About Me
Chartered Financial Analyst (CFA)
1 Ethical and Professional Standards
1-1 Code of Ethics
1-2 Standards of Professional Conduct
1-3 Guidance for Standards I-VII
1-4 Introduction to the Global Investment Performance Standards (GIPS)
1-5 Application of the Code and Standards
2 Quantitative Methods
2-1 Time Value of Money
2-2 Discounted Cash Flow Applications
2-3 Statistical Concepts and Market Returns
2-4 Probability Concepts
2-5 Common Probability Distributions
2-6 Sampling and Estimation
2-7 Hypothesis Testing
2-8 Technical Analysis
3 Economics
3-1 Topics in Demand and Supply Analysis
3-2 The Firm and Market Structures
3-3 Aggregate Output, Prices, and Economic Growth
3-4 Understanding Business Cycles
3-5 Monetary and Fiscal Policy
3-6 International Trade and Capital Flows
3-7 Currency Exchange Rates
4 Financial Statement Analysis
4-1 Financial Reporting Mechanism
4-2 Income Statements, Balance Sheets, and Cash Flow Statements
4-3 Financial Reporting Standards
4-4 Analysis of Financial Statements
4-5 Inventories
4-6 Long-Lived Assets
4-7 Income Taxes
4-8 Non-Current (Long-term) Liabilities
4-9 Financial Reporting Quality
4-10 Financial Analysis Techniques
4-11 Evaluating Financial Reporting Quality
5 Corporate Finance
5-1 Capital Budgeting
5-2 Cost of Capital
5-3 Measures of Leverage
5-4 Dividends and Share Repurchases
5-5 Corporate Governance and ESG Considerations
6 Equity Investments
6-1 Market Organization and Structure
6-2 Security Market Indices
6-3 Overview of Equity Securities
6-4 Industry and Company Analysis
6-5 Equity Valuation: Concepts and Basic Tools
6-6 Equity Valuation: Applications and Processes
7 Fixed Income
7-1 Fixed-Income Securities: Defining Elements
7-2 Fixed-Income Markets: Issuance, Trading, and Funding
7-3 Introduction to the Valuation of Fixed-Income Securities
7-4 Understanding Yield Spreads
7-5 Fundamentals of Credit Analysis
8 Derivatives
8-1 Derivative Markets and Instruments
8-2 Pricing and Valuation of Forward Commitments
8-3 Valuation of Contingent Claims
9 Alternative Investments
9-1 Alternative Investments Overview
9-2 Risk Management Applications of Alternative Investments
9-3 Private Equity Investments
9-4 Real Estate Investments
9-5 Commodities
9-6 Infrastructure Investments
9-7 Hedge Funds
10 Portfolio Management and Wealth Planning
10-1 Portfolio Management: An Overview
10-2 Investment Policy Statement (IPS)
10-3 Asset Allocation
10-4 Basics of Portfolio Planning and Construction
10-5 Risk Management in the Portfolio Context
10-6 Monitoring and Rebalancing
10-7 Global Investment Performance Standards (GIPS)
10-8 Introduction to the Wealth Management Process
4.3 Financial Reporting Standards Explained

4.3 Financial Reporting Standards - 4.3 Financial Reporting Standards Explained

Key Concepts

Generally Accepted Accounting Principles (GAAP)

GAAP is a set of standards and principles designed to ensure consistency, transparency, and comparability in financial reporting. These principles are established by accounting organizations and are used primarily in the United States. GAAP covers topics such as revenue recognition, asset valuation, and financial statement presentation.

Example: A company using GAAP must recognize revenue when it is earned and realizable, which means the company has completed the work or delivered the goods, and payment is reasonably assured.

International Financial Reporting Standards (IFRS)

IFRS is a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements. IFRS aims to provide a common language for business affairs so that company accounts are understandable and comparable across international boundaries.

Example: Under IFRS, a company must use the fair value method to value financial instruments, which means the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial Statements

Financial statements are formal records of a business's financial activities. The primary financial statements include the Balance Sheet, Income Statement, Cash Flow Statement, and Statement of Changes in Equity. These statements provide a comprehensive view of the company's financial health and performance.

Example: The Balance Sheet provides a snapshot of a company's assets, liabilities, and equity at a specific point in time, showing what the company owns and owes, as well as the amount invested by shareholders.

Auditing and Assurance

Auditing is the independent examination of financial statements to provide assurance that they are free from material misstatement and present a true and fair view of the company's financial position. Assurance services extend beyond auditing to provide confidence about the reliability of information for decision-making.

Example: An external auditor reviews a company's financial statements to ensure they comply with GAAP or IFRS and issues an opinion on whether the statements are fairly presented in all material respects.

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