Financial Statements

Which of the following is not a component of complete set of financial statements?

• Statement of financial position

• Notes, comprising a summary of significant policies and another explanatory

• Statement of changes in equity

• Addition statements such as environmental reports and value-added statements

Financial reporting standards continuously change primarily in response to

• users’ needs.

• government regulations.

• political influence.

• changes in social environments.

Every transaction will affect how many accounts?

• Only one

• Two or more

• Only two

• At least three

Which basic feature is applied when immaterial amounts of similar nature and function are grouped or

condensed as one line item in the financial statements?

• aggregation

• offsetting

• accounting policy

• comparability

Which of the following is an example of offsetting?

• the allowance for doubtful accounts is deducted from accounts receivable.

• he total liabilities are deducted from total assets to at net assets.

• the accumulated depreciation is deducted from property, plant and equipment.

• gains and losses from disposal of noncurrent assets are reported by deducting the proceeds from

  the carrying amount of the assets and the related selling cost.

Which feature is applied when the effects of transaction and other events are recognized when they occur and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate?

• Going concern

• Time period

• Entity concept

• Accrual basis

The statement of financial position is useful for analyzing all of the following except

• liquidity

• profitability

• solvency

• financial flexibility

Investment securities held for the purpose of retiring long-term bonds payable should be classified as

• current assets

• deferred liability

• non-current assets

• intangible assets

Which obligations are classified as current liabilities even if they are due to be settled after more than

12 months after the end of the reporting period?

• Payable arising from purchase of goods and consumption of services relating to entity’s conduct

  of primary operations.

• Bank overdrafts

• Long term financial liabilities

• Cash dividends payable

The analysis of the statement of financial position is useful in assessing the liquidity, which is the ability to

• 
  satisfy short-term obligations.

• maintain past levels of preferred and ordinary dividends.

• maintain profitable operations.

• survive major economic downturn.