Chapter 11 Financial statements

Question 1

What are the two methods of calculating Depreciation?

Answer 1

The straight-line method:
most popular
same amount deducted each period

The declining balance method:
fixed percentage deducted each period

Question 2

What is a non-current asset?

Answer 2

They are assets that are not easily converted into cash and not expected to be in the next year.

PP&E
Goodwill
Intangible assets
Investments in associates

Question 3

What is the statement of financial position?

Answer 3

Shows a company’s financial position on a specific date in time

Assets
Equity
Liabilities

Question 4

What are the two methods of calculating value of Inventory?

Answer 4

The weighted average method

The first in first out method

Question 5

What is trade receivables?

Answer 5

Money owed to a company for goods and services

Question 6

What is trade payables?

Answer 6

Money owed to a company for raw materials and supplies.

Question 7

What is the statement of comprehensive income?

Answer 7

It shows how much a company earned in a year compared to how much it spent.

Question 8

What is the statement of changes in equity?

Answer 8

It shows changes to each component of equity.

Retained earnings
Total comprehensive income

Question 9

What is the statement of cash flows?

Answer 9

It shows a companies operating activities for one year.

Operating activities
Financing activities
Investing activities

Question 10

What are two important parts of a annual report?

Answer 10

Notes of the financial statement

Auditors report