B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1a. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION

Question 1

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

What are the 7 Statements:

Answer 1

1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION

2. INCOME STATEMENT/STATEMENT OF PROFIT OR LOSS

3. STATEMENT OF COMPREHENSIVE INCOME

4. STATEMENT OF CHANGES IN EQUITY

5. STATEMENT OF CASH FLOWS

6. NOTES TO FINANCIAL STATEMENTS

7. CONSOLIDATED FINANCIAL STATEMENTS

Question 2

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION

What does it report?

Main Premise?

Answer 2

The balance sheet reports economic resources and obligations as of a specific date.

The main premise of the balance sheet is the accounting equation:
Assets = Liabilities + Shareholders’ Equity.

Question 3

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

The order of items on a balance sheet is: (5)

Answer 3

● Current assets

● Long term assets

● Short term liabilities

● Long term liabilities

● Shareholders’ equity

Question 4

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

Assets are presented in order of liquidity (cash at the top).

Current assets are assets expected to be used up within one year

Examples of current assets: (5)

Answer 4

Examples of current assets:

● Cash

● Inventory

● Prepaid expenses

● Accounts receivable

● Short term investments

Question 5

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

Examples of long-term assets: (4)

Answer 5

● Property, plant, and equipment

● Investments

● Goodwill

● Patents

Question 6

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

Current liabilities are liabilities expected to be resolved within one year.

They are presented in order of maturity, usually starting with accounts payable.

Examples of short-term liabilities: (5)

Answer 6

● Accounts payable

● Short term debt

● Bonds or dividends payable within the next year

● Accrued expenses

● Deferred revenue

Question 7

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

Examples of long-term liabilities: (3)

Answer 7

● Notes payable

● Capital lease obligations

● Bonds payable (noncurrent)

Question 8

_{^{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}}

Income Statement vs Balance Sheet

Answer 8

In comparison to the income statement, which shows a period of time - such as January 1 to December 31 -

the balance sheet is just showing what a company has as of a certain date, usually December 31.

Question 9

_{B. GENERAL PURPOSE FINANCIAL STATEMENTS - 1. BALANCE SHEET/STATEMENT OF FINANCIAL POSITION}

Balance Sheet: Other things to know

Answer 9

Goods that are out on consignment should be included in the company’s inventory at their cost.

Money collected in advance for a product will go in the liabilities section as deferred revenue. The transaction has created a “liability” to provide goods or services to the customer who has now paid in advance.

Gift cards/gift certificates: They are deferred revenue until they are either used and become revenue, or if they expire, they become revenue when they expire.