Financial Analysis & Reporting Flashcards
7 cards from real CPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Analysis & Reporting flashcards as text
Under ASC 606, when is revenue recognized for a performance obligation satisfied over time?
Answer: As the entity satisfies the performance obligation over the contract period
ASC 606 requires revenue to be recognized over time when one of three criteria is met, such as the customer simultaneously receives and consumes the benefits.
Which of the following is classified as an investing activity on the statement of cash flows?
Answer: Purchase of equipment for cash
Purchases of long-lived assets such as equipment are investing activities because they involve acquiring resources intended to generate future income.
A company reports net income of $200,000. Depreciation was $30,000, accounts receivable increased $15,000, and accounts payable decreased $10,000. What is operating cash flow (indirect method)?
Answer: $205,000
$200,000 + $30,000 – $15,000 – $10,000 = $205,000; increases in receivables use cash and decreases in payables use cash.
The current ratio is 2.5 and current liabilities are $80,000. What are current assets?
Answer: $200,000
Current assets = Current ratio × Current liabilities = 2.5 × $80,000 = $200,000.
Which earnings per share figure must be disclosed on the face of the income statement for a public company with a complex capital structure?
Answer: Both basic and diluted EPS
ASC 260 requires public entities with complex capital structures to present both basic and diluted EPS on the face of the income statement.
Under the allowance method, recording the write-off of a specific uncollectible account affects which accounts?
Answer: Allowance for doubtful accounts and accounts receivable
A write-off under the allowance method debits the allowance account and credits accounts receivable, with no effect on net income.
Comprehensive income equals net income plus:
Answer: Other comprehensive income items
Comprehensive income includes net income and other comprehensive income (OCI) items such as unrealized gains/losses on AFS securities and foreign currency translation adjustments.