CFM Financial Reporting & Analysis 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 CFM Financial Reporting & Analysis flashcards as text
Which financial statement shows a company's revenues, expenses, and net income over a specific period?
Answer: Income Statement
The income statement (also called profit and loss statement) summarizes revenues and expenses to show net income or loss over a reporting period.
Under US GAAP, which inventory costing method assumes the most recently purchased items are sold first?
Answer: LIFO
LIFO (Last-In, First-Out) assumes the most recently acquired inventory is sold first, which is permitted under US GAAP but prohibited under IFRS.
What does the current ratio measure?
Answer: Short-term liquidity by comparing current assets to current liabilities
The current ratio (current assets ÷ current liabilities) measures a company's ability to meet its short-term obligations with its short-term assets.
Which accounting principle requires expenses to be recorded in the same period as the revenues they helped generate?
Answer: Matching principle
The matching principle dictates that expenses must be recognized in the same period as the revenues they are associated with, ensuring accurate profit reporting.
What is the formula for Return on Assets (ROA)?
Answer: Net Income / Total Assets
ROA = Net Income / Total Assets, measuring how efficiently a company uses its assets to generate profit.
Goodwill appears on which financial statement under US GAAP?
Answer: Balance Sheet as an intangible asset
Under US GAAP, goodwill is recorded on the balance sheet as an intangible asset and is subject to annual impairment testing rather than amortization.