CFA Level 1 - Financial Reporting &
Analysis Exam Questions & Answers
(Grade A+)
Auditor/Audit Opinion -
correct answer ✅1) Unqualified opinion (good); 2) Qualified
opinion (followed GAAP except for...); 3) Adverse opinion (bad)
FASB -
correct answer ✅US
1) Financial Accounting Standards Board; 2) Standards form GAAP;
3) Aims, useful, relevant, reliable, consistent and comparable; 4)
SEC deems FASB standard authoritative
FASB - Harmonization -
correct answer ✅1) Increase comparability; 2) Reduce expense of
overseas capital; 3) Reduce the expense of producing consolidated
accounts
IOSCO -
correct answer ✅EU & US
1) Int'l Org. of Securities Commission; 2) Goal: uniform regulation;
3) Core objectives: Protecting investor, Fair, transparent, efficient
markets, Reduction of systematic risk
,CFA Level 1 - Financial Reporting &
Analysis Exam Questions & Answers
(Grade A+)
IASB -
correct answer ✅EU
1) Int'l Accounting Standards Board; 2) Unified int'l frameworks of
accounting standards (IFRS); 3) Addopted by EU in 2005
IASB - Goals -
correct answer ✅1) Development of high quality, transparent and
enforceable global standards; 2) Promote application of standards;
3) Take into account special needs (small & med entities &
emerging markets); 4) Convergence of nat'l and int'l standards
Roles of financial reporting & analysis include: -
correct answer ✅1) Evaluating equity investments for a portfolio;
2) Evaluating potential M&A;
3) Evaluating a subsidiary of a parent company;
4) Deciding on private equity/ venture cap investment
5) Determine creditworthiness - borrowing;
6) Extending credit to customers;
7) Examining compliance with covenants/contracts;
8) Assigning a debt rating;
,CFA Level 1 - Financial Reporting &
Analysis Exam Questions & Answers
(Grade A+)
9) Valuing a security - Equity research/reports;
10) Forecasting future earnings/cash flows;
Balance Sheet -
correct answer ✅shows the financial position of a firm AT A
SINGLE POINT in time A = L + E.
Income Statement -
correct answer ✅Shows the performance of the company over a
reporting period.
Sarbanes-Oxley Management Report: -
correct answer ✅1) Responsibility to establish and maintain
adequate internal controls
2) Mgmt's framework for evaluating internal controls
3) Assessment of the effectiveness of internal controls over the last
operating period
4) Statement of auditor's attestment
5) Certify that f/s are fairly presented
, CFA Level 1 - Financial Reporting &
Analysis Exam Questions & Answers
(Grade A+)
MD&A contains: -
correct answer ✅1) Results of operations and discussions of
trend;
2) Capital resources, liquidity, and cash flow trends;
3) General business overview based on known trends;
4) Effects of trends, events, and uncertainties;
5) Discontinued operations, extraordinary items, unusual items;
6) Disclosure in interim f/s;
7) Segment cash flow
Funded status of the pension plan (under US GAAP & IFRS) is
reported where? -
correct answer ✅US Gaap: Balance Sheet
IFRS:Disclosed in Footnotes
May be mentioned in MD&A if mgnt considers it significant
Steps of F/S Analysis -
correct answer ✅1) Purpose and context
2) Data Collection
3) Data Processing
Analysis Exam Questions & Answers
(Grade A+)
Auditor/Audit Opinion -
correct answer ✅1) Unqualified opinion (good); 2) Qualified
opinion (followed GAAP except for...); 3) Adverse opinion (bad)
FASB -
correct answer ✅US
1) Financial Accounting Standards Board; 2) Standards form GAAP;
3) Aims, useful, relevant, reliable, consistent and comparable; 4)
SEC deems FASB standard authoritative
FASB - Harmonization -
correct answer ✅1) Increase comparability; 2) Reduce expense of
overseas capital; 3) Reduce the expense of producing consolidated
accounts
IOSCO -
correct answer ✅EU & US
1) Int'l Org. of Securities Commission; 2) Goal: uniform regulation;
3) Core objectives: Protecting investor, Fair, transparent, efficient
markets, Reduction of systematic risk
,CFA Level 1 - Financial Reporting &
Analysis Exam Questions & Answers
(Grade A+)
IASB -
correct answer ✅EU
1) Int'l Accounting Standards Board; 2) Unified int'l frameworks of
accounting standards (IFRS); 3) Addopted by EU in 2005
IASB - Goals -
correct answer ✅1) Development of high quality, transparent and
enforceable global standards; 2) Promote application of standards;
3) Take into account special needs (small & med entities &
emerging markets); 4) Convergence of nat'l and int'l standards
Roles of financial reporting & analysis include: -
correct answer ✅1) Evaluating equity investments for a portfolio;
2) Evaluating potential M&A;
3) Evaluating a subsidiary of a parent company;
4) Deciding on private equity/ venture cap investment
5) Determine creditworthiness - borrowing;
6) Extending credit to customers;
7) Examining compliance with covenants/contracts;
8) Assigning a debt rating;
,CFA Level 1 - Financial Reporting &
Analysis Exam Questions & Answers
(Grade A+)
9) Valuing a security - Equity research/reports;
10) Forecasting future earnings/cash flows;
Balance Sheet -
correct answer ✅shows the financial position of a firm AT A
SINGLE POINT in time A = L + E.
Income Statement -
correct answer ✅Shows the performance of the company over a
reporting period.
Sarbanes-Oxley Management Report: -
correct answer ✅1) Responsibility to establish and maintain
adequate internal controls
2) Mgmt's framework for evaluating internal controls
3) Assessment of the effectiveness of internal controls over the last
operating period
4) Statement of auditor's attestment
5) Certify that f/s are fairly presented
, CFA Level 1 - Financial Reporting &
Analysis Exam Questions & Answers
(Grade A+)
MD&A contains: -
correct answer ✅1) Results of operations and discussions of
trend;
2) Capital resources, liquidity, and cash flow trends;
3) General business overview based on known trends;
4) Effects of trends, events, and uncertainties;
5) Discontinued operations, extraordinary items, unusual items;
6) Disclosure in interim f/s;
7) Segment cash flow
Funded status of the pension plan (under US GAAP & IFRS) is
reported where? -
correct answer ✅US Gaap: Balance Sheet
IFRS:Disclosed in Footnotes
May be mentioned in MD&A if mgnt considers it significant
Steps of F/S Analysis -
correct answer ✅1) Purpose and context
2) Data Collection
3) Data Processing
