1914 TOA – STATEMENT OF FINANCIAL POSITION PDF

Preview

Summary

HTU CPA In-House Review (HCIR) Financial Accounting and ReportingTOA – STATEMENT OF FINANCIAL POSITION April G.1. Statement of financial position is useful for all of the following, except a. To compute rate of return b. To analyse cash inflows and outflows for the period c. To evaluate capital stru...

Description

HTU CPA In-House Review (HCIR) Financial Accounting and Reporting TOA – STATEMENT OF FINANCIAL POSITION

April G.

1. Statement of financial position is useful for all of the following, except a. To compute rate of return b. To analyse cash inflows and outflows for the period c. To evaluate capital structure d. To assess future cash flows 2. The statement of financial position provides a basis for all of the following, except a. Computing rate of return b. Evaluating capital structure c. Determining increase in cash due to operations d. Assessing liquidity and financial flexibility 3. Which criticism is not normally aimed at a statement of financial position? a. Failure to reflect current value information b. The extensive use of separate classification c. An extensive use of estimate d. Failure to include items of financial value 4. The statement of financial position a. Omits many items that are of financial value b. Makes very limited use of judgment and estimate c. Uses fair value for most assets and liabilities d. All of the choices are correct 5. Which is a limitation of the statement of financial position? a. Many items that are of financial value are omitted b. Judgment and estimate are used. c. Current fair value is not reported d. All of these are a limitation of the statement of financial position. 6. When there is much variability, the opening cycle is measured at a. The mean value b. The median value c. Twelve months d. Three years 7. The operating cycle of an entity a. Is the time between the acquisition of materials entering into process and their realization in cash. b. Is the period of time normally elapsed in converting trade receivable back into cash. c. Is period of one year d. Refers to the seasonal variation experienced by entities 8. An entity shall classify an asset as current under all of the following conditions, except a. The entity excepts to realize the assets or intends to sell or consume it within the entity ‘s normal operating cycle.

1914

Page 1 of 7

b. The entity holds the asset for the purpose of trading c. The entity excepts to realize the assets within twelve months after the reporting period d. The assets is cash or a cash equivalent that is restricted to settle a liability for more than twelve months after the reporting period 9. An entity shall classify a liability as current when under all of the following condition, except a. The entity excepts to settle the liability within the entity’s normal operating cycle b. The entity’s holds the liability primarily for the purpose of trading. c. The liability is due to be settled within twelve months after the reporting period d. The entity has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. 10.Which obligations are classified as current even if these are due to be settled after more than twelve months from the end of the reporting period? a. Trade payables and accruals for employee and other operating cost b. Current portion of interest-bearing liabilities c. Bank overdrafts d. Dividends payable 11. Current and noncurrent presentation of assets and liabilities provides useful information when the entity a. Supplies goods or services within a clearly identifiable operating cycle b. Is a financial institution c. Is a public utility d. Is a nonprofit organization 12.A presentation of assets and liabilities in increasing or decreasing order of liquidity provides information that is reliable and more relevant than a current and noncurrent presentation for a. Financial institution b. Public utility c. Manufacturing entity d. Service provider 13.In the Philippines, the common practice is to present in the statement of financial position a. Current assets before noncurrent assets, current liabilities before noncurrent liabilities and equity after liabilities b. Noncurrent assets before current assets , noncurrent liabilities before current liabilities and equity after liabilities c. Current assets before noncurrent assets , noncurrent liabilities before current liabilities and equity after liabilities d. Noncurrent assets before current assets, current liabilities before noncurrent liabilities and equity after liabilities. 14.A financial liability due within twelve months after the reporting period shall be classified as noncurrent a. When it is refinanced on a long term-term basis before the issue of financial statements

1914

Page 2 of 7

b. When the entity has no discretion to refinance for at least twelve months. c. When it is refinanced on a long term-basis after the end of reporting period d. When it is refinanced on a long term basis on or before the end of reporting period. 15.When an entity breaches under a long term loan agreement on or before the end of the reporting period with the effect that the liability becomes payable on demand, the liability is classified as a. Current under all circumstances b. Noncurrent under all circumstances c. Current if the lender has agreed after the reporting period and before the issuance of the statement not to demand payment as a consequences of the breach d. Noncurrent if the lender agreed after the reporting period to provide a grace period for at least twelve months after the reporting period. 16.In presenting a statement of financial position, an entity a. Must make the current and noncurrent presentation. b. Must present assets and liabilities in order of liquidity. c. Must choose either the current and noncurrent or the liquidity presentation, meaning free choice of presentation. d. Must make the current and noncurrent presentation, except when a presentation based on liquidity provides information that is reliable and more relevant. 17.Assets to be sold, consumed or realized as part of the normal operating cycle are a. Current assets b. Noncurrent assets c. Classified as current or noncurrent in accordance with other criteria d. Noncurrent investment 18.Liabilities that an entity expects to settle within the normal operating cycle are classified a. Noncurrent liabilities b. Current or noncurrent liabilities in accordance with other criteria c. Current liabilities d. Equity 19.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? a. Current assets b. Equity c. Noncurrent liabilities d. Noncurrent assets 20.In which section of the statement of financial position should employment taxes that are due for settlement in 15 months’ time be presented? a. Current liabilities b. Current assets c. Noncurrent liabilities d. Noncurrent assets

1914

Page 3 of 7

21.An entity has a loan due for repayment in six months time but the entity has the option to refinance for repayment two year later. The entity plans to refinance this loan. In which section of the statement of financial position should this loan be presented? a. Current liabilities b. Current assets c. Noncurrent liabilities d. Noncurrent assets 22.Which of the following must be included on the face of the statement of financial position? a. Investment property b. Number of shares authorized c. Contingent asset d. Share in an entity owned by that entity 23.Which of the following is not required to be presented as minimum information on the face of the statement of financial position? a. Investment property b. Investment accounted under the equity method c. Biological asset d. Contingent liability 24.Which of the following must be included as a line item in the statement of financial position? a. Contingent assets b. Property, plant and equipment analyzed by class c. Share capital and reserves analyzes by class d. Deferred tax 25.Which statement about the statement of financial position is not true? a. Biological assets should be reported in the statement of financial position. b. The number of shares authorized for issue should be reported in the statement of financial position or the statement of changes in equity or in the notes. c. Provisions should be recognized in the statement of financial position. d. A revaluation surplus on a noncurrent asset in the current year should be recognized in the income statement. 26.In analysing financial statements, which financial statement would a potential investor primarily use to assess liquidity and financial flexibility? a. Statement of financial position b. Income statement c. Statement of retained earnings d. Statement of cash flows 27.Which is an essential characteristic of an asset? a. The claims to the benefits are legally enforceable b. An asset is tangible c. An asset is obtained at a cost d. An asset provides future benefits

1914

Page 4 of 7...