CCA Financial Reporting & Analysis 2

Question 1

Under US GAAP, which method is prohibited for inventory valuation that is allowed under IFRS?

Accepted Answer

LIFO

Answer

IFRS prohibits the Last-In, First-Out (LIFO) method, while US GAAP permits it.

Question 2

A company reports total assets of $500,000 and total liabilities of $200,000. What is the debt-to-equity ratio?

Accepted Answer

0.67

Answer

Equity = $500,000 - $200,000 = $300,000; Debt-to-Equity = $200,000 / $300,000 = 0.67.

Question 3

Which financial statement reconciles net income to cash provided by operating activities?

Accepted Answer

Statement of Cash Flows

Answer

The Statement of Cash Flows (indirect method) starts with net income and adjusts for non-cash items and working capital changes.

Question 4

Goodwill impairment testing under ASC 350 requires companies to perform the test at minimum:

Accepted Answer

Annually

Answer

ASC 350 requires goodwill to be tested for impairment at least annually, or more frequently if triggering events occur.

Question 5

The quick ratio differs from the current ratio because it excludes:

Accepted Answer

Inventory and prepaid expenses

Answer

The quick ratio excludes inventory and prepaid expenses as they are less liquid than other current assets.

(CCA) Certified Corporate Accountant Practice Test