Learning Module 1 Introduction to Financial Statement Analysis

Which step in the financial statement analysis framework requires the analyst to decide the intended audience, report format, timetable, and specific questions to be answered?

An analyst is beginning a cross-company comparison but is tempted to compute dozens of ratios immediately. According to the chapter, which action is recommended first?

Which organization represents securities regulators in more than 115 jurisdictions and establishes objectives and principles that influence global capital-market reporting?

Which US law created the Public Company Accounting Oversight Board (PCAOB) and strengthened requirements for auditor independence and management’s responsibility for internal control?

Which SEC form is primarily used to file audited annual financial statements, management discussion and analysis, and other comprehensive annual disclosures for US registrants?

Which disclosure is most likely to be found in the notes to a company's financial statements rather than on the face of the primary statements?

Which of the following best describes an operating segment that must be disclosed separately under segment reporting rules?

Management’s Discussion and Analysis (MD&A) is most useful to analysts because it typically contains:

Which audit opinion indicates that the auditor believes the financial statements materially depart from the applicable accounting standards and are not fairly presented?

Which of the following is NOT a core objective stated by IOSCO for securities regulation?

If a company has accounting policies that differ from its peer group in several areas, the chapter recommends analysts should:

Which form would a US-listed company file to disclose a material corporate event (for example, an acquisition) that occurs between its periodic filings?

Which of the following is true regarding Key Audit Matters (KAMs) and Critical Audit Matters (CAMs)?

Which statement about management commentary (MD&A) is most accurate according to the chapter?

When should an analyst be most concerned about the flexibility in accounting policies and estimates used by management?

Which of the following disclosure items would most likely help an analyst evaluate whether a company’s revenue recognition policies are conservative or aggressive?

A company discloses that some of its contracts have variable consideration and significant rights of return. Under the converged revenue standard, what account is most likely recorded when cash is received in advance of transfer of goods or services?

Under IFRS, which of the following is TRUE about capitalization of internally generated intangible development costs?

Which of the following is an appropriate analyst action when a target company uses different inventory costing methods (e.g., LIFO versus FIFO) than its peers?

Which of the following best describes goodwill recognized in a business combination?

Which of the following is true regarding impairment of goodwill under IFRS and US GAAP?

Analysts often compute 'tangible book value' by eliminating intangible assets and goodwill from shareholders’ equity. According to the chapter, why might this be useful?

Which measurement basis is commonly used for debt securities that the entity intends to hold to maturity and has contractual cash flows of principal and interest?

Under IFRS, when may an equity investment be classified as measured at fair value through other comprehensive income (FVOCI)?

Which balance sheet note disclosure most directly helps an analyst understand the company’s off-balance-sheet lease commitments prior to any capitalizing of leases?

Which of the following best describes how analysts should treat management’s voluntary communications (earnings calls, investor presentations) in their analysis?

Which of the following is an example of a disclosure an analyst would expect to find in segment reporting notes?

Which of the following statements about reconciliation disclosures between IFRS and US GAAP is accurate?

Which of the following is a primary reason analysts monitor actions of standard setters and regulators?

Which of the following information sources is categorized in the chapter as 'proprietary primary research'?

If a firm reports an unmodified (clean) audit opinion and also identifies several Key Audit Matters in the audit report, what should an analyst infer?

Which of the following actions by an analyst would best address the potential comparability issue caused by a company capitalizing development costs while its peer expenses similar amounts immediately?

Which of these is an example of information typically included in a company’s proxy statement (DEF-14A) and useful to financial analysts?

An analyst observes that a significant portion of a company’s reported assets consist of long-lived intangible assets with indefinite lives. Which of the following is an appropriate concern?

Which of the following best reflects why analysts examine segment revenues by geography?

Which of the following is a reason analysts should be cautious when using common database outputs without adjustments?

Under SEC rules, which filing informs shareholders of matters that will be voted on at shareholder meetings and discloses executive compensation and director biographies?

Which of the following best explains why the chapter stresses the need for follow-up after issuing a report or recommendation?

An analyst notes a company suspended revenue guidance for a business segment and emphasized a shift toward efficiency and profitability. Which of the following issuer communications most likely contained that information?

Which of the following is an analyst’s best practice when encountering substantial non-audit services provided by a company’s auditor?

In assessing the quality of a company’s reported profits, which of the following signals in the chapter is highlighted as a warning sign?

Which of these is a common third-party proprietary source an analyst might use to obtain standardized financial data and historical time series?

Which of the following is a key difference highlighted between IFRS and US GAAP that affects inventory accounting?

Which of the following is a recommended action when a company reports significant one-time items that are material and unlikely to recur?

Which of the following is a limitation of using only financial statements when analyzing a company, as discussed in the chapter?

Which of the following best describes the intent of the chapter’s recommendation to 'distinguish clearly between opinions and facts' in analyst reports?

Which of the following illustrates why changes in scope (acquisitions or disposals) can hinder comparability of financial statements over time?

Which of the following best describes why disclosure of a major customer representing 10 percent or more of revenues is important to analysts?

Which of the following best summarizes why analysts should monitor new products, instruments, or transactions in the market (such as digital assets)?

Which of the following best reflects the chapter’s overall guidance on using multiple information sources?