Part 1 - Financial Statements; Statement of Financial Position; Notes Accompanying Financial Statements

b. To present information about the realizable amount of an entity's assets in the event of liquidation.

Which of the following is not an objective of financial statements?

a. To present information about financial position of an entity as of a given date.

b. To present information about the realizable amount of an entity's assets in the event of liquidation.

c. To present information about the financial performance of an entity for a given reporting period.

d. To present information about the changes of financial position of an enterprise.

a. an enterprise is a going concern and will continue ni operation for the foreseeable future.

The financial statements are normally prepared on the assumption that

a. an enterprise is a going concern and will continue ni operation for the foreseeable future.

b. an enterprise does not have the ability to continue its operations.

c. an enterprise will liquidate its operations during the subsequent reporting period.

d. the enterprise has the intention of curtailing materially the scale of its operations.

c. Income and expenses

which among the following are elements of financial performance?

a. Assets and liabilities

b. Assets, liabilities and equity

c. Income and expenses

d. Income, expenses and drawings

c. structured presentation of the financial position and changes in financial position of an enterprise

Financial statements are

a. specific purpose financial reports

b. intended to meet the information needs of the management

c. structured presentation of the financial position and changes in financial position of an enterprise

d. reports about the performance of the management

c. Net income

Which of the following is not to be presented on the face of the statement of financial position?

a. Notes payable

b. Treasury shares

c. Net income

d. Share capital

d. Statement of financial position

Which of the following is a snapshot photo as of a given date?

a. Statement of cash flows

b. Statement of changes in equity

c. Statement of comprehensive income

d. Statement of financial position

d. allows trade receivables and inventories to be classified as current assets even if they would not be realized in cash within twelve months from the end of the reporting period

The operating cycle

a. cannot exceed one year

b. refers to the seasonal variations experienced by business enterprises

c. should be used to classify assets and liabilities as current if it is less than one year

d. allows trade receivables and inventories to be classified as current assets even if they would not be realized in cash within twelve months from the end of the reporting period

c. required to purchase raw materials, produce the product, sell it on credit and collect cash from customers.

For a manufacturer of motorcycle units, the operating cycle represents the period of time

a. between selling the product on credit and collecting cash from customers.

b. between producing the product, selling it on credit, and collecting cash from customers

c. required to purchase raw materials, produce the product, sell it on credit and collect cash from customers.

d. required to purchase raw materials, produce the product and sell it on credit.

d. Trade installment receivables normally collectible in 18 months.

Which of the following is a current asset?

a. Cash surrender value of a life insurance policy of which the company is the beneficiary.

b. Investment in marketable securities for the purpose of controlling the issuing company.

c. Cash designated for the purchase of tangible fixed assets.

d. Trade installment receivables normally collectible in 18 months.

c. I, III, and IV

Which of the following would be reported in the shareholders’ equity section of the statement of financial position?

I. Retained earnings appropriated for plant expansion

II. Cash dividends declared but not yet paid on preference shares

III. Share premium

IV. Accumulated actuarial gains or losses on remeasurement or defined benefit asset or liability

a.I, II, III, and IV

b. I, II, and III

c. I, III, and IV

d. II, III, and IV

b. in the order of liquidity

When assets and liabilities on the statement of Inancial position sre not presented into current and non-current classification, they should be presented broadly

a. in the order of maturity.

b. in the order of liquidity

c. alphabetically.

d. in the order of magnitude.

a. current assets minus current liabilities

Working capital is equal to

a. current assets minus current liabilities

b. total assets minus total liabilities

c. current assets plus current liabilities

d. total shareholders’ equity

c. Corporations shall present equity accounts according to source

How does a statement of financial position of a corporation differ from that of a single proprietorship or a partnership?

a. Some assets are presented by corporations but not by partnerships or single proprietorship because only corporations can exercise control over these resources

b. Corporations need not classify liabilities into current and non-current

c. Corporations shall present equity accounts according to source

d. There are really no distributions in the presentation of the statement of financial position of a single proprietorship, a partnership, and a corporation

c. correct an improper financial statement presentation

The notes to the financial statements should not be used to

a. present disclosures required by generally accepted accounting principles
b. describe the accounting policies adopted by the enterprise
c. correct an improper financial statement presentation
d. describe the basis for resolving uncertainties in the financial statements

c. Names of the shareholders of record as of the balance sheet date

Which of the following is not required disclosure in the notes to the financial statements?

a. Summary of significant accounting policies

b. Supporting information for items presented on the face of the financial statements

c. Names of the shareholders of record as of the balance sheet date

d. Liabilities whose occurrence is probable but whose amount cannot be measured reliably

b. Guarantee of indebtedness of others

Which of the following information should be disclosed in the summary of significant accounting policies?

a. Criteria for determining which investments are treated as cash equivalents?

b. Guarantee of indebtedness of others

c. Business combination after the end of the reporting period

d. Refinancing of debt subsequent to the end of the reporting period

a. Retirement of company president

Which of the following non-adjusting events after the reporting period will require?

a. Retirement of company president

b. Settlement of litigation when the event that gave rise to the litigation occurred prior to the reporting date

c. Employee strokes

d. Issue of a large amount of share capital