Kế CFAB - Chap 2

The capital of a sole trader would change as a result of:

• A credit customer paying by cheque

• Raw materials being purchased on credit

• Non-current assets being purchased on credit

• Personal petrol being paid for out of the business’ petty cash

A business can make a profit and yet have a decreased bank balance. Which of the following might cause this to happen?

 

• The sale of non-current assets at a loss

• The charging of depreciation in the statement of profit or loss

• The lengthening of the period of credit given to customers

• The lengthening of the period of credit taken fromsuppliers

The purpose of the financial statements that lists an entity’s total assets and total capital/liabilities is to show:

 

• The financial performance of the entity over a period of time

•   The amount of the entity could be sold for in liquidation

• The amount the entity could be sold for as a going concern

• The financial position of the entity at a particular moment in time

A sole trader is £5,000 overdrawn at her bank and receives £1,000 from a credit customer in respect of its account.

 

Which element(s) of the accounting equation will change due to this transaction?

 

• Assets and liabilities

• Liabilities only

• Assets only

• Assets, liabilities and capital

A sole trader purchases goods on credit.

 

Which element(s) of the accounting equation will change due to this transaction?

 

• Assets and liabilities

• Assets and capital

• Capital and liabilities

• Assets only

A sole trader borrows £10,000 from a bank.

 

Which element(s) of the accounting equation will change due to this transaction?

 

• Assets and liabilities

• Assets and capital

• Capital and liabilities

• Assets only

A sole trader sells goods for cash for £500 which had cost £300.

Which element(s) of the accounting equation will change due to this transaction?

 

• Assets and liabilities

•   Assets and capital

• Capital and liabilities

• Assets only

A sole trader increases the business’s number of motor vehicles by adding his own car to its fleet.

 

Which element(s) of the accounting equation will change due to this transaction?

 

•   Assets only

• Capital only

• Assets and capital

• Assets and liabilities

Which three of the following are elements of financial statements as identified by the IASB’s Conceptual Framework?

 

• Income

• Expenses

•   Profits

• Losses

• Equity