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- 10 Marks
FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements
Explain the essential characteristics of assets and features of liabilities per IAS 1.
Question
The International Financial Reporting Standards (IFRS) through the International Accounting Standards Board (IASB) set out the definition and essential characteristics of assets and liabilities in the presentation of financial statements, which users of the statements are likely to rely on when making major economic decisions.
Required:
Identify the essential characteristics of assets and comment on the features of liabilities in accordance with provisions of IAS 1 on the presentation of financial statements. (10 Marks)
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- Tags: Assets, Financial Statements, IAS 1, IFRS, Liabilities
- Level: Level 2
- Topic: Presentation of Financial Statements (IAS 1)
- Series: NOV 2014
- 1 Marks
FA – Nov 2012 – L1 – SA – Q3 – Financial Statements Preparation
Determining which item is not part of the statement of financial position.
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Finance Charge, Financial Position, Liabilities
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: NOV 2012
- 6 Marks
CR – May 2020 – Q4a – Capital Reduction Account
This question requires the preparation of a Capital Reduction Account for Sasasila Ltd following a reorganization.
Question
Sasasila Ltd has been operating profitably for a number of years. However, in recent times, the company has been making losses. Below is the statement of financial position as at 30 June 2019:
| Assets | GH¢000 |
|---|---|
| Non-Current Assets | |
| Patents and copyrights | 75,000 |
| Land and buildings (net) | 200,000 |
| Plant and machinery (net) | 150,000 |
| Current Assets | |
| Inventories | 125,000 |
| Trade receivables | 125,000 |
| Bank | 37,500 |
| Investments (cost) | 100,000 |
| Total Assets | 812,500 |
| Equity and liabilities: | |
| Equity | |
| Ordinary share capital (issued at GH¢10 each) | 375,000 |
| 20% cumulative preference shares (issued at GH¢10 each) | 175,000 |
| Retained earnings | (75,000) |
| Non-current Liabilities | |
| 15% Debentures | 125,000 |
| Current Liabilities | |
| Interest on debentures | 18,750 |
| Trade payables | 93,750 |
| Provision for business restructuring | 50,000 |
| Provision for legal damages & claims | 12,500 |
| Provision for warranties | 37,500 |
| Total Equity and Liabilities | 812,500 |
Additional relevant information: The following scheme of reconstruction was approved by all parties as well as the High Court with the exception of only one ordinary shareholder:
- The ordinary shares were to be reduced to GH¢5 per share.
- The preference shares were to be reduced to GH¢7.5 per share and arrears in dividends for three years were to be canceled from the company’s books.
- The fair values of the assets were agreed at the following values:
- Patents and copyrights: Nil
- Land and buildings: GH¢225,000
- Plant and machinery: GH¢75,000
- Investments: GH¢75,000
- Inventories: GH¢105,000
- Trade receivables: GH¢70,000
- The balance on retained earnings is to be eliminated in full.
- The liability for legal damages and claims was to be settled for GH¢10 million, and the provision for warranties reduced to GH¢27.5 million.
- The accrued debenture interest was to be paid in cash.
- Investments with a carrying amount of GH¢52.5 million were to be sold for cash at that value to strengthen the working capital position.
- The amount set aside for business restructuring was to be eliminated as well.
- The High Court directed a payment of GH¢0.2 million to a member who opposed the scheme for 50 ordinary shares held by him.
Prepare the Capital Reduction Account as at 30 June 2019.
Find Related Questions by Tags, levels, etc.
- Tags: Capital Reduction, Corporate reorganization, Equity, Liabilities
- Level: Level 3
- Topic: Corporate reconstruction and reorganisation
- Series: MAY 2020
- 1 Marks
FA – Nov 2015 – L1 – SA – Q4 – Elements of Financial Statements
Determines the percentage of liabilities against assets.
Find Related Questions by Tags, levels, etc.
- Tags: Balance Sheet, Financial Ratios, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: NOV 2015
- 1 Marks
FA – Nov 2015 – L1 – SA – Q1 – Elements of Financial Statements
Defines the residual interest in the assets of an entity after deducting liabilities.
