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MindMap Gallery CFA Financial Statement Analysis Accounting Fundamentals (Test Points 1-5)

CFA Financial Statement Analysis Accounting Fundamentals (Test Points 1-5)

CFA Financial Statement Analysis Accounting Fundamentals (Test Points 1-5) I compiled it when I was preparing for the exam. I hope it can help those who are preparing for the exam. Please forgive me if there are any typos.

Edited at 2022-12-21 14:53:06

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CFA Financial Statement Analysis Accounting Fundamentals (Test Points 1-5)

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Outline

CFA Financial Statement Analysis Income Statement (Test Points 6-10)
- 9
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CFA Financial Statement Analysis Accounting Fundamentals (Test Points 1-5)

1. Financial reports and financial statements

1.1 Purpose of financial reporting: provide information to wide range of inerested parties

1.2 Information provided

financial position

financial performance

changes in financial position

1.3 Contents of financial reports

financial statement

balance sheet

Note: Debt only refers to interest-bearing liabilities; liability also includes non-interest-bearing liabilities.

statement of comprehensive income

cash flow statement

statement of changes in equity

footnotes

supplementary information

management discussion and analysismanagement analysis discussion

auditor's report audit report

…

other information

proxy statement

conference call conference call minutes

…

2. Financial report composition

2.1 Balance sheet

A=LE

current financial position

2.2 Income statement

income-expenses=net income

over a period of time

"net income"="bottom line" in the income statement

2.3 Cash flow statement

over a period of time

Three types of cash flow

operating:CFO

investing:CFI

financing:CFF

2.4 Statement of changes in owners’ equity

2.5 Report linkage relationship

Core Report: Balance Sheet

BASE rule: B A-S=E

Ending R/E=Beginning R/E net income-dividend

Ending cash=Beginning cash cash inflow-cash outflow

2.6 Notes to statements

footnotes must be audited

3. Audit report and audit opinion

Characteristics of audit opinion

independent review independent opinion

assure reasonably assure

Type of audit opinion

Unqualified OpinionUnqualified Opinion

Qualified Opinion reserved opinion (not good in certain aspects)

Adverse Opinion (with material misstatement)

Disclaimer of Opinion Unable to express opinion (audit scope limited)

4. Accounting standard setting entities and regulatory agencies

standard-setting bodies standard-setting bodies

FASB:U.S.GAAP

IASB: IFRS

Regulatory Authority

United States: SEC

Form 10-K: annual report, audited and required to be audited

Form 10-Q: quarterly report, not necessarily audited, no audit required

International: IOSCO

5. Report quality requirements

5.1 Financial statement quality characteristics

Basic Features

1.relevanceRelevance

2.faithful representation credibility

completecomplete

neutral Seeking truth from facts

free from error

Supplementary features

3.comparability comparability

4.verifiability verifiability

5.timeliness

6.understandability understandability

5.2 General requirements for financial statements

going concern basis going concern assumption

accrual basis of accounting accrual basis

Accounting adjustments

change in accounting estimate change in accounting estimate - prospective application method

change in accounting policies change in accounting policies—retrospective retrospective adjustment method

correction of an error error correction - restatement