COMPLETE summary ch 1 corporate finance
Questions and Answers 2023
Accounting Periods - -Length of time covered by financial statements; also called reporting
period.
-Matching - -in their statements, firms should include all expenses incurred to realize the
revenues that they report
-Conservatism - -firms, given a situation where measurement uncertainties produce equally
likely profit figures, should report the lowest figure
-Understandability - -Reports should be presented in a manner that makes it easy for the user to
comprehend their meaning.
-Relevance - -the relation of something to the matter at hand
-Reliability - -information that is provided must be complete and verifiable
-Consistency - -firms should strive to use consistent accounting methods so that their statements
can be compared over time
-FASB has identified specific requirements that apply to the external reports of all firms which
are: - -1. The Financial Position at Period's End
2. The Cash Flows for the Period
3. The Earnings for the Period
4. The Comprehensive Income for the Period
5. The Investments by and Distributions to Owners for the Period
-FIFO - -First in-first out
-LILO - -Last-in, last-out
-What is contained in the footnotes? - -footnotes contain understand which accounting principles
apply
-The balance sheet is also known as... - -statement of financial position
-Accounting Equation - -Assets = Liabilities + Owner's Equity
-Liquidity - -the ease with which an asset can be converted into cash
-Comparative Balance Sheet - -A balance sheet with two or more years of data.
Questions and Answers 2023
Accounting Periods - -Length of time covered by financial statements; also called reporting
period.
-Matching - -in their statements, firms should include all expenses incurred to realize the
revenues that they report
-Conservatism - -firms, given a situation where measurement uncertainties produce equally
likely profit figures, should report the lowest figure
-Understandability - -Reports should be presented in a manner that makes it easy for the user to
comprehend their meaning.
-Relevance - -the relation of something to the matter at hand
-Reliability - -information that is provided must be complete and verifiable
-Consistency - -firms should strive to use consistent accounting methods so that their statements
can be compared over time
-FASB has identified specific requirements that apply to the external reports of all firms which
are: - -1. The Financial Position at Period's End
2. The Cash Flows for the Period
3. The Earnings for the Period
4. The Comprehensive Income for the Period
5. The Investments by and Distributions to Owners for the Period
-FIFO - -First in-first out
-LILO - -Last-in, last-out
-What is contained in the footnotes? - -footnotes contain understand which accounting principles
apply
-The balance sheet is also known as... - -statement of financial position
-Accounting Equation - -Assets = Liabilities + Owner's Equity
-Liquidity - -the ease with which an asset can be converted into cash
-Comparative Balance Sheet - -A balance sheet with two or more years of data.