Question
In accordance with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), the residual interest in the assets of the entity after deducting all its liabilities is termed:
A. Liability
B. Provision
C. Equity
D. Assets
E. Reserves
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Equity, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: NOV 2015
- 1 Marks
FA – May 2018 – L1 – SA – Q5 – Elements of Financial Statements
Identifies elements related to the measurement of an entity's financial position.
Question
Which of the following elements is directly related to the measurement of an entity’s financial position?
A. Performance, income, and expenses
B. Income, expenses, and equity
C. Performance, income, and equity
D. Assets, liabilities, and equity
E. Assets, liabilities, and performance
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Equity, Financial Position, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: MAY 2018
- 1 Marks
FA – May 2018 – L1 – SA – Q2 – Recording Financial Transactions
Analyzes the impact of a purchase on the assets and liabilities of a business.
Question
Adeyemi Boat Shop bought a N70,000 electric hoist to lift engines out of boats. The Boat Shop paid N20,000 in cash for the hoist and signed a note to pay the balance in 90 days. This transaction will cause:
A. The Boat Shop’s assets to increase by N70,000 and liabilities to increase by N50,000.
B. No change in owners’ equity but a N50,000 increase in both assets and liabilities.
C. Assets to increase by N50,000 and owners’ equity to decrease by the same amount.
D. No change in total assets, but a N50,000 increase in liabilities.
E. Both assets and liabilities decrease by N50,000.
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Liabilities, Transaction Analysis
- Level: Level 1
- 1 Marks
FA – Nov 2021 – L1 – SA – Q19 – Financial Statements
This question tests the ability to identify which of the listed items is not a liability.
Find Related Questions by Tags, levels, etc.
- Tags: Financial Statements, Liabilities, Multiple Choice
- Level: Level 1
- 1 Marks
FA – Nov 2022 – L1 – SA – Q19 – Financial Analysis
Identify the item that is not considered a liability.
Find Related Questions by Tags, levels, etc.
- Tags: Accounting, Financial Statements, Liabilities
- Level: Level 1
- Topic: Financial Analysis
- Series: NOV 2022
- 10 Marks
FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements
Explain the essential characteristics of assets and features of liabilities per IAS 1.
Question
The International Financial Reporting Standards (IFRS) through the International Accounting Standards Board (IASB) set out the definition and essential characteristics of assets and liabilities in the presentation of financial statements, which users of the statements are likely to rely on when making major economic decisions.
Required:
Identify the essential characteristics of assets and comment on the features of liabilities in accordance with provisions of IAS 1 on the presentation of financial statements. (10 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Financial Statements, IAS 1, IFRS, Liabilities
- Level: Level 2
- Topic: Presentation of Financial Statements (IAS 1)
- Series: NOV 2014
- 1 Marks
FA – Nov 2012 – L1 – SA – Q3 – Financial Statements Preparation
Determining which item is not part of the statement of financial position.
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Finance Charge, Financial Position, Liabilities
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: NOV 2012
- 6 Marks
CR – May 2020 – Q4a – Capital Reduction Account
This question requires the preparation of a Capital Reduction Account for Sasasila Ltd following a reorganization.
Question
Sasasila Ltd has been operating profitably for a number of years. However, in recent times, the company has been making losses. Below is the statement of financial position as at 30 June 2019:
| Assets | GH¢000 |
|---|---|
| Non-Current Assets | |
| Patents and copyrights | 75,000 |
| Land and buildings (net) | 200,000 |
| Plant and machinery (net) | 150,000 |
| Current Assets | |
| Inventories | 125,000 |
| Trade receivables | 125,000 |
| Bank | 37,500 |
| Investments (cost) | 100,000 |
| Total Assets | 812,500 |
| Equity and liabilities: | |
| Equity | |
| Ordinary share capital (issued at GH¢10 each) | 375,000 |
| 20% cumulative preference shares (issued at GH¢10 each) | 175,000 |
| Retained earnings | (75,000) |
| Non-current Liabilities | |
| 15% Debentures | 125,000 |
| Current Liabilities | |
| Interest on debentures | 18,750 |
| Trade payables | 93,750 |
| Provision for business restructuring | 50,000 |
| Provision for legal damages & claims | 12,500 |
| Provision for warranties | 37,500 |
| Total Equity and Liabilities | 812,500 |
Additional relevant information: The following scheme of reconstruction was approved by all parties as well as the High Court with the exception of only one ordinary shareholder:
- The ordinary shares were to be reduced to GH¢5 per share.
