Financial Analysis and Reporting Flashcards
6 cards from real CPHR 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 Analysis and Reporting flashcards as text
What are the three main financial statements?
Answer: Income statement, balance sheet, and cash flow statement
The income statement, balance sheet, and cash flow statement provide a comprehensive view of financial performance and position.
What does the balance sheet represent?
Answer: A snapshot of assets, liabilities, and equity at a specific point in time
The balance sheet shows what a company owns (assets), owes (liabilities), and the owners stake (equity) at a given date.
What is the purpose of financial ratio analysis?
Answer: To evaluate financial health and compare performance across periods or companies
Financial ratios provide standardized metrics for analyzing profitability, liquidity, efficiency, and solvency.
What is the difference between accrual and cash-basis accounting?
Answer: Accrual records transactions when earned or incurred; cash-basis records when cash changes hands
Accrual accounting recognizes revenue when earned and expenses when incurred, regardless of when cash is exchanged.
What is materiality in financial reporting?
Answer: Information is material if its omission could influence users financial decisions
Materiality determines whether information is significant enough that its inclusion or exclusion could affect decision-making.
What is the purpose of an audit of financial statements?
Answer: To provide independent assurance that statements are free from material misstatement
An audit provides reasonable assurance through independent examination that financial statements present a true and fair view.