Balance Sheets

A balance sheet is . . .

• a ledger account, proving that the accounting records 'balance'.

• a statement showing the market value of a firm.

• a listing, in a particular format, of the balances brought down remaining in the double-entry accounts after the profit and loss account has been prepared.

• a statement showing the market value of assets and liabilities.

The correct heading for the balance sheet of J. Burton at the end of December 2000 is 'Balance Sheet of Burton . . .

• for the period ended 31 December 2000'.

• for the year ended 31 December 2000 '.

• as at 31 December 2000'.

• as at December 2000'.

The balance sheet of a firm as at any particular date is intended to show . . .

• the nature of the firm's business at that date.

• the identity of the firm's owners at that date.

• the financial position of the firm at that date.

• the physical size of the firm at that date.

A firm's fixed assets are .. .

• A all of its assets which have a long life and a substantial value.

• all of its assets which have an expected useful economic life of more than one year and were purchased in order to be used in the firm on a continuing basis rather than solely for resale.

• all assets which have a physical substance.

• None of the above.

A firm's current assets are . . .

• A amounts which it is due to receive within one year of its balance sheet date.

• its cash and positive bank balances and other assets likely to be converted into cash or bank balances within one year of its balance sheet date as a result of its normal trading operations.

• the total of its debtors, its stocks and its cash and bank balances.

• amounts which it is due to receive as a result of credit sales made by it within the last year.

When preparing a firm's balance sheet, which of the following should be classified as a long-term liability ?

• An amount payable by the firm within six months of the date of the balance sheet.

• An amount payable by the firm within nine months of the date of the balance sheet.

• An amount payable by the finn after more than one year from the balance sheet date.

• None of the above.

A firm's current liabilities, at its balance sheet date, are . . .

• its bank overdrafts, if any, and any portions of its term loans which it is due to repay within one year of that date.

• all liabilities which it is due to discharge within one year of that date.

• any trade creditors which it is due to pay within three months of that date.

• all liabilities which it incurred in the six months prior to that date.

Categorise the three items below as either 'Current liabilities' or 'Long-term liabilities' of a firm as at 31 December 2000 and choose the option A, B, C or D which correctly categorises all three items.

• Item 1 - Current

  Item 2 - Current

  Item 3 - Long-term

• Item 1 - Current

  Item 2 - Long-term

  Item 3 - Current

• Item 1 - Long-term Current

  Item 2 - Current

  Item 3 - Long-term

• Item 1 - Long-term

  Item 2 - Current

  Item 3 - Current

The following information relates to a sole trader. The sole trader's capital at 30 June was:

• £5,100

• £5,300

• £5,500

• £5,600

Which of the following summarised balance sheets is correct ?

• Firm I

• Firm 2

• Firm 3

• None of the above.