Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity) – Page 2

AA – Nov 2022 – L2 – Q6 – Audit Opinion in Financial Statements

Describe contents of audit opinion in financial statements as presented to an audit committee.

Question

When prompted on a question at the presentation meeting to the audit committee of AMIRAH Plc, the Partner of OIO professional services stated that the end result of the statutory audit is general purpose financial statements on which audit opinion will be expressed. He explained that the auditor shall express an unmodified opinion when the auditor concludes his work, based on the audit
evidence obtained, that the financial statements as a whole are free from material misstatement and that the financial statements are prepared, in all
material respects, in accordance with the applicable financial reporting framework. However, if the external auditor is unable to obtain sufficient and appropriate audit evidence to conclude that the financial statements as a whole
are free from material misstatement, the auditor shall modify the opinion in the auditor’s report. In summary, the auditor’s opinion is a certification that accompanies financial statements after the examination of the books of accounts.
You are the manager in the firm and a member of the audit committee has requested for more explanation on the presentation by the partner.
Required:
a. Explain general purpose financial statements. (5 Marks)
b. Highlight to an audit committee member, the contents of audit opinion in financial statements. (10 Marks)

Answer

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Tags: Audit Committee, Audit opinion, Financial Statements, ISA 700
Level: Level 2

FA – Nov 2012 – L1 – SA – Q2 – Financial Statements

Identifying a non-characteristic of a bonus issue.

Question

Which of these is NOT a characteristic of bonus issue?

A. Increasing capital without diluting current shareholdings
B. Capitalising reserves, so that they cannot be paid as dividends
C. Not raising cash
D. Generating new shares
E. Could jeopardise payment of future dividend if profit declines

Answer

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Tags: Bonus issue, Capital, Dividends, Shareholders
Level: Level 1

FA – Nov 2021 – L1 – SA – Q19 – Financial Statements

This question tests the ability to identify which of the listed items is not a liability.

Question

Which of the following is NOT a liability?
A. Accrued wages
B. Trade Payables
C. Prepayments
D. Insurance due but unpaid
E. Rent arrears

Answer

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Tags: Financial Statements, Liabilities, Multiple Choice
Level: Level 1

FA – Nov 2021 – L1 – SA – Q10 – Financial Statement

This question tests the knowledge of the components of financial statements as per IAS 1.

Question

In accordance with IAS 1-Presentation of Financial Statements, which of the following is NOT a component of financial statements?
A. Statement of financial position
B. Statement of profit or loss and other comprehensive income
C. Statement of changes in equity
D. Statement of affairs
E. Statement of cashflows

Answer

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Tags: Financial Statements, IAS 1, Multiple Choice
Level: Level 1

FA – Nov 2021 – L1 – SA – Q2 – Financial Statements

This question tests the understanding of correct accounting principles.

Question

Which of the following is a correct accounting principle?
A. Revenue should be supported by equity
B. There should be a balance in the account payable in order to measure total assets
C. Where total liabilities is zero, the assets are equal to equity
D. Total liabilities and equity are equal
E. Total assets can be less than liabilities and equity

Answer

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Tags: Accounting principles, Financial Statements, Multiple Choice
Level: Level 1

FA – Nov 2022 – L1 – SA – Q10 – Financial Statements

Identify the component that is not part of financial statements under IAS 1.

Question

Answer

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Tags: Financial Statements, IAS 1, Reporting Standards
Level: Level 1

FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

Question

The financial data extracted from the books of Solomon Enterprises Limited for the year ended 31 December 2013 are as follows:

Particulars	N’000
Sales	55,924
Cost of sales	41,028
Selling and distribution expenses	2,748
Administration expenses	2,404
Interest expenses	1,528
Tax paid	1,584
Increase in inventories	11,868
Decrease in receivables	1,416
Increase in payables	4,944

Additional information:
Included in administration expenses are:
i. Depreciation charges for the year of N500,000
ii. Loss on disposal of assets of N48,000

Required:
Prepare the Statement of Cash Flows showing cash flow generated from operating activities using the indirect method. (11 Marks)
Show all workings.

Answer

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Tags: Cash Flow from Operations, Cash Flow Statement, IAS 7, Indirect Method
Level: Level 1

FA – Nov 2014 – L1 – SB – Q6a – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Defining operating, investing, and financing cash flows with two examples for each.

