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    Seminar 4 - Qs

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    Maman Abdurrahman
    The document provides a seminar on the statement of financial position and includes multiple choice questions about key concepts such as the purpose of depreciation, how non-current assets are valued, the definition of a liability, and equity items. It also includes practice questions that require calculating missing figures in statement of financial position examples and preparing draft statements of profit or loss and financial position from a trial balance for a sample company.

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    Seminar 4 - Qs

    Uploaded by

    Maman Abdurrahman
    14 views3 pages
    The document provides a seminar on the statement of financial position and includes multiple choice questions about key concepts such as the purpose of depreciation, how non-current assets are valued, the definition of a liability, and equity items. It also includes practice questions that require calculating missing figures in statement of financial position examples and preparing draft statements of profit or loss and financial position from a trial balance for a sample company.

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    Seminar 4- Qs

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    The document provides a seminar on the statement of financial position and includes multiple choice questions about key concepts such as the purpose of depreciation, how non-current assets are valued, the definition of a liability, and equity items. It also includes practice questions that require calculating missing figures in statement of financial position examples and preparing draft statements of profit or loss and financial position from a trial balance for a sample company.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    14 views3 pages

    Seminar 4 - Qs

    Uploaded by

    Maman Abdurrahman
    The document provides a seminar on the statement of financial position and includes multiple choice questions about key concepts such as the purpose of depreciation, how non-current assets are valued, the definition of a liability, and equity items. It also includes practice questions that require calculating missing figures in statement of financial position examples and preparing draft statements of profit or loss and financial position from a trial balance for a sample company.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    CORPORATE REPORTING BUSM113

    SEMINAR 4- The Statement of Financial Position I

    Multiple Choice Questions:

    1. What is the purpose of charging depreciation on non-current assets?


    a) to allocate the cost less the residual value of an asset over the accounting periods
    that benefit from its use
    b) to ensure that funds are available for the eventual replacement of the asset
    c) to reduce the cost of the asset in the balance sheet to its estimated market value
    d) to comply with the prudence concept
    e) to demonstrate that the company is a going concern

    2. The amount for non-current assets shown on the Statement of Financial Position is
    usually:
    a. the cost of replacing them
    b. the original cost less any depreciation
    c. the original cost ignoring depreciation
    d. the cost of keeping them maintained
    e. the residual value

    3. Which one of the following best describes the term liability?


    a. Resources to meet financial commitments as they fall due
    b. An excess of equity over current assets
    c. A present obligation of the entity arising from past events
    d. The residual interest in the assets of the enterprise after deducting all its liabilities
    e. Total assets less goodwill

    4. Which one of the following is not considered as an equity item?


    a) Currency translation reserve
    b) Non-controlling interests
    c) Own shares
    d) Retirement benefit obligations
    e) Retained earnings

    5. At the balance sheet date, a company has total assets of £200,000 and total
    liabilities of £155,000. What is the amount of shareholders’ equity?
    a) £200,000
    b) £155,000
    c) £355,000
    d) £45,000
    e) Zero

    1
    CORPORATE REPORTING BUSM113

    6. A company has total asset of £200,000 and liabilities of £170,000 at the beginning of
    the year. At the end of the year, the amount of assets has increased by 10% and the
    liabilities are £185,000. What is the total equity at the year end?
    a) £30,000
    b) £35,000
    c) £15,000
    d) £50,000
    e) £45,000

    Practice Questions:

    1. Insert the missing figures in the following examples, remembering that some items will be
    added and others will be subtracted.

    (a) (b) (c) (d) (e)


    £ £ £ £ £
    ASSETS
    Non-current assets 12,400 22,800 ? 42,200 ?
    Current assets ? 3,700 4,200 ? 11,800
    Total assets 15,800 ? 36,200 52,800 66,000

    EQUITY AND LIABILITIES


    Equity
    Capital ? 6,000 10,000 ? 10,000
    Retained earnings 4,800 13,300 ? 25,800 ?
    9,800 ? 32,700 40,800 47,700
    Liabilities
    Non-current liabilities ? 6,000 2,000 10,000 ?
    Current liabilities 1,000 1,200 ? 2,000 3,300
    6,000 ? 3,500 ? 18,300
    Total equity and
    liabilities ? ? ? ? ?

    1. Salma Ibrahim set up a company called Uplights Ltd and opened a lighting shop on 1
    January 2017. Her brother is studying for his accountancy exams and helps her by doing

    2
    CORPORATE REPORTING BUSM113

    the bookkeeping and managing the inventory. At the end of the first year of trading, he
    generates the following trial balance from the accounting records:

    Uplights Ltd
    Trial balance at 31 December 2017
    Debit Credit
    £ £
    Revenue 66,500
    Purchases 20,000
    Property, plant & equipment at cost 20,000
    Trade receivables 2,000
    Trade payables 8,400
    Cash 14,500
    Bank interest received 100
    Rent and rates 24,000
    Salaries 21,500
    Insurance 2,000
    Lighting & heating 500
    Telephone & Internet 400
    Advertising 100
    Share capital at 1 January 2017 30,000
    105,00 105,00
    0 0

    Additional information at 31 December 2017:


    Inventory was valued at £8,000.
    Estimated current tax payable is £2,000.
    The company classifies expenses by nature.

    Required:
    Prepare a draft statement of profit or loss for Uplights Ltd for the year ended 31
    December 2017 and a draft statement of financial position at that date. Show all your
    workings.

    Solution in Excel file.

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