Balance sheet information is useful for all of the following except to

analyze cash inflows and outflows for the period

evaluate capital structure
compute rates of return
assess future cash flows
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 2
When an entity breaches an udertaking under a long-term loan agreement with the
effect that the liability becomes payable on demand, the liability is classified
as
Non-current, only if the lender demands immediate payment as a consequence of th
e breach.
Current, even if the lender has agreed not to demand payment as a consequence of
the breach.
Non-current, even if the lender has agreed not to demand payment as a consequenc
e of the breach
Current, only if the lender demands immediate payment as a consequence of the br
each
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 3
Which of the following is a contra account?
Patents
Unearned revenue
Premium on bonds payable
Accumulated depreciation
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 4
The following trial balance of Trina Company at December 31, 2014 has been adjus
ted except for income tax expense:
Cash
675,000
Accounts receivable (net)
2,695,000
Inventory
2,185,000
Property, plant and equipment (net)
10,245,000
Accounts payable and accrued liabilities
1,800,000
Income tax payable
1,500,000
Deferred tax liability
750,000
Share capital
2,500,000
Share premium
3,000,000
Retained earnings, January 1
3,350,000

Net sales and other revenue

15,000,000
Costs and expenses
10,000,000
Income tax expense
2,100,000
27,900,000
27,900,000
Included in accounts receivable is P1,000,000 due from a customer and payable in
quarterly installments of P125,000. The last payment is due December 30, 2016.
The balance in the deferred tax liability account pertains to a temporary differ
ence that arose in a prior year, of which P150,000 is expected to reverse in 201
5. During the year, estimated tax payment of P600,000 was charged to income tax
expense. The income tax rate is 30% on all types of income. In Shaw's December 3
1, 2014 statement of financial position.
The current assets should be
5,055,000
5,555,000
5,530,000
6,030,000
SOLUTION:
Cash
675,000
Accounts receivable
2,195,000
Inventory
2,185,000
Total current assets
5,055,000
Accounts receivable
2,695,000
Noncurrent portion (125,000 x 4)
( 500,000)
Adjusted current portion
2,195,000
Accounts payable and accrued liabilities
1,800,000
Income tax payable (1,500,000 - 600,000)
900,000
Total current liabilities
2,700,000
2.0 Financial Accounting and Reporting - Statement of Financial Position (Diffic
ult)
Question 5
The balance sheet contributes to financial reporting by providing a basis for al
l of the following except
determining the increase in cash due to operations.
evaluating the capital structure of the enterprise.
computing rates of return.
assessing the liquidity and financial flexibility of the enterprise.
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 6
Which accounting terminology is least associated with the statement of financial
position?
Provision

Reserves
Accumulated profit or loss
Distribution cost
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 7
The general ledger trial balance of Rhy Company includes the following accounts
on December 31, 2014:
Inventory, including inventory expected in the ordinary course of operations to
be sold beyond 12 months amounting to P700,000
1,000,000
Trade receivables
1,200,000
Prepaid insurance
80,000
Listed investments held for trading purposes at fair value
200,000
Available for sale investments
800,000
Cash
300,000
Deferred tax asset
150,000
Bank overdraft
250,000
What amount should be shown as total current assets on December 31, 2014?
2,080,000
2,780,000
3,580,000
2,530,000
SOLUTION:
Inventory
1,000,000
Trade receivables
1,200,000
Prepaid insurance
80,000
Investments held for trading
200,000
Cash
300,000
Total current assets
2,780,000
In the absence of statement to the contrary, available for sale investments shal
l be classified as noncurrent. PAS 1 and PAS 12 provide that deferred tax asset
is a noncurrent asset. The bank overdraft is classified as current liability
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 8
Which of the following items must be presented as a line item on the face of a s
tatement of financial position?
Trade and other receivables
Cost of goods sold
Sales revenue
Share of profit of subsidiaries
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 9
Edwin Company was incorporated on January 1, 2013 with proceeds from the issuanc

e of P750,000 in shares and borrowed funds of P110,000. During the first year of
operations, revenue from sales and consulting amounted to P82,000, and operatin
g costs and expenses totalled P64,000. On December 15, the entity declared a P3,
000 cash dividend, payable to shareholders on January 15, 2013. No additional ac
tivities affected owner's equity in 2013. The liabilities increased to P120,000
by December 31, 2013. What amount should be reported as total assets on December
31, 2013?
882,000
787,000
885,000
875,000
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 10
In the preparation of financial statements, it is necessary to present comparati
ve information for:
all amounts reported in the financial statements.
statement of cash flow items only.
statement of financial position items only.
statement of profit or loss and other comprehensive income items only.
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 11
Treasury stock should be reported as a(n)
reduction of stockholders' equity.
current asset.
investment.
other asset.
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 12
Under PAS 10, events after the balance sheet date are favorable and unfavorable
events thats occur between the
BS date and blind date
BS date and FS issue date
BS date and the date when FS are authorized for issue
The date when FS are authorized for issuance and FS issue date
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 13
Which of the following must be included as a line item in an entity's statement
of financial position?
Number of shares authorized
Investment property
Contingent liability
Shares in an entity owned by the entity
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 14
All of the following are considered nondistributable equity reserves, except
Foreign translation credit adjustment
Share premium reserve
Unappropriated retained earnings
Revaluation surplus
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 15
Which of the following best exemplifies a contingency that is reported in the no
tes to the financial statements?
Loss from a lawsuit settled out of court prior to the end of the fiscal year
Estimated loss from an ongoing lawsuit
Warranty claims on future sales
Losses from potential future lawsuits

2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)

Question 16
A generally accepted method of valuation is
1
trading securities at market value.
2
accounts receivable at net realizable value.
3
inventories at current cost.
3
1
2
1 and 2
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 17
The following are normally presented in a statement of financial position as cur
rent items:
accounts payable.
property, plant and equipment.
deferred tax assets.
deferred tax liabilities.
2.0 Financial Accounting and Reporting - Statement of Financial Position (Easy)
Question 18
Which of the following is not required to be disclosed in the statement of finan
cial position as a line item?
Provisions
Deferred tax liabilities
Accrued audit fees
Property, plant and equipment
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 19
Under PAS 1, assets in the statement of financial position are broadly classifie
d into
Tangible and intangible
Depreciable and non-depreciable
Monetary and non-monetary
Current and non-current
2.0 Financial Accounting and Reporting - Statement of Financial Position (Averag
e)
Question 20
Which of the following must be included in an entity's statement of financial po
sition?
Contingent liability
Investment property
Number of shares authorized
Shares in an entity owned by that entity