Question

a. In relation to the Statement of Cash Flows, define the following terms and give two examples in each case:

i. Operating Cash Flows
ii. Investing Cash Flows
iii. Financing Cash Flows
(Total 9 Marks)

Answer

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Tags: Cash Flow, Financing, IAS 7, Investing, Operating
Level: Level 1

FA – MAY 2015 – L1 – SB – Q2 – Financial Statements Preparation

Prepare an extended trial balance and adjustments for Salfo Enterprises based on ledger balances.

Question

The following is a list of balances extracted from the ledger of Salfo Enterprises:

N
Inventory on 1 January 2013	30,600
Revenue	245,340
Purchases	160,200
Salaries and wages	52,110
Furniture and fittings	92,500
Office expenses	16,200
Trade receivables	50,400
Trade payables	22,400
Cash in hand and at bank	6,230
Drawings	15,500
Capital	156,000

Additional information:

Inventory on 31 December 2013: N38,000
Prepaid office expenses: N2,300
Accrued wages: N1,500
Depreciation is to be charged on furniture and fittings at 10% per annum on cost.

Required: a. Prepare the initial trial balance. (4 Marks)
b. Record the necessary adjustments. (8 Marks)
c. Prepare the adjusted trial balance. (8 Marks)

Answer

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Tags: Adjustments, Depreciation, Financial Statements, Prepaid Expenses, Trial Balance
Level: Level 1

FA – Mar/July 2020 – L1 – SB – Q4b -Financial Statements

Preparing share capital and related accounts based on a share issue.

Question

Bravado Limited has an authorised share capital of 10M of N0.50 per share. On November 1, 2019, the company issued the entire shares for public subscription at N0.75 per share.

As at November 10, 12M applications were received through Klassic Bank PLC, the company’s banker. The shares were allotted on a pro rata basis, and the company refunded the excess application money.

You are required to prepare:
i. Share application account
ii. Bank account
iii. Share premium account
iv. Ordinary share capital account
v. Application money refund account

Answer

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Tags: Journal Entries, Share Capital, Share Premium
Level: Level 1

FA – Mar/July 2020 – L1 – SB – Q4a – Financial Statements

Explaining share premium and its five uses.

Question

Explain briefly share premium and outline its FIVE uses.

Answer

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Tags: Application Money, Share Capital, Share Premium
Level: Level 1

FA – Mar/July 2020 – L1 – SB – Q1a – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of profit or loss and financial position based on extracted balances.

Question

The following balances were extracted from the books of Walling Enterprises as at October 31, 2019:

Item	N’000
Capital at November 1, 2018	90,428
Purchases	776,400
Revenue	1,045,800
Salaries and wages	66,880
Rent and rates	28,004
Receivables	144,600
Bad debts	3,768
Drawings	19,004
Allowances for receivables	7,404
Bank	5,632
Payables	68,616
Cash	668
Inventories at November 1, 2018	164,218
Motorcycle at cost	14,400
Accumulated depreciation on motorcycle	4,200
Bank interest received	1,756
Commission received	5,370

Additional Information:

(i) Inventory at October 31, 2019 was valued at N198,712,000
(ii) Rent prepaid at October 31, 2019 amounted to N3,200,000
(iii) Depreciation is to be provided on the motorcycle at the rate of 20% on cost per annum
(iv) Accrued salary at October 31, 2019 amounted to N6,024,000
(v) Commission received in advance is N800,000
(vi) Additional amount of irrecoverable debts of N2,840,000 is to be written off
(vii) Bank interest of N100,000 has fallen due but is yet to be received
(viii) Allowances for receivables are to be adjusted to 5% of accounts receivables
(ix) Goods taken by the owner for own use and cheque withdrawals amounting to N1,600,000 and N2,400,000 respectively are yet to be recorded.

Required:

Using the extended trial balance, prepare:
a. Statement of profit or loss of Walling Enterprises for the year ended October 31, 2019.
b. Statement of financial position of Walling Enterprises as at October 31, 2019.

