Font size
WorksheetsAdjusted Financial Statements
Total questions: 73
Worksheet time: 45mins
What is the purpose of preparing the Statement of Financial Performance?
inform stakeholders the profitability of business
inform stakeholders the income and expenses of business
inform stakeholders the nature of business
inform stakeholders the size of business
What is the purpose of the Statement of Financial Position?
inform stakeholders the assets and liabilities of business
provides information on how resources are obtained and used and the claim by the owner on the net assets of the business at a point in time.
provides information on how resources are obtained and used in the business at a point in time.
inform stakeholders the owner's equity of business
What is the equation to calculate Gross profit?
Sales revenue + Income - Expenses
(Sales revenue - Sales returns) - Cost of sales
(Sales revenue + Cost of sales) - Sales returns
(Sales revenue + Sales returns) - Cost of sales
What is the meaning of Gross profit?
profit from providing services to customers
profit from providing money to customers
profit from providing goods to customers
profit from providing loans to customers
What is the meaning of Profit for the year?
is the overall final money earned from operating the business
is the overall final income earned from operating the business
is the overall final position earned from operating the business
is the overall final profit earned from operating the business
What are the steps to calculate Net Profit for the year?
Gross profit + Income - Capital
Gross profit + Income + Expenses
Gross profit + Income - Expenses
Gross profit - Income - Expenses
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
What is the difference between non-current assets and current assets?
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
Calculate the amount for current liabilities.
Fixtures $1 000 Loan $10 000 Trade payables $6 000
Discount received $400 Bank overdraft $700
$11 000
$16 000
$16 700
$6 700
Which information is not included in the work sheet heading?
The period covered
Name of the accounting form
Business name
Accountant's name
Revenue and expense accounts are extended to
retained earning statement
balance sheet section
income statement
accounts payable section
How does net loss affect owner's equity?
increases
decreases
no change
indirectly
When revenue > expenses, then there is a
Net Loss
mistake in the math
Net Income
transposition error
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
All of the following are included in the Statement of Financial Position, except for?
Profit
Vehicle
Vehicle expenses
Capital
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/
Which of the statements about profit is incorrect?
Profit = Revenue - Expenses
Profit includes revenue and other income
A loss occurs if expenses are greater than revenues
Profit at the end of the year is added to the business's bank balance
All of the following are revenues, except for?
Accounts receivable
Dividends received
Rent Revenue
Commission Revenue
All of the following are assets, except for?
Goodwill
Patents
Loans to other businesses
Loans from other businesses
The financial statement that reports the assets, liabilities, and shareholders equity at a specific date is the:
Balance sheet
Income Statement
Trial Balance
General Ledger
Cash at bank is an example of a
Current asset
Non-current asset
Equity
How to find Net Profit/(Net Loss)?
Opening Capital + Drawings
Closing Capital - Opening Capital + Drawings
Closing Capital - Drawings
Opening - Drawings - Closing Capital
A balance sheet shows:
how much gross profit it has
how much net profit it has
how much a business owns and owes
Identify the three sections of a Balance Sheet
Revenue
Assets
Equity
Expenses
Liabilities
Calculate the amount for current liabilities.
Land $1 000
5 year loan $10 000
Trade payables $6 000
Bank overdraft $700
$11 000
$16 000
$16 700
$6 700
The costs incurred in the day-to-day operations of an organization.
Bookeeper
Profit
Revenue
Expenses
The total amount of money received from the sale of goods or services.
Bookeeper
Profit
Revenue
Expenses
The difference between what it costs to make and sell a product and what a customer pays for it.
Bookeeper
Profit
Revenue
Expenses
A “snapshot” of an organization’s financial position at a given time.
Statement of Financial Position
Statement of the Comprehensive Income
Statements of Cash Flow
Cost of Goods Sold
The amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies.
Statement of Financial Position
Statement of the Comprehensive Income
Statements of Cash Flow
Cost of Goods Sold
Money owed to a company by its clients or customers who have promised to pay for products at a later date.
Current Assets
Account Receivable
Current Liabilities
Account Payable
The amount a company owes to suppliers for goods and services purchased with credit.
Current Assets
Account Receivable
Current Liabilities
Account Payable
A firm’s financial obligations to short-term creditors, which must be repaid within one year.
