Financial Account preperation

At January 1st, 2021, a business had prepaid insurance of $700. In July it paid an invoice for $9,300 and on December 31st, 2021, it transferred an expense of $9,000 to the income statement. The value and classification for insurance in the Statement of Financial Position at December, 2021, is:

• $400 Current Liability

• $400 Current Asset

• $1,000 Current Asset

• $1,000 Current Liability

What type of bond is issued at a discount, but no interest is paid on the bond?

• Bond Yields

• Zero Coupon Bonds

• Deep Discount Bonds

• Convertible Bonds

Which of the following is NOT a benefit of debt financing?

• There are no interest payments in the first year

• It is less expensive than issuing shares

• It is readily available especially if the company has little or no existing debt finance

• It provides tax relief on interest payment

The accruals concept state that:

• Current assets are valued at market prices

• Cash received is matched against cash paid in the period they occur

• Non-current assets are valued at historical cost

• Revenues are matched against expenses in the period they occur

A business has accounts receivable of $50,000 at the end of its current year and maintains an allowance for doubtful debts of 5% of it's accounts receivables. The allowance for doubts debts at the start of the year was $2,000. What will the ledger entries for the current year be, with the respect to the allowance

• Debit profit and loss $500 and Credit allowance for doubtful debts $500

• Debit allowance for doubtful debts $2,500 and Credit profit and loss $2,500

• Debit profit and loss $2,500 and Credit allowance for doubtful debts $2,500

• Debit the allowance for doubtful debts $500 and Credit the profit and loss $500

What is the meaning of debt financing?

• Debt financing means a strategy for raising capital by offering companies

• None of the items listed

• All of the items listed

• Debit financing means a strategy for raising capital by debentures or bonds of companies

The Allowance for doubtful debts is governed by which concept?

• The Full Disclosure Concept

• The Business Entity Concept

• The Prudence Concept

• The Historical Cost Concept

At 30 June 2022 a company's Allowance for Doubtful Debts was $39,000. At 30 June 2023 Accounts Receivables totaled $517,000. It was decided to write off debts totaling $37,000 and to adjust the Allowance for Doubtful Debts to the equivalent of 5% of existing Accounts Receivables. What figure should appear as allowance for receivables (doubtful debts) in the Statement of Financial Position as at 30 June 2023?

• $23,850

• $24,000

• $22,000

• $61,000

The entry to show an increase in the Allowance for doubtful debts is:

• Debit the allowance for doubtful debts

• Credit the accounts receivable account.

• Debit the accounts receivable account

• Credit the allowance for doubtful debts account

Which of the following is NOT an option for a sole

• A line of credit

• Issuing share to the general public

• A bank overdraft

• A credit card