Answer

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Tags: Statement of Financial Position, Statement of Profit or Loss, Trial Balance
Level: Level 1

FA – Mar/July 2020 – L1 – SA – Q19 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Identifying a current liability in a financial statement

Question

Which of the following items is a current liability in the financial statements of Institute of Chartered Administrators?
A. Subscription in arrears
B. Prepaid salaries
C. Depreciation
D. Accounts receivables
E. Subscription in advance

Answer

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Tags: Current Liability, Financial Statements, Subscription
Level: Level 1

FA – Mar/July 2020 – L1 – SA – Q13 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Correct journal entry for share capital and share premium

Question

P Limited made an issue of 150,000 N1 ordinary shares at a premium of 20%. The shares were fully subscribed and the proceeds were received through the bank.

What is the correct journal to record the above transaction?

Answer

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Tags: Journal Entries, Share Capital, Share Premium
Level: Level 1

Topic: Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

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AA – Nov 2022 – L2 – Q6 – Audit Opinion in Financial Statements

Describe contents of audit opinion in financial statements as presented to an audit committee.

FA – Nov 2012 – L1 – SA – Q2 – Financial Statements

Identifying a non-characteristic of a bonus issue.

FA – Nov 2021 – L1 – SA – Q19 – Financial Statements

This question tests the ability to identify which of the listed items is not a liability.

FA – Nov 2021 – L1 – SA – Q10 – Financial Statement

This question tests the knowledge of the components of financial statements as per IAS 1.

FA – Nov 2021 – L1 – SA – Q2 – Financial Statements

This question tests the understanding of correct accounting principles.

FA – Nov 2022 – L1 – SA – Q10 – Financial Statements

Identify the component that is not part of financial statements under IAS 1.

FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

FA – Nov 2014 – L1 – SB – Q6a – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Defining operating, investing, and financing cash flows with two examples for each.

FA – MAY 2015 – L1 – SB – Q2 – Financial Statements Preparation

Prepare an extended trial balance and adjustments for Salfo Enterprises based on ledger balances.

FA – Mar/July 2020 – L1 – SB – Q4b -Financial Statements

Preparing share capital and related accounts based on a share issue.

FA – Mar/July 2020 – L1 – SB – Q4a – Financial Statements

Explaining share premium and its five uses.

FA – Mar/July 2020 – L1 – SB – Q1a – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of profit or loss and financial position based on extracted balances.

FA – Mar/July 2020 – L1 – SA – Q19 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Identifying a current liability in a financial statement

FA – Mar/July 2020 – L1 – SA – Q13 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Correct journal entry for share capital and share premium

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Topic: Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

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AA – Nov 2022 – L2 – Q6 – Audit Opinion in Financial Statements

Describe contents of audit opinion in financial statements as presented to an audit committee.

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FA – Nov 2012 – L1 – SA – Q2 – Financial Statements

Identifying a non-characteristic of a bonus issue.

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FA – Nov 2021 – L1 – SA – Q19 – Financial Statements

This question tests the ability to identify which of the listed items is not a liability.

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FA – Nov 2021 – L1 – SA – Q10 – Financial Statement

This question tests the knowledge of the components of financial statements as per IAS 1.

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FA – Nov 2021 – L1 – SA – Q2 – Financial Statements

This question tests the understanding of correct accounting principles.

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FA – Nov 2022 – L1 – SA – Q10 – Financial Statements

Identify the component that is not part of financial statements under IAS 1.

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FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

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FA – Nov 2014 – L1 – SB – Q6a – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Defining operating, investing, and financing cash flows with two examples for each.

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FA – MAY 2015 – L1 – SB – Q2 – Financial Statements Preparation

Prepare an extended trial balance and adjustments for Salfo Enterprises based on ledger balances.

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FA – Mar/July 2020 – L1 – SB – Q4b -Financial Statements

Preparing share capital and related accounts based on a share issue.

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FA – Mar/July 2020 – L1 – SB – Q4a – Financial Statements

Explaining share premium and its five uses.

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FA – Mar/July 2020 – L1 – SB – Q1a – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of profit or loss and financial position based on extracted balances.

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FA – Mar/July 2020 – L1 – SA – Q19 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Identifying a current liability in a financial statement

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FA – Mar/July 2020 – L1 – SA – Q13 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Correct journal entry for share capital and share premium

You're reporting an error for "FA – Mar/July 2020 – L1 – SA – Q13 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)"

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