Current Assets
Current Liabilities
Accounts Receivable
Accounts Payable
What is difference between accrued expenses and prepaid expenses? (tick 2 boxes)
accrued expenses = not yet paid for the current year
prepaid expenses = paid in advance for the next accounting period
accrued expenses = paid for the current year
prepaid expenses = not paid for next accounting year
accrued expenses = posted as current asset
prepaid expenses = posted as current liability
accrued expenses = posted as current liability
prepaid expenses = posted as current asset
What is the difference between income receivable and income received in advance? (tick 2 boxes)
income receivable = posted as current asset
income received in advance = posted as current liability
income receivable = not yet received for current year
income received in advance = received in advance for next year
income receivable = received for current year
income received in advance = not received in advance for next year
income receivable = posted as current liability
income received in advance = posted as current asset
What are 2 accounting concepts applied to prepayments and accruals?
prudence and accrual concepts
prudence and matching concepts
accounting entity and going concern concepts
matching and accrual concepts
Additional information at year end:
accrued insurance $300 prepaid rent $700
Identify the correct entries in Income statement .
add $300 accrued insurance minus $700 prepaid rent
add $300 accrued insurance add $700 prepaid rent
minus $300 accrued insurance minus $700 prepaid rent
minus $300 accrued insurance add $700 prepaid rent
How do we close the Insurance(expenses) account at year end?
close to Trading portion
close to Profit and loss portion
close to Income statement portion
close to Balance sheet portion
The accrual concept states that _____ during a financial period, regardless of _______.
income and expenses are recorded when they are earned and incurred respectively, when collection is received and
payment is made.
assets and liabilities are recorded , when they occurred.
An example is utilities used in December 2018 but which has not been paid in December 2018 must be recorded in the Income Statement for the period ended 2018. This is an application of ___ concept.
Accrual
Matching
Accounting period
Objectivity
Prepaid rent is recorded as ____ in the Balance Sheet.
Current assets
Current liabilities
Commission income received in advance is recorded as ____ in the Balance Sheet.
Current assets
Current liabilities
Accrued salaries is recorded as ____ in the Balance Sheet.
Current assets
Current liabilities
A decrease in the provision for doubtful debts would result in ______________.
a reduction in net profit (profit for the year)
an increase in net profit (profit for the year)
a reduction in gross profit
an increase in gross profit
Why do we need to substract the provision for doubtful debts over the trade receivables/ debtors balance in a statement of financial position/ balance sheet?
because that is the formula
because the debtors were found to be bad
because the debtors amount is too high
because we apply the concept of prudence
An increase in the provision for doubtful debts would result in _______________.
an increase in revenue
an increase in expenses
a decrease in revenue
a decrease in expenses
Duran Ltd estimates the balance of its Provision for Doubtful Debts should be $4000 on 30 June. The current balance of the provision account is $3000. The correct General journal entry is:
Dr. Income statement $4000
CR. Provision for Doubtful Debts $4000
Dr. Income statement $1000
CR. Provision for Doubtful Debts $1000
Dr. Provision for Doubtful Debts $1000
CR. Income statement $1000
Alternative term for irrecoverable debts
Bad debts
depreciation
Purpose of preparing a income statement is to
monitor liquidity position of the business.
measure the profitability of the business
The business provides for doubtful debts each year at 2% of the trade receivables balance at the end of the financial year. The balance of the trade receivables is $45,000. What is the amount of Provision for Doubtful Debts?
$900
$9000
$450
$90
Depreciation arises because of -
Obsolescence
Constant use of assets
expiry of time
All of these
Factors taken into consideration for providing depreciation are -
Total cost of assets
Estimated useful life of the asset
Estimated scrap value of the asset
All of the above
Main objective of charging depreciation is-
Ascertaining true profit or loss
Ascertaining true financial position
Ascertaining true cost of production
All of the above
Gross profit is calculated by...
Revenue - Total Costs
Revenue + Variable Costs
Revenue - Cost of Sales
Revenue - Fixed Costs
Cost of sales is calculated by...
Opening stock + purchases - closing stock
Opening stock + purchases + closing stock
Adding up all of the stock bought during the year
Opening stock - closing stock
Revenue = 1000
Cost of Goods Sold = 200
Expenses = 300
Gross Profit = ?
800
500
700
300
Net Profit = 500
Revenue = 2000
Expenses = 1000
Cost of Goods Sold = ?
1500
1000
3000
500
Sales $88 000 Cost of sales $42 000 means GP is
44 000
48 000
46 000
What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses?
Asset
Liability
Owner's Equity
Expense
Also known as the "Long-term Assets"
Non-current Assets
Current Assets
Non-current liabilities
Current Liabilities
Refers to the financial obligations of a company that are not expected to be settled within one year.
Non-current Assets
Current Assets
Non-Current Liabilities
Current Liabilities
