Understanding the Statement of Financial Position

What is the primary purpose of a statement of financial position?

• To calculate the company's tax liability

• To provide a snapshot of a company's financial health at a specific point in time

• To forecast future profits

• To list all company expenses

Which of the following is considered a non-current asset?

• Trade receivables

• Inventory

• Bank loan

• Tangible assets

How is net book value calculated for non-current assets?

• Cost minus trade payables

• Cost minus depreciation and amortisation

• Cost plus bank overdraft

• Cost plus prepayments

Which of the following is a current liability?

• Bank loan

• Mortgage

• Trade payables

• Intangible assets

What does net current assets/liabilities represent?

• Total equity minus non-current liabilities

• Current assets minus current liabilities

• Non-current assets minus current liabilities

• Total assets minus total liabilities

Which of the following is a non-current liability?

• Bank overdraft

• Accruals

• Bank loan

• Prepayments

What is included in total equity?

• Only opening capital

• Opening capital, transfer of profit or loss, drawings, closing capital

• Only closing capital

• Only drawings

How is straight-line depreciation calculated?

• Cost minus depreciation to date

• Cost multiplied by a percentage

• Cost divided by the number of years

• Cost plus depreciation to date

What adjustment is made for prepayments in a financial statement?

• Added to current liabilities

• Subtracted from current assets

• Added to current assets

• Subtracted from non-current liabilities

What is the purpose of adjusting for accruals in financial statements?

• To overstate expenses

• To match expenses with the period they are incurred

• To reduce liabilities

• To increase assets