Question 1

The statement of financial position provides insight into the liquidity of the business. This means that

Accepted Answer

A) the ability of the business to pay its long-term debts. 
B) the ability of the business to pay dividends. 
C) the ability of the business to pay its short-term obligations with current assets. 
D) the ability of the business to purchase new long-term assets. 
A) the ability of the business to pay its long-term debts. 
B) the ability of the business to pay dividends. 
C) the ability of the business to pay its short-term obligations with current assets. 
D) the ability of the business to purchase new long-term assets.

Question 2

The effect on the statement of financial position when a debtor pays the amount that is owed is:

Accepted Answer

A) increase asset bank; decrease asset debtor; increase equity. 
B) increase asset bank; increase equity. 
C) increase asset bank; decrease asset debtor. 
D) none of the above. 
A) increase asset bank; decrease asset debtor; increase equity. 
B) increase asset bank; increase equity. 
C) increase asset bank; decrease asset debtor. 
D) none of the above.

Question 3

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded, is the:

Accepted Answer

A) money measurement convention. 
B) historical cost convention. 
C) conservatism convention. 
D) reliability convention. 
A) money measurement convention. 
B) historical cost convention. 
C) conservatism convention. 
D) reliability convention.

Question 4

There is a growing tendency for many non-current assets to be valued on the basis of market values. The item which is most likely to be valued at market value is:

Accepted Answer

A) the assets of a life insurer. 
B) goodwill. 
C) motor vehicles. 
D) accounts receivable. 
A) the assets of a life insurer. 
B) goodwill. 
C) motor vehicles. 
D) accounts receivable.

Question 5

The accounting convention that the objectivity principle provides support for is:

Accepted Answer

A) historic cost. 
B) prudence (conservatism). 
C) relevance. 
D) accounting period. 
A) historic cost. 
B) prudence (conservatism). 
C) relevance. 
D) accounting period.

Question 6

If assets are $36,200 and equity is $13,600, liabilities are:

Accepted Answer

A) $47,500. 
B) $22,100. 
C) $22,600. 
D) $22,900. 
A) $47,500. 
B) $22,100. 
C) $22,600. 
D) $22,900.

Question 7

Which of these assets, which could be listed on a statement of financial position, is likely not to translate into future economic benefits?

Accepted Answer

A) Large inventories of spare parts. 
B) Accounts receivable that have been outstanding for several months. 
C) Inventory that has been on the shelves for over a year. 
D) All of the above. 
A) Large inventories of spare parts. 
B) Accounts receivable that have been outstanding for several months. 
C) Inventory that has been on the shelves for over a year. 
D) All of the above.

Question 8

What are the possible approaches to presenting a narrative statement of financial position?

Accepted Answer

A) Entity. 
B) Proprietary. 
C) Horizontal. 
D) Both A and B. 
A) Entity. 
B) Proprietary. 
C) Horizontal. 
D) Both A and B.

Question 9

Which of the following is not necessarily a liability?

Accepted Answer

A) Provision for holiday pay. 
B) Bank overdraft. 
C) Loan to employee. 
D) None of the above, i.e., all are necessarily liabilities. 
A) Provision for holiday pay. 
B) Bank overdraft. 
C) Loan to employee. 
D) None of the above, i.e., all are necessarily liabilities.

Question 10

The effect on the statement of financial position when the owner contributes her private vehicle for the exclusive use of the business is:

Accepted Answer

A) increase asset vehicle; increase equity. 
B) increase asset vehicle; decrease equity. 
C) increase asset vehicle; increase owner's drawings. 
D) none of the above. 
A) increase asset vehicle; increase equity. 
B) increase asset vehicle; decrease equity. 
C) increase asset vehicle; increase owner's drawings. 
D) none of the above.

Question 11

Identify the current asset.

Accepted Answer

A) Fixtures and fittings. 
B) Inventory. 
C) Delivery vehicle. 
D) Loan to L Hardie repayable in 2 years. 
A) Fixtures and fittings. 
B) Inventory. 
C) Delivery vehicle. 
D) Loan to L Hardie repayable in 2 years.

Question 12

The accounting convention that requires items in the statement of financial position to be valued at their acquisition cost is the:

Accepted Answer

A) matching convention. 
B) realisation convention. 
C) money measurement convention. 
D) historic cost convention. 
A) matching convention. 
B) realisation convention. 
C) money measurement convention. 
D) historic cost convention.

The statement of financial position provides insight into the liquidity of the business. This means that

The effect on the statement of financial position when a debtor pays the amount that is owed is:

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded, is the:

There is a growing tendency for many non-current assets to be valued on the basis of market values. The item which is most likely to be valued at market value is:

The accounting convention that the objectivity principle provides support for is:

If assets are $36,200 and equity is $13,600, liabilities are:

Which of these assets, which could be listed on a statement of financial position, is likely not to translate into future economic benefits?

What are the possible approaches to presenting a narrative statement of financial position?

Which of the following is not necessarily a liability?

The effect on the statement of financial position when the owner contributes her private vehicle for the exclusive use of the business is:

Identify the current asset.

The accounting convention that requires items in the statement of financial position to be valued at their acquisition cost is the:

Introduction to Accounting

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters

Exam 2: Measuring and Reporting Financial Position

The statement of financial position provides insight into the liquidity of the business. This means that

The effect on the statement of financial position when a debtor pays the amount that is owed is:

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded, is the:

There is a growing tendency for many non-current assets to be valued on the basis of market values. The item which is most likely to be valued at market value is:

The accounting convention that the objectivity principle provides support for is:

If assets are $36,200 and equity is $13,600, liabilities are:

Which of these assets, which could be listed on a statement of financial position, is likely not to translate into future economic benefits?

What are the possible approaches to presenting a narrative statement of financial position?

Which of the following is not necessarily a liability?

The effect on the statement of financial position when the owner contributes her private vehicle for the exclusive use of the business is:

Identify the current asset.

The accounting convention that requires items in the statement of financial position to be valued at their acquisition cost is the:

Introduction to Accounting

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters