CFM Financial Statements & Reporting 2

Question 1

What type of audit opinion indicates that financial statements are presented fairly in all material respects?

Accepted Answer

Unqualified (clean) opinion

Answer

An unqualified or clean opinion from auditors means the financial statements are presented fairly in accordance with applicable accounting standards.

Question 2

Which US GAAP standard governs the recognition of revenue from contracts with customers?

Accepted Answer

ASC 606

Answer

ASC 606 establishes a five-step model for revenue recognition from contracts with customers, replacing earlier industry-specific guidance.

Question 3

In financial reporting, what is 'materiality'?

Accepted Answer

The threshold above which information could influence users' decisions

Answer

Materiality refers to the significance of an item; information is material if its omission or misstatement could influence the economic decisions of users.

Question 4

What does goodwill on the balance sheet represent?

Accepted Answer

The premium paid above the fair value of net assets in an acquisition

Answer

Goodwill represents the excess purchase price paid over the fair value of identifiable net assets acquired in a business combination.

Question 5

Under ASC 842, how are most operating leases now recorded on the lessee's balance sheet?

Accepted Answer

As a right-of-use asset and a corresponding lease liability

Answer

ASC 842 requires lessees to recognize a right-of-use asset and a corresponding lease liability on the balance sheet for most operating leases.

CFM - Certified Finance Manager Practice Test

CFM - Certified Finance Manager Practice Test

CFM Financial Statements & Reporting 2