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CFA Session 7
Financial Statement Analysis
18
Finance
Undergraduate 4
01/26/2010

Additional Finance Flashcards

 


 

Cards

Term
financial statement footnotes
Definition
supplementary disclosures that are audited
Term
supplementary schedules
Definition

additional information which is not audited

 

EX: sales by region

Term
standard auditor's opinion
Definition

1. auditor performed independent review

2. reasonable assurance of no material errors

3. accounting methods correct and reasonable

*statement about management internal controls

 

unqualified opinion--no errors/concerns

 

qualified opinion--explain certain exceptions to accounting principles used

 

adverse opinion--statements not presented fairly

Term
proxy statements
Definition
issued to shareholders when there is a matter that requires shareholder vote
Term
financial statement analysis framework (6 steps)
Definition

1. state the objective and content

2. gather data

3. process data

4. analyze and interpret data

5. report conclusions/recommendations

6. update the analysis

Term
general journal
Definition
list of all journal entries by date
Term
general ledger
Definition
list of all journal entries organized by account
Term
initial trial balance
Definition
initial end of period balance in each account
Term
adjusted trial balance
Definition
balance of each account after adjustments are made
Term
Financial Accounting Standards Board (FASB)
Definition
in the U.S., sets forth GAAP
Term

International Accounting Standards Board (IASB)

 

Definition
sets International Financial Reporting Standards (IFRS) outside the U.S.
Term
regulatory authorities
Definition

SEC (U.S.)

&

FSA (UK)

Term
International Organization of Securities Commisions (IOSCO)
Definition

most national authorities belong to this commission

 

1. protect investors

2. ensure fairness, efficiency, transparency

3. reduce systematic risk

Term
SEC Required Filings
Definition

S-1--registration statement prior to sale of new securities to public

 

10-K--annual report

 

10-Q--quarterly report

 

DEF-14A--prepared in conjunction with proxy statement

 

8-K--disclose material events

 

144--issue securities to qualified buyers without registering securities with the SEC, but must inform SEC

 

3, 4, & 5--involve beneficial ownership of securities by a company's officers and directors

Term
required financial statements
Definition

1. balance

2. income

3. cash flows

4. owners equity

5. explanatory notes--summary of accounting policies

Term
principles for preparing financial statements
Definition

1. fair presentation

2. going concern basis--assumption firm will continue

3. accrual basis--reflect when transactions occur, not cash

4. consistency

5. materiality

Term
reconciliation statement
Definition
financial statements that show what a firm's results would be under different accounting standards (GAAP vs. IFRS)
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