Understanding Financial Statements

Which of the following is most likely to be a non-current asset?

• Tax refundable

• Plant and Equipment

• Cash and Cash Equivalents

• Share Capital

Answer explanation

Plant and Equipment (e.g. machines, office furniture) typically last more than a year.

What is the correct balance sheet formula?

• Assets = Liabilities x Equity

• Assets = Liabilities - Equity

• Assets + Liabilities = Equity

• Assets = Liabilities + Equity

Which of the following is not one of the key financial statements?

• Balance Sheet

• Income Statement

• Director's Statement

• Cash Flow Statement

Which of the following is NOT an asset?

• Trade Payables

• Trade Receivables

• Plant and Equipment

• Cash and Cash Equivalents

Answer explanation

Trade Payables are obligations of a company to pay suppliers of goods and services. It is a LIABILITY.

Which of the following is a liability?

• Accrued Revenue

• Retained Earnings

• Bank Borrowings

• Investment in Subsidiaries

In which example below would the income NOT be considered revenue?

• A delivery company sells a van from its fleet for S$30,000

• A second-hand car dealer sells a van for S$50,000

• A petrol company sells 40 litres of petrol for S$80

• An electronics store sells a laptop for $2,000

Which of these transactions would generate operating cash flows?

• A delivery company sells one of its delivery vehicles

• A construction company obtains a bank loan

• A car dealer sells its office car

• A furniture store sells a table

Answer explanation

The furniture store sold a table, which would what we expect is part of its primary operations, hence it generates operating cash flows.