The profit and loss account (income statement) and balance sheet (statement of financial position) are compiled by a limited liability company at the end of its accounting period.

• TRUE

• FALSE

Suppliers who a business owes money to are known as trade debtors.

• TRUE

• FALSE

Answer explanation

Trade Creditors

Directors are ultimately responsible for ensuring that the final accounts produced by a limited liability company are accurate and reveal the truth.

• TRUE

• FALSE

The balance of current assets minus current liabilities is known as working capital.

• TRUE

• FALSE

In a balance sheet, the two items which must balance are net assets and current liabilities.

• TRUE

• FALSE

Answer explanation

Net Assets and Equity

A bank loan due to be repaid in more than one year's time an example of a long-term liability.

• TRUE

• FALSE

A profit and loss account records the revenue and expenses for a business over a financial year.

• TRUE

• FALSE

Dividends payable, company tax, and trade creditors are all examples of current liabilities.

• TRUE

• FALSE

Gross profit is calculated by subtracting expenses from sales revenue.

• TRUE

• FALSE

Answer explanation

Sales less Cost of sales

Patents, copyrights, and trademarks are examples of intangible fixed assets.

• TRUE

• FALSE