Conceptual Questions Financial
Reporting and Analysis - CFA PREP
Exam Questions and Answers Graded A+
Which of the following statements least accurately describes a role of financial
statement analysis?
A)Use the information in financial statements to make economic decisions.
B)Provide reasonable assurance that the financial statements are free of material
errors.
C)Evaluate an entity's financial position and past performance to form opinions
about its future ability to earn profits and generate cash flow. - Correct answer-
B)Provide reasonable assurance that the financial statements are free of material
errors.
A firm's financial position at a specific point in time is reported in the:
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,A)balance sheet.
B)income statement.
C)cash flow statement. - Correct answer-A)balance sheet.
Information about accounting estimates, assumptions, and methods chosen for
reporting is most likely found in:
A)the auditor's opinion.
B)financial statement notes.
C)Management's Discussion and Analysis. - Correct answer-B)financial statement
notes.
If an auditor finds that a company's financial statements have made a specific
exception to applicable accounting principles, she is most likely to issue a:
A)dissenting opinion.
B)cautionary note.
C) Qualified Opinion - Correct answer-C) Qualified Opinion
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, Information about elections of members to a company's Board of Directors is most
likely found in:
A)a 10-Q filing.
B)a proxy statement.
C)footnotes to the financial statements. - Correct answer-B)a proxy statement.
Which of these steps is least likely to be a part of the financial statement analysis
framework?
A)State the purpose and context of the analysis.
B)Determine whether the company's securities are suitable for the client.
C)Adjust the financial statement data and compare the company to its industry
peers. - Correct answer-B)Determine whether the company's securities are suitable
for the client.
The objective of financial reporting, according to the IASB framework, is to:
A)provide information about the firm to current and potential investors.
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Reporting and Analysis - CFA PREP
Exam Questions and Answers Graded A+
Which of the following statements least accurately describes a role of financial
statement analysis?
A)Use the information in financial statements to make economic decisions.
B)Provide reasonable assurance that the financial statements are free of material
errors.
C)Evaluate an entity's financial position and past performance to form opinions
about its future ability to earn profits and generate cash flow. - Correct answer-
B)Provide reasonable assurance that the financial statements are free of material
errors.
A firm's financial position at a specific point in time is reported in the:
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,A)balance sheet.
B)income statement.
C)cash flow statement. - Correct answer-A)balance sheet.
Information about accounting estimates, assumptions, and methods chosen for
reporting is most likely found in:
A)the auditor's opinion.
B)financial statement notes.
C)Management's Discussion and Analysis. - Correct answer-B)financial statement
notes.
If an auditor finds that a company's financial statements have made a specific
exception to applicable accounting principles, she is most likely to issue a:
A)dissenting opinion.
B)cautionary note.
C) Qualified Opinion - Correct answer-C) Qualified Opinion
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, Information about elections of members to a company's Board of Directors is most
likely found in:
A)a 10-Q filing.
B)a proxy statement.
C)footnotes to the financial statements. - Correct answer-B)a proxy statement.
Which of these steps is least likely to be a part of the financial statement analysis
framework?
A)State the purpose and context of the analysis.
B)Determine whether the company's securities are suitable for the client.
C)Adjust the financial statement data and compare the company to its industry
peers. - Correct answer-B)Determine whether the company's securities are suitable
for the client.
The objective of financial reporting, according to the IASB framework, is to:
A)provide information about the firm to current and potential investors.
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