Financial statement Basics

What is the difference between non-current assets and current assets?

answer choices

• NCA provide benefits that are used within one financial period but CA provide benefits that last beyond one financial period

• NCA provide benefits that last beyond one financial period but CA provide benefits that are used within one financial period

• NCA are easily converted to cash but CA are not easily converted to cash easily

• NCA are not loans but CA are loans

What is the equation to calculate Gross profit?

• (Revenue-Returns outwards)- (Opening inventory+purchases-Returns inwards + Carriage outwards)-Closing inventory

• (Revenue-Returns inwards)- (Opening inventory+purchases-Returns outwards + Carriage outwards) + Closing inventory

• (Revenue-Returns inwards)- (Opening inventory+purchases-Returns outwards - Carriage outwards) - Closing inventory

• (Revenue-Returns inwards)- (Opening inventory+purchases-Returns outwards + Carriage outwards) - Closing inventory

Which of the following are items of Expenses?

• salaries, utilities, inventory, discount allowed

• salaries, utilities, insurance, discount allowed

• salaries, utilities, interest received, discount allowed

• salaries, utilities, loan, discount allowed

Which of the following transactions does not create a current liability

• Obtain a new overdraft facility from ABC bank

• Purchasing professional services from Legal firm with 60 days payment terms

• Provisioning for gratuity based on information given by a valuation firm

• Taking legal action in relation to dispute with customer on long pending balance

Which of the following statements are true in relation to financial statements

• Accounting Equation

  Assets = Capital -Drawings- Liabilities

• Financial Statements are prepared to set performance measures in relation to future strategic decisions

• Retained earnings = Opening Retained profit + Profit made for the year- Dividend paid to share holders

• Income statement calculates Net profit or loss as at a particular date

Operating Activities in the Income Statement consist of the following:

• revenue

• cost of good sold

• operating expenses

• interest expense

• income taxes

The calculation for working capital is?

• capital minus assets

• current liabilities minus current assets

• assets minus liabilities

• current assets minus current liabilities

Given the following data: Purchases $54,533; Returns Outwards $2,341; Returns Inwards $1,766; Carriage Outwards $543; Carriage Inwards $4,324; Opening Stock $17,600 and Closing Stock $14,342. The value of Cost of Goods Sold is ___?

• $56,025

• $60,349

• $59,774

• $60,317

Which of the following statements is correct?

• Profit for the year equals the Net Assets

• The profit from the Profit or Loss Statement is transferred to the Owner's Equity section of the Statement of Financial Position

• Assets plus liabilities equals Net Assets, which is also equal to closing capital

• Closing capital = opening bank balance + profit - drawings

All of the following statements regarding the purpose of the Statement of Financial Position are correct except for?

• Shows assets, liabilities and owner's equity

• It is prepared at a point in time

• It can assist users, such as bank managers, with decisions

• Shows revenue, expenses and profit