 Show Understanding Balance sheets – Question Bank www.ift.world Copyright © IFT. All rights reserved. Page 1 LO.a: Describe the elements of the balance sheet: assets, liabilities, and equity. 1.Which of the following statements is most accurate? A. A classified balance sheet is one which departs materially from accounting standards as per an auditor’s opinion. B. A classified balance sheet is grouped into current and non-current assets and liabilities. C. The excess of current assets over current liabilities is known as liquidity. 2.An asset or liability is created on the balance sheet when revenue is recognized before cash is received and vice versa. Which of the following combinations is most accurate regarding the creation of an asset or liability? Revenue recognized. Cash not received. Cash received. Revenue not recognized. 3.Balance sheet provides financial information of a company: A. For a particular period such as a quarter, or a year. B. At a specific point in time. C. In terms of two basic elements: assets and liabilities. 4.Which of the following statements is most accurate about balance sheets? A. Under US GAAP, intangibles are valued at historical cost. B. Under US GAAP, a classified balance sheet presents non-current liabilities after current liabilities. C. In a liquidity-based presentation, land use rights is ordered above bank deposits. 5.The balance sheet is based upon which of the following equations? A. Assets = Liabilities + Equity. B. Assets = Liabilities – Equity. C. Assets = Equity – Liabilities. LO.b: Describe uses and limitations of the balance sheet in financial analysis. 6.Which of the following is least likely correct about balance sheets? A. Different assets and liabilities on the balance sheet have different measurement bases. B. Equity in the balance sheet is a measure of the intrinsic value of a company. C. Items on the balance sheet are measured at current value at the end of the reporting period that are subject to change. LO.c: Describe alternative formats of balance sheet presentation. 7.A balance sheet format were assets and liabilities are categorized as current and non-current is referred to as the:
Try the multiple choice questions below to test your knowledge of Chapter 6. Once you have completed the test, click on 'Submit Answers for Grading' to get your results. If your lecturer has requested that you send your results to them, please complete the Routing Information found at the bottom of your graded page and click on the 'E-Mail Results' button. Please DO NOT forward your results unless your lecturer has specifically requested that you do so. This activity contains 21 questions.What is the main problem in using a balance sheet to provide an accurate?Answer and Explanation: The balance sheet records the current balance of asset, liability, and equity accounts at a specific time, which does not represent the data for the entire period. That would reduce the accuracy in assessing the value of equity if the firm raises new equity during the year.
How to analysis balance sheet of a company?A balance sheet reflects the company's position by showing what the company owes and what it owns. You can learn this by looking at the different accounts and their values under assets and liabilities. You can also see that the assets and liabilities are further classified into smaller categories of accounts.
How to Read and analyse a balance sheet?The information found in a balance sheet will most often be organized according to the following equation: Assets = Liabilities + Owners' Equity. A balance sheet should always balance. Assets must always equal liabilities plus owners' equity. Owners' equity must always equal assets minus liabilities.
What information is included in a balance sheet?The balance sheet includes information about a company's assets and liabilities. Depending on the company, this might include short-term assets, such as cash and accounts receivable, or long-term assets such as property, plant, and equipment (PP&E).
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Which of the following statements about analyzing the balance sheet is least accurate
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