Exam (elaborations)
CFI FMVA QUESTIONS AND ANSWERS 2024
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Exam of 54 pages for the course FMVA - Financial Modeling and Valuation Analyst at FMVA - Financial Modeling and Valuation Analyst (CFI FMVA)
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CFI FMVAIncome statement accounting - answer Accrual - revenues & costs recorded as a
business earns or incurs them, not as it receives and pays money
It includes them in the relevant period's income statement and matches them as closely
as possible
CF makes no difference whatsoever - IS where sale happens
=> How do you decide when sale happens? RECOGNIZE REV UPON DELIVERY OF
GOOD/SERVICE PERFORMED
Why are profits and cash flow not the same thing? - answer Accounting differences
The idea of matching over time - answer
CFS Accounting - answer Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - answer record income and expenditures at the time the
money changes hands
Cash accounting method - answer An accounting method in which income and
expenditures are recorded at the time the money changes hands.
Accrual Accounting - answer recording in each fiscal period applicable expenses,
whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - answer reporting income when it is earned and expenses
when they are incurred
Accrual Basis Accounting - answer the method of accounting that recognizes
revenue when it is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - answer Accounting basis in which companies record, in
the periods in which the events occur, transactions that change a company's financial
statements, even if cash was not exchanged.
accrued expenses - answer expenses incurred in one fiscal period but not paid until
a later fiscal period
,accrued expenses - answer expenses incurred but not yet paid in cash or recorded
Cash flow from operating activities - answer The net amount of cash provided from
operating activities.
cash flow from financing activities - answer
The idea of matching over time - answer
CFS Accounting - answer Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - answer record income and expenditures at the time the
money changes hands
Cash accounting method - answer An accounting method in which income and
expenditures are recorded at the time the money changes hands.
Accrual Accounting - answer recording in each fiscal period applicable expenses,
whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - answer reporting income when it is earned and expenses
when they are incurred
Accrual Basis Accounting - answer the method of accounting that recognizes
revenue when it is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - answer Accounting basis in which companies record, in
the periods in which the events occur, transactions that change a company's financial
statements, even if cash was not exchanged.
accrued expenses - answer expenses incurred in one fiscal period but not paid until
a later fiscal period
accrued expenses - answer expenses incurred but not yet paid in cash or recorded
Cash flow from operating activities - answer The net amount of cash provided from
operating activities.
cash flow from financing activities - answer The section of the statement of cash
flows that reports cash flows from transactions affecting the equity and debt of the
business.
cash flow from financing activities - answer items related to debt, dividends, and
issuing or repurchasing shares
,cash flow from investing activities - answer The section of the statement of cash
flows that reports cash flows from transactions affecting investments in noncurrent
assets.
cash flow from investing activities - answer involves any cash in or out of the
company due to investment in or disposal of fixed assets.
Contributed surplus - answer Amount paid for shares in excess of their par value
Contributed surplus - answer money that has been invested in the firm by outside
parties
Contributed surplus - answer A source of contributed capital that can result from
certain types of equity transactions, including the reacquisition of shares.
Straightline depreciation - answer Allocates equal amounts of plant assets net cost
to depreciation during its useful life.
Accounts Receivable - answer Amounts to be received in the future due to the sale
of goods or services
Accounts Payable - answer Amounts to be paid in the future for goods or services
already acquired
Cash Flow Accounting System - answer An accounting system entering expenses
and revenues only when cash is received or paid out.
authorised share capital - answer Maximum number of shares that a company can
issue, as specified in the firm's memorandum of association
outstanding share capital - answer Issued share capital less the par value of shares
that are held in the company's treasury.
inventory - answer the quantity of goods that a firm has on hand
inventory - answer a complete list of items such as property, goods in stock, or the
contents of a building.
Working Capital - answer current assets - current liabilities
Net Working Capital - answer current assets minus current liabilities
current assets - answer cash and other assets expected to be exchanged for cash or
consumed within a year
, Current Liabilities - answer liabilities due within a short time, usually within a year
Current assets include - answer cash, marketable securities, accounts receivable,
and inventories
Current liabilities include - answer notes payable, accounts payable, unearned
revenues, and accrued liabilities such as taxes, salaries and wages, and interest.
Current liabilities include - answer Accounts Payable
Short-Term Notes Payable
Wages Payable
Taxes Payable
Interest Payable
Contingencies - answer possible outcomes; different plans based on varying
circumstances
Unearned Revenue - answer A liability created when a business collects cash from
customers in advance of providing services or delivering goods.
Common Shares - answer Represent an ownership interest, a residual claim on the
firm's assets in liquidation, and govern through voting rights;
No obligation for firm to pay a dividend;
Can proxy their votes to others;
Preferred Shares - answer Shares of stock that entitle owner to a fixed dividend
amount. Dividend must be paid by the company before common stock owners get paid.
Shareholders usually do not have voting rights.
Preferred Shares - answer stock that gives its owners preference in the payment of
dividends and an earlier claim on assets than common shareholders if the company is
forced out of business and its assets are sold
deferred income taxes - answer A liability account to pay income taxes that have
been postponed to a future year's income tax return. In some cases, this account can
also be an asset account representing income taxes to be saved in a future year's
income tax return.
Goodwill - answer amount paid for an existing business above the value of its other
assets
goodwill - answer the value of all favourable attributes that relate to a company that
are not attributable to any other specific asset
Goodwill (accounting) - answer price paid in excess of the fair market value of assets
acquired
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