Financial Reporting
Exam Weight: ~4 questions (3% of exam)
Investment advisers must understand corporate financial statements to evaluate companies and make suitability recommendations. This unit covers the three primary financial statements, auditor opinions, SEC reporting requirements, and key accounting concepts.
What You'll Learn
- Accounting fundamentals: audited vs. unaudited statements, cash vs. accrual accounting
- Financial reports: the three financial statements, auditor disclosures, SEC filings, and annual reports
- Synthesis: Putting financial reporting concepts together
The Big Picture
Think of it this way: This unit teaches you how to read the financial health of the companies that issue securities. On the exam, suitability questions often require you to interpret financial data to determine if a company is appropriate for an investor.
| Key Concept | What It Answers |
|---|---|
| Financial statements | How healthy is this company financially? |
| Auditor opinions | How trustworthy are these financial statements? |
| SEC filings | Where can investors find this financial information? |
| Cash vs. accrual | When are revenues and expenses recognized? |