Deck 3: The Measurement of Wealth

Question 1

The statement of financial position shows only the assets owned and controlled by the enterprise.

Answer 1

True

Question 2

A company car is a liability.

Answer 2

False

Question 3

Money owed to the bank is an asset of the business.

Answer 3

False

Question 4

The statement of financial position includes all the assets controlled by the business.

Question 5

The statement of financial position includes all the assets owned by the owner and the business.

Question 6

The statement of financial position includes only the assets owned by the owner.

Question 7

Which of the following best describes the liabilities of an enterprise?

A) What the enterprise has been invoiced for
B) Everything that the enterprise owes to anybody
C) Everything that the enterprise owes to the owners
D) Everything that the enterprise owes to anybody other than the owners

Question 8

The reason owners' assets and business assets must be accounted for separately is because:

A) They are different legal entities
B) They are treated differently for tax purposes
C) Enterprises are always set up as limited companies
D) To do so conforms with the business entity principle

Question 9

Which of the following are normally seen as tangible assets?

A) Royalty agreements
B) Intellectual property
C) Patents and trademarks
D) Office furniture
E) None of the above

Question 10

Which of the following definitions best describes an asset?

A) Something the business owns
B) Something the business controls
C) Something arising from a past transaction where the future benefits will come to the business
D) Something the business owns which will provide future benefits

Question 11

A business owner has provided you with the following information on their market trading business. Flat - leasehold £150000, inventory of goods £8000 bought for next market, van £2000, bank overdraft £700, stall £1 500. What is the owners' equity?

A) £161500
B) £11500
C) £160800
D) £10800
E) None of the above

Question 12

The statement of financial position shows the assets and the liabilities of the enterprise.

Question 13

The statement of financial position accurately measures the wealth of an enterprise.

Question 14

The statement of financial position measures the change in wealth over a specified time period.

Question 15

The statement of financial position includes only the assets owned by the business.

Question 16

Which of the following is a non-current asset?

A) One that is not up to date
B) One that is held for the long term to support the operations of the enterprise
C) One that is expected to be turned into cash in the next twelve months
D) One that is part of the operating cycle
E) One that is held primarily for the purpose of being traded