Questions and Answers of Accounting For Financial Instruments

Which of the following would probably be classified as an operating activity?A. Buying common stock in a companyB. Investing in new machinery for the production goodsC. Providing a service in the
Which of the following would probably be classified as a financing activity?A. Taking out a bank loanB. Sale of food products by a supermarketC. Payment of taxes owned to government
In the table below indicate whether the item is an asset, liability, owners’ equity, revenue, or expense: Accounts payable Sales Cash Prepaid rent Consumption of electricity and water Accrued
Objects that represent the various types of economic obligations by a business entity are referred to as:A. LossesB. LiabilitiesC. Cash outflowsD. Gains
Objects that represent the outflows of economic resources from the company or increases in the liabilities are referred to as:A. AssetsB. GainsC. AppropriationsD. Expenses
Objects that represent the different types of economic resources owned or controlled by the business entity are referred to as:A. RevenueB. Cash inflowsC. AssetsD. Equity
An accountant has collected the following information in advance of his company’s year-end earnings declaration:The accountant’s estimate of ending retained earnings (in millions) would be:A.
The accountant has compiled the following information regarding his company:The accountant’s estimate of distributed dividends would be:A. €5.5 millionB. €4.5 millionC. €8.5 million
An accountant has extracted the following information regarding a company of interest:The accountant’s forecast of total assets at year-end would be:A. €158 millionB. €250 millionC. €150
Carry out the activities as required below.a. Enter the following transactions in the general journal of Oscar Ltd. On 2 April, Ms. R. Kramer established an entity ‘Oscar Ltd’ with a cash
On 1 March 201X, BeCare plc bought goods valued €75,000 from Ajax plc. BeCare plc did not have adequate cash to cover the purchase value. However, Ajax plc agreed to draw a bill of exchange on
Oasis Investment Ltd has it financial ending on 31 December and during its financial year conducted a number of transactions with respect to Omega plc €1 Ordinary Shares. Omega plc normally
The Board of Directors of Lindersberg Ltd authorised the company to issue a five-year loan at 5 per cent interest rate, with the interest being paid at the end of each year. A client, Global Ltd
When reference is made to amortised cost, what exactly is being amortised?A. Asset valueB. AppropriationsC. A discount or premiumD. Cost of the liability
How do you treat transaction costs that are associated to amortised cost?A. Cash outflowsB. ExpensedC. Added to the liabilitiesD. Added to the value of the financial instrument
Which method should be applied to avoid accounting mismatches?A. No preferable methodB. Amortised cost methodC. A combination of methodsD. Fair value method
How is transaction costs that are associated to Fair Value treated?A Cash outflowsB ExpensedC Added to the liabilitiesD Added to the value of the financial instrument
Under which method are a majority of derivatives accounted for?A. Fair Value through Profit and LossB. Fair Value through EquityC. Amortised cost
Where are gains and losses due to investments in equity instruments shown?A. Under other comprehensive incomeB. Other comprehensive income if the instrument is not held for tradingC. Under profit and
Allied Ltd purchases a financial asset for €85 with associated legal costs of €8. At the end of the accounting financial period the market value of the financial asset increased to €110. Due to

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