Financial Statements & Reporting Flashcards
6 cards from real CFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Statements & Reporting flashcards as text
What type of audit opinion indicates that financial statements are presented fairly in all material respects?
Answer: Unqualified (clean) opinion
An unqualified or clean opinion from auditors means the financial statements are presented fairly in accordance with applicable accounting standards.
Which US GAAP standard governs the recognition of revenue from contracts with customers?
Answer: ASC 606
ASC 606 establishes a five-step model for revenue recognition from contracts with customers, replacing earlier industry-specific guidance.
In financial reporting, what is 'materiality'?
Answer: The threshold above which information could influence users' decisions
Materiality refers to the significance of an item; information is material if its omission or misstatement could influence the economic decisions of users.
What does goodwill on the balance sheet represent?
Answer: The premium paid above the fair value of net assets in an acquisition
Goodwill represents the excess purchase price paid over the fair value of identifiable net assets acquired in a business combination.
Under ASC 842, how are most operating leases now recorded on the lessee's balance sheet?
Answer: As a right-of-use asset and a corresponding lease liability
ASC 842 requires lessees to recognize a right-of-use asset and a corresponding lease liability on the balance sheet for most operating leases.
Which financial ratio measures how efficiently a company collects its receivables?
Answer: Days sales outstanding (DSO)
Days Sales Outstanding measures the average number of days it takes a company to collect payment after a sale has been made.