the Statement of Retained Earnings? |
Beg RE + Net income- Dividends = End RE
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Liquidity |
The amount of time it takes for an asset to be turned into cash or for a liability to be paid. |
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Solvency |
Reflects a company’s ability to pay its debt and related interest |
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Financial Flexibility |
A company’s ability to alter the timing of its cash flows to respond to unexpected needs and opportunities |
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What formula can you use to determine Profit? |
Beg RE + Net Income - Dividends= End RE |
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How do you Calculate FCF |
Cash flow from Operating Activities - Capital Expenditures– Dividends |
