Exam 4: Statements of Financial Position and Changes in Equity; Disclosure Notes

Accounts Receivable and Inventories must always be shown as current assets on the balance sheet.

Which of the following would be non-adjusting subsequent event(s)?

Under ASPE, Biological Assets are always shown separately from Property, Plant & Equipment at their Fair Value less costs to sell.

In financial reporting it is improper to offset current assets with current liabilities unless there is a legal right of offset.

If current assets exceed current liabilities, payments on current liabilities will:

A corporation operates a retail store and must determine the correct December 31, year 1, year-end accrual for the following expenses: 1. The store lease calls for fixed rent of $1,000 per month, payable at the beginning of the month, and additional rent equal to 6 percent of net sales over $200,000 per calendar year, payable on January 31 of the following year. Net sales for year 1 are $800,000. 2) The corporation has personal property subject to a city property tax. The city's fiscal year runs from July 1 to June 30 and the tax, assessed at 3 percent of personal property on hand at April 30, is payable on June 30. The corporation estimates that its personal property tax will amount to $6,000 for the city's fiscal year ending June 30, year 2. In its December 31, year 1, balance sheet, the corporation should report accrued expenses of:

Assets must be presented before liabilities and equities under IFRS.

A gain contingency can be accrued when:

An investor seeking a return on invested capital would be most concerned with a company's liquidity.

The following information relates to a manufacturing firm for the current year. The corporation president is interested in knowing how much cash was provided by earnings. She has heard that net operating cash flow can be different from earnings. Net income \ 10,000 Depreciation expense 50,000 Net increase in current as sets (noncash) 30,000 Net increase in current liabilities 60,000 Proceeds trom sale of land 100,000 Cash dividend payments 40,000 Receipt of dividends from investments (this amount is included in net income) 20,000 (a) Compute net operating cash flow using the indirect method. (b) Given your answer in (a), which measure is a better one for use in evaluating this company, net income or net operating cash flow?

Which of the following subsequent events would require an adjustment to the financial statements under IFRS?

Accounting errors and policy changes are handled retrospectively, with an adjustment to opening Retained Earnings to correct for the effects of these, while changes in accounting estimates are handled prospectively.

By grouping assets in decreasing order of liquidity, the accounts receivable account will almost always be the first item on the balance sheet.

On January 1^st, 2010, ABC Inc., a publicly traded company, had the following Shareholder Equity balances: Common Shares \ 500,000 Retained Earnings \ 800,000 Contributed Surplus \ 100,000 Accumulated Other Comprehensive Income \ 50,000 During 2010, the following took place: ABC Inc earned net income of $120,000 and paid cash dividends in the amount of $20,000. In addition, the company declared a stock dividend in the amount of $50,000. Also during 2010, ABC experienced an unrealized foreign exchange gain of $50,000 upon translation of its foreign subsidiary's results. Required: Prepare a Statement of Changes in Equity for ABC Inc. for 2010.

Which of the following loss contingencies ordinarily will NOT be accrued as liabilities?

Biological assets, Investment Properties and Provisions must all be shown separately under IFRS (wherever applicable) but not under ASPE.

Where on the statement of financial position would a company's total comprehensive income for the year be included under IFRS?

Retained earnings appropriations are the result of decisions made by management.

Certain types of contingencies neither need to be accrued nor disclosed in the notes to the financial statements.

Related party transactions, not in the normal course of business, must be recorded at: