WorksheetsIA3: Module 2
Total questions: 10
Worksheet time: 5mins
The statement of financial position is useful for analyzing all of the following, except
Solvency
Liquidity
Profitability
Financial flexibility
Which of the following statements is true concerning the presentation of statement of financial position?
I. An entity shall present current and noncurrent assets and liabilities as separate classification on the face of the statement of financial position.
II. All assets and liabilities are presented broadly in the order of liquidity when such presentation is faithfully represented and more relevant.
I only
II only
Both I and II
Neither I nor II
Assets to be sold, consumed, or realized as part of the normal operating cycle are
Current assets
Noncurrent assets
Classified as current or noncurrent in accordance with other criteria
Noncurrent investments
In which section of the statement of financial position should cash that is restricted for the settlement of a liability due 18 months after the reporting period be presented?
Current assets
Equity
Noncurrent liabilities
Noncurrent assets
In analyzing financial statements, which financial statement would a potential investor primarily use to assess liquidity and financial flexibility?
Statement of retained earnings
Income statement
Statement of changes in equity
Statement of financial position
Which of the following is an essential characteristic of an asset?
The claims to an asset's benefits are legally enforceable.
An asset is tangible.
An asset is obtained at a cost.
An asset provides future benefits.
An example of an item which is not an element of working capital is
Accrued interest on note receivable
Treasury share
Goods in share
Temporary investment
Working capital is
The group of assets which enables the entity to operate profitably
Total current assets
Total current assets minus total current liabilities
Capital invested in business
Accrued revenue would normally appear in the statement of financial position under
Noncurrent assets
Current liabilities
Noncurrent liabilities
Current assets
An operating cycle
Is twelve months or less in length
Is the average time required for an entity to collect accounts receivable
Is used to determine current assets when the operating cycle is longer than one year
Starts with inventory and ends with cash
