ACCT 3310 Ch.5

Why is the SFP classified?

• To assist with analysis and ratio calculations.

• To match categories on the cash flow statement.

• To comply with securities regulation.

• To address the economic entity principle.

The SFP should allow users to

• assess a companies financial structure

• evaluate liquidity and solvency

• calculate important ratios (e.g. current ratio).

• all of the above are correct.

SFP classifications and titles are strictly defined by IFRS.

• True

• False

All of the following are typical asset classifications except:

• Goodwill

• Short term Investments

• Property Plant and Equipment

• Intangibles

Current assets and liabilities are normally realized/due within one year.

• True

• False

Current assets are generally listed

• in alphabetic order.

• from largest to smallest.

• in order of liquidity.

• by function or nature.

Some short term investments can be categorized as cash equivalents.

• True

• False

Short term investments are valued at:

• cost

• amortized cost

• fair value

• can be any of the above

Accounts Receivable are

• valued at net realizable value

• ordinary trade receivables

• disclosed separately if owed by related parties or unusual

• all of the above

Inventories are not

• held for sale

• materials used in production

• in the process of production

• used in the day to day operations to generate income