Question (1) Which item would be recorded as a current liability on a business's balance sheet? This is a single choice question. Selections are automatically selected as you use arrow to move. O Accounts payable to be settled 3 months from the balance sheet date. O Future rental payments due to be paid in the next 24 months in respect of an operating lease. O Commitment to purchase operating property that will be delivered in the following financial year. A loan due for repayment 36 months after the balance sheet date. Question (2) Jelly Treats makes confectionery and at the start of the year had net assets of 440. Movement of net assets are described below. Please calculate the retained profit for the period. Proceeds received from issue of new shares 150, Increase in accumulated other comprehensive income 155, Dividends paid 200, Net assets at end of period 785 This is a single choice question. Selections are automatically selected as you use arrow to move. O 70 O 335 O 40 O 290 Question (3) Which of these current liabilities will usually have interest applied to it? This is a single choice question. Selections are automatically selected as you use arrow to move. O Current portion of long-term accrued liabilities. O Accrued expenses. O Notes payable. O Accounts payable. Question (4) Which liability has known repayment amounts and timings? This is a single choice question. Selections are automatically selected as you use arrow to move. O Deferred tax liability. O Accrual for employee retirement benefit obligations. O Accrual for disputed legal claim. O A bank loan. Question (5) Where in the financial statements would you find next years' committed operating lease payments? This is a single choice question. Selections are automatically selected as you use arrow to move. O In note analyzing future payments that are not included within balance sheet liabilities. O In a note analyzing deferred revenue. O The following year's committed operating lease payments are a form of debt that is presented within current liabilities. O In a note analyzing current liabilities. Question (6) How do the short-term portion of accruals for litigation and environmental claims differ from accounts payable? This is a single choice question. Selections are automatically selected as you use arrow to move. O The accruals are estimates of amounts that are to paid to suppliers for operational requirements where no invoice has been received. Accounts payable differ from provisions in that an invoice will have been received. O These accruals arise when a company agrees a delay in paying its accounts payable with a supplier and formalizes the arrangement through a contractual arrangement. O The accruals are estimates of amounts that are expected to be paid outside of normal operations, while accounts payable are contractual payments to suppliers for operational requirements. O The accruals are amounts that are to be paid in relation to the purchase of fixed assets, while accounts payable are contractual payments to suppliers for operational requirements. Question (7) Why should you pay attention to subordinated debt, in particular stockholder loans, when reviewing long-term liabilities in financial statements? This is a single choice question. Selections are automatically selected as you use arrow to move. O Stockholders may be tempted to divert cash to the repayment of stockholder loans in preference to senior debt. O Stockholder loans are a form of equity financing so their presence in long-time liabilities would distort leverage rations. O Loans from stockholders are generally a sign of corporate distress, this can be validated by investigating whether or not interest is being paid. O Stockholder loans are usually repayable on demand, so they should be viewed as a form of financing of the operating cycle. Question (8) A company has net assets at the start of the year of $150K. At year end the net assets have declined to $120K. During the year, the company recognized an increase in value of investments through accumulated other comprehensive income of $100K and paid a dividend of $500K. How much net profit did it make in the year? This is a single choice question. Selections are automatically selected as you use arrow to move. O $600K O $530K O $370K O $430K Question (9) When would an equity account for additional paid in capital be created? This is a single choice question. Selections are automatically selected as you use arrow to move. O When stocks are issued at an amount above the par value of the stocks issued. O When foreign operations are translated into the currency of the parent company. O When financial instruments are measured at fair value through other comprehensive income. When stocks are issued to facilitate the acquisition of one company by another. Question (10) A business has a 5-year repayments loan carrying an interest rate of 5%. At year end, there is a total debt outstanding of $500,000 and accrued interest of $25,000. The loan is repayable in 5 remaining equal installments. How should this debt be presented in the financial statements? This is a single choice question. Selections are automatically selected as you use arrow to move. O Long-term liability $400,000, Current liability $125,000. O Long-term liability $500,000, Current liability $25,000 O Current liability $525,000 O Long-term liability $525,000 Question (11) Which statement accurately describes the main components of equity as they appear on a financial statement? This is a single choice question. Selections are automatically selected as you use arrow to move. O Equity consists of all stockholder capital including additional paid in capital, cumulative retained earnings, and accumulated other comprehensive income. O Equity consists of stockholder paid in capital only. O Equity consists of the number of shares in issue multiplied by the year end share price. O Equity is the sum of the cash received in relation to the issuance of all classes of stock issued by a business. Question (12) Which statement correctly identifies a distinguishing feature of equity when compared with debt? This is a single choice question. Selections are automatically selected as you use arrow to move. O Debt, but not equity, normally provides returns to investors. O Debt, but not equity, is reflected as credit entries in the balance sheet. O Equity, but not debt, may be long-term in nature. O Debt, but not equity, obliges the issuer to make payments to investors.