CXC Principles of Accounts: Financial Statements 2

Question 1

The Balance Sheet shows:

Accepted Answer

Assets, liabilities, and owner's equity at a specific date

Answer

Revenue and expenses earned during an accounting period

Answer

Cash inflows and outflows over a period

Answer

Sales and purchase transactions only

Question 2

The fundamental accounting equation is:

Accepted Answer

Assets = Liabilities + Owner's Equity

Answer

Assets = Revenue − Expenses

Answer

Liabilities = Assets + Equity

Answer

Owner's Equity = Assets + Liabilities

Question 3

Which of the following is a current asset?

Accepted Answer

Accounts receivable

Answer

Machinery

Answer

Long-term investments

Answer

Motor vehicles

Question 4

Which of the following is a non-current (fixed) asset?

Accepted Answer

Motor vehicles

Answer

Cash at bank

Answer

Closing inventory

Answer

Prepaid expenses

Question 5

Owner's equity on the Balance Sheet increases when:

Accepted Answer

The business earns a net profit

Answer

The owner withdraws cash from the business

Answer

The business incurs a net loss

Answer

Total liabilities increase

Question 6

Accumulated depreciation on the Balance Sheet is shown as:

Accepted Answer

A deduction from the cost of non-current assets

Answer

An addition to the value of non-current assets

Answer

A current liability of the business

Answer

Part of owner's equity

Question 7

Which of the following is a long-term (non-current) liability?

Accepted Answer

Mortgage payable

Answer

Bank overdraft

Answer

Accounts payable

Answer

Accrued expenses