- CFA Exams
- Dec. 2020 Level 1
- Study Session 7. Financial Reporting and Analysis II
- Reading 22. Understanding Balance Sheets
Reading 22. Understanding Balance Sheets
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Learning Outcome Statements
| Reading 22. Understanding Balance Sheets | |
|---|---|
| 1. Components and Format of the Balance Sheet a. describe the elements of the balance sheet: assets, liabilities, and equity; b. describe uses and limitations of the balance sheet in financial analysis; c. describe alternative formats of balance sheet presentation; d. distinguish between current and non-current assets, and current and non-current liabilities; | |
| 2. Measurement Bases of Assets and Liabilities e. describe different types of assets and liabilities and the measurement bases of each; | |
| 3. Financial Instruments: Financial Assets and Financial Liabilities e. describe different types of assets and liabilities and the measurement bases of each; | |
| 4. Equity f. describe the components of shareholders' equity; | |
| 5. Uses and Analysis of the Balance Sheet g. convert balance sheets to common-size balance sheets and interpret common-size balance sheets; h. calculate and interpret liquidity and solvency ratios. |