- The preference shares were to be reduced to GH¢7.5 per share and arrears in dividends for three years were to be canceled from the company’s books.
- The fair values of the assets were agreed at the following values:
- Patents and copyrights: Nil
- Land and buildings: GH¢225,000
- Plant and machinery: GH¢75,000
- Investments: GH¢75,000
- Inventories: GH¢105,000
- Trade receivables: GH¢70,000
- The balance on retained earnings is to be eliminated in full.
- The liability for legal damages and claims was to be settled for GH¢10 million, and the provision for warranties reduced to GH¢27.5 million.
- The accrued debenture interest was to be paid in cash.
- Investments with a carrying amount of GH¢52.5 million were to be sold for cash at that value to strengthen the working capital position.
- The amount set aside for business restructuring was to be eliminated as well.
- The High Court directed a payment of GH¢0.2 million to a member who opposed the scheme for 50 ordinary shares held by him.
Prepare the Capital Reduction Account as at 30 June 2019.
Find Related Questions by Tags, levels, etc.
- Tags: Capital Reduction, Corporate reorganization, Equity, Liabilities
- Level: Level 3
- Topic: Corporate reconstruction and reorganisation
- Series: MAY 2020
- 1 Marks
FA – Nov 2015 – L1 – SA – Q4 – Elements of Financial Statements
Determines the percentage of liabilities against assets.
Find Related Questions by Tags, levels, etc.
- Tags: Balance Sheet, Financial Ratios, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: NOV 2015
- 1 Marks
FA – Nov 2015 – L1 – SA – Q1 – Elements of Financial Statements
Defines the residual interest in the assets of an entity after deducting liabilities.
Question
In accordance with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), the residual interest in the assets of the entity after deducting all its liabilities is termed:
A. Liability
B. Provision
C. Equity
D. Assets
E. Reserves
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Equity, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: NOV 2015
- 1 Marks
FA – May 2018 – L1 – SA – Q5 – Elements of Financial Statements
Identifies elements related to the measurement of an entity's financial position.
Question
Which of the following elements is directly related to the measurement of an entity’s financial position?
A. Performance, income, and expenses
B. Income, expenses, and equity
C. Performance, income, and equity
D. Assets, liabilities, and equity
E. Assets, liabilities, and performance
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Equity, Financial Position, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: MAY 2018
- 1 Marks
FA – May 2018 – L1 – SA – Q2 – Recording Financial Transactions
Analyzes the impact of a purchase on the assets and liabilities of a business.
Question
Adeyemi Boat Shop bought a N70,000 electric hoist to lift engines out of boats. The Boat Shop paid N20,000 in cash for the hoist and signed a note to pay the balance in 90 days. This transaction will cause:
A. The Boat Shop’s assets to increase by N70,000 and liabilities to increase by N50,000.
B. No change in owners’ equity but a N50,000 increase in both assets and liabilities.
C. Assets to increase by N50,000 and owners’ equity to decrease by the same amount.
D. No change in total assets, but a N50,000 increase in liabilities.
E. Both assets and liabilities decrease by N50,000.
Find Related Questions by Tags, levels, etc.
- Tags: Assets, Liabilities, Transaction Analysis
- Level: Level 1
- 1 Marks
FA – Nov 2021 – L1 – SA – Q19 – Financial Statements
This question tests the ability to identify which of the listed items is not a liability.
Find Related Questions by Tags, levels, etc.
- Tags: Financial Statements, Liabilities, Multiple Choice
- Level: Level 1
- 1 Marks
FA – Nov 2022 – L1 – SA – Q19 – Financial Analysis
Identify the item that is not considered a liability.
Find Related Questions by Tags, levels, etc.
- Tags: Accounting, Financial Statements, Liabilities
- Level: Level 1
- Topic: Financial Analysis
- Series: NOV 2022