19. The current assets section of the statement of financial position should include * b. patents. a. machinery. d. inventory c. goodwill.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
19. The current assets section of the
b. patents.
a. machinery.
d. inventory
c.
20. Equity or debt securities held to finance future construction of additional plants should be classified on a balance sheet as *
c. intangible assets.
a. current assets.
d. long-term investments
b. property, plant, and equipment.
21. In a statement of
d. selling activities
c. investing activities.
a. operating activities.
b. financing activities.
22. The statement of financial position *
d. All of the choices are correct regarding the statement of financial position.
c. Uses fair value for most assets and liabilities.
b. Makes very limited use of judgments and estimates.
a. Omits many items that are of financial value.
23. The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in *
c. tangible fixed assets back into cash, or 12 months, whichever is longer.
a. inventory back into cash, or 12 months, whichever is shorter.
d. inventory back into cash, or 12 months, whichever is longer.
b. receivables back into cash, or 12 months, whichever is longer.
24. Statement of financial position information is useful for all of the following except *
b. evaluating a company's liquidity
a. assessing a company's risk
c. evaluating a company's financial flexibility
d. determining
25. A limitation of the balance sheet that is not also a limitation of the income statement is *
c. the numbers are affected by the accounting methods employed
a. the use of judgments and estimates
d. valuation of items at historical cost
b. omitted items
26.Each of the following are an intangible asset except *
a. copyrights.
b. goodwill.
c. plant expansion fund.
d. trademarks.
27. Which item below is not a current liability? *
b. Share dividends distributable
c. The currently maturing portion of long-term debt
d. Trade accounts payable
a. Unearned revenue
28. Non-current liabilities include *
d. All of these choices are correct.
a. obligations not expected to be liquidated within the next year or operating cycle.
c.
b. obligations payable at some date beyond the next year or operating cycle.
29. Which of the following should be excluded from long-term liabilities? *
b. Most pension obligations
d. None of these choices are correct.
c. Non-current liabilities that mature within the operating cycle and will be paid from a sinking fund
a. Obligations payable at some date beyond the operating cycle
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