Often asked: When a company compares its current financial data with its prior year’s data it is making?

What are comparisons of financial data made within a company are called?

Intracompany Comparisons is a method of comparing a comapny’s financial statement/performance with the past results of the same company.

What should occur when there is a change in accounting principle?

What should occur when there is a change in accounting principle? The change should be reported retroactively.

What is the disposal of a significant component of a business called?

Three types of irregular items are reported – discontinued operations, extraordinary items, and changes in accounting principle. ¨ Discontinued operations refers to the disposal of a significant component of a business, such as the elimination of a major class of customers or an entire activity.

Which of the following is the best way to measure a company’s short term ability to pay its maturing obligations and to meet unexpected needs for cash?

Cards

Term Classified Balance Sheet	Definition This groups together similar assets and similar liabilities, using a number of standard classifications and sections.
Term Liquidity Ratios	Definition Measure short–term ability of the company to pay its maturing obligations and to meet unexpected needs for cash

What is vertical analysis also known as?

Vertical analysis is also known as common size financial statement analysis. (For more, read The Common-Size Analysis of Financial Statements.)

How do you know if liquidity is good?

A good liquidity ratio is anything greater than 1. It indicates that the company is in good financial health and is less likely to face financial hardships. The higher ratio, the higher is the safety margin that the business possesses to meet its current liabilities.

When would a change in accounting principle make sense?

There is a change in accounting principle when: There are two or more accounting principles that apply to a particular situation, and you shift to the other principle; or. When the accounting principle that formerly applied to the situation is no longer generally accepted; or.

What are the three types of accounting changes?

Changes in accounting are of three types. They are changes in accounting principle, changes in accounting estimates, and changes in reporting entity. Accounting errors result in accounting changes too.

What is the accounting treatment for discontinued operations?

Discontinued operations are reported on the income statement separately from continuing operations. When companies merge, understanding which assets are being divested can give a clearer picture of how a company will make money in the future.

How is the balance sheet affected if a company sells goods in cash?

Cash will increase when goods are sold for cash and when accounts receivable are collected. Cash will decrease when cash is paid for expenses, inventory, equipment, liabilities, etc.

What does expenses mean in business?

In its simplest terms, you should be looking to record any expense, paid by the business, by you, or by your employees that is for physical items or services needed to run the business.

What is the format of the one statement Comprehensive income statement under IFRS?

What is the format of the one–statement comprehensive income statement approach under IFRS? All components of revenue and expense are reported in a combined statement which computes net income or loss followed by components of comprehensive income or loss to arrive at comprehensive income.

In which of the following is net sales are represented by 100 %?

In a horizontal analysis of the income statement, net sales is represented by 100 percent.

What is the meaning of current assets?

Current assets are all the assets of a company that are expected to be sold or used as a result of standard business operations over the next year. Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.

What is the order in which assets are generally listed on a classified balance sheet?

Current Assets are listed: by order of expected conversion to cash. The correct order of presentation in a classified balance sheet for the following current assets is: cash, accounts receivable, inventory, prepaid insurance.