Answered: Select one: a. A highly lucrative…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Recognition is the process of including within the financial statements items which meet the definition of an element according to the IASB’s Conceptual Framework for Financial Reporting. Which of the following items should be recognised as an asset in the statement of financial position of a company?

Select one:

a. A highly lucrative contract signed during the year which is due to commence shortly after the year end

b. A government grant relating to the purchase of an item of plant several years ago which has a remaining life of four years

c. A skilled and efficient workforce which has been very expensive to train. Some of these staff are still in the employment of the company

d. A receivable from a customer which has been sold (factored) to a finance company. The finance company has full recourse to the company for any losses

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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