Question 1

The statement of financial position shows only the assets owned and controlled by the enterprise.

Accepted Answer

The statement of financial position shows only the assets owned and controlled by the enterprise, as well as the liabilities and equity of the enterprise.

Question 2

A company car is a liability.

Accepted Answer

A company car is considered an asset because it is a valuable resource owned by the company that has economic value and can be used to generate revenue or provide benefits to the business.

Question 3

Money owed to the bank is an asset of the business.

Accepted Answer

Money owed to the bank is considered a liability for the business, not an asset, because it represents an obligation to pay back the borrowed funds.

Question 4

The statement of financial position includes all the assets controlled by the business.

Accepted Answer

The statement of financial position, also known as the balance sheet, includes all the assets that are controlled by the business, including current assets, long-term assets, and property, plant, and equipment.

Question 5

The statement of financial position includes all the assets owned by the owner and the business.

Accepted Answer

The statement of financial position (balance sheet) reflects the assets, liabilities, and equity of the business entity itself, not the personal assets of the owner.

Question 6

The statement of financial position includes only the assets owned by the owner.

Accepted Answer

The statement of financial position, also known as balance sheet, includes all assets, liabilities, and equity of a business or entity, not just those owned by the owner.

Question 7

Which of the following best describes the liabilities of an enterprise?&#10;A) What the enterprise has been invoiced for&#10;B) Everything that the enterprise owes to anybody&#10;C) Everything that the enterprise owes to the owners&#10;D) Everything that the enterprise owes to anybody other than the owners

Accepted Answer

Liabilities refer to everything that the enterprise owes to anybody other than its owners. This includes debts, accounts payable, taxes owed, and other obligations. Choice A is incorrect as it only refers to what the enterprise has been invoiced for, which may not include all liabilities. Choice B is too broad as it includes liabilities to the owners, which are not considered liabilities in accounting terms. Choice C is incorrect as it only refers to liabilities owed to the owners, not to other parties.

Question 8

The reason owners' assets and business assets must be accounted for separately is because:&#10;A) They are different legal entities&#10;B) They are treated differently for tax purposes&#10;C) Enterprises are always set up as limited companies&#10;D) To do so conforms with the business entity principle

Accepted Answer

The separation of owners' assets and business assets is required by the business entity principle, which requires that business transactions be kept separate from personal transactions. This principle ensures that the financial position of the business is accurately reflected in the financial statements, and helps to prevent fraud and errors in accounting. While the other options listed may also be true to some extent, they do not fully explain why owners' assets and business assets must be accounted for separately.

Question 9

Which of the following are normally seen as tangible assets?&#10;A) Royalty agreements&#10;B) Intellectual property&#10;C) Patents and trademarks&#10;D) Office furniture&#10;E) None of the above

Accepted Answer

Tangible assets are physical assets that can be touched, seen and felt. Office furniture is a physical asset and considered as a tangible asset. Royalty agreements and intellectual property are intangible assets while patents and trademarks may be considered as either intangible or tangible depending on their physical form.

Question 10

Which of the following definitions best describes an asset?&#10;A) Something the business owns&#10;B) Something the business controls&#10;C) Something arising from a past transaction where the future benefits will come to the business&#10;D) Something the business owns which will provide future benefits

Accepted Answer

An asset is defined as something arising from a past transaction where the future benefits will come to the business, as it encompasses ownership, control, and future economic benefits.

Question 11

A business owner has provided you with the following information on their market trading business. Flat - leasehold £150000, inventory of goods £8000 bought for next market, van £2000, bank overdraft £700, stall £1 500. What is the owners' equity?

A) £161500
B) £11500
C) £160800
D) £10800
E) None of the above

Accepted Answer

The answer of A business owner has provided you with...

Question 12

The statement of financial position shows the assets and the liabilities of the enterprise.

Accepted Answer

The answer of The statement of financial position shows the...

Question 13

The statement of financial position accurately measures the wealth of an enterprise.

Accepted Answer

The answer of The statement of financial position accurately measures...

Question 14

The statement of financial position measures the change in wealth over a specified time period.

Accepted Answer

The answer of The statement of financial position measures the...

Question 15

The statement of financial position includes only the assets owned by the business.

Accepted Answer

The answer of The statement of financial position includes only...

Question 16

Which of the following is a non-current asset?&#10;A) One that is not up to date&#10;B) One that is held for the long term to support the operations of the enterprise&#10;C) One that is expected to be turned into cash in the next twelve months&#10;D) One that is part of the operating cycle&#10;E) One that is held primarily for the purpose of being traded

Accepted Answer

The answer of Which of the following is a non-current...

Deck 3: The Measurement of Wealth