SFP Flashcards
When there is much variability, the operating cycle is measured at
c. Twelve months
The operating cycle of an entity
a. Is the time between the acquisition of materials entering into a process and their realization in cash.
An entity shall classify an asset as current under all of the following conditions, except
The asset is cash or a cash equivalent that is restricted to settle a liability for more than twelve months after the reporting period.
An entity shall classify a liability as current under all of the following conditions, except
d. The entity has the right to defer settlement of the liability for at least twelve months after the reporting period.
Which obligations are classified as current even if they are due to be settled more than twelve months after the end of the reporting period?
a. Trade payables and accruals for employee and other operating costs
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.
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
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
a. Current assets before noncurrent assets, current liabilities before noncurrent liabilities, and equity after liabilities
A financial liability due within twelve months after the reporting period shall be classified as current
d. When it is financed on a long-term basis on or before the end of the reporting period.
When an entity breaches 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
c. Current if the lender has agreed after the reporting period and before the issuance of the statements not to demand payment as a consequence of the breach
In presenting a statement of financial position, an entity
d. Must make the current and non current presentation, except when a presentation based on liquidity provides information that is reliable and more relevant.
Assets to be sold, consumed or realized as part of the normal operating cycle are
a Current assets
Liabilities that an entity expects to settle within the normal operating cycle are classified as
c.Current liabilities
Cash restricted for the settlement of a liability due 18 months after the reporting period should be presented as
d. Noncurrent asset
Employment taxes due for settlement in 15 months’ time should be presented as
a. Current liability
In analyzing financial statements, which financial statement would a potential investor primarily use to assess liquidity and financial flexibility?
a.Statement of financial position
Which is an essential characteristic of an asset?
d. An asset is a present economic resource
Conceptually, asset valuation accounts are
b. Neither assets nor liabilities
working capital is
d. Current assets less current liabilities.
The basis for classifying assets as current or noncurrentis the period of time normally elapsed from the time the entity expends cash to the time it converts
d. Inventory back into cash or 12 months, whichever is longer
- The statement of financial position is useful for analyzing all of the following, except
c. profitability
- The amount of time that is expected to elapse until an asset is realized into cash is referred to as
c. liquidity
What is one criticism not normally aimed at a statement of financial position?
b. The extensive use of separate classifications
The statement of financial position
a. Omits many items that are of financial value
