Financial Statements

Brands are example of:

• intangible assets

• current assets

• share capital

• current liabilities

Goodwill is best describes as:

• the attitude of a successfull business to its employee

• the increase in business value resulting form R&D

• the value of a business over and above the value of its physical assets

• the price another business is prepared to pay for a business

A business has to sell its inventories quickly to raise cash. The amount of cash raised is likely to be:

• the book value of the inventories

• less than the book value of the inventories

• more than the book value of the inventories

• none of the above

Asking debtors to make much speedier payments will:

• increase the cash in the business

• reduce the cash in the business

• leave the cash in the business the same

• reduce accounts payable

A company sells more shares. The impact of this on the balance sheet will be:

• more inventories in the business

• less share capital in the business

• an increase in assets

• an increase in cash and share capital

A fixed asset is depreciated because:

• it enables accountants to make the profits more for tax purposes

• the business will pay a lower dividend

• It will increase the book value of the business

• the assets will eventually need to be replaced

Accountants will use the Net Realisable Value (NRV) of inventories when:

• NRV is larger than the original cost of the stock

• NRV is smaller than the original cost of the stock

• inflation has increased the value of the stock

• there is a high opportunity cost of holding stock

Which asset will depreciate much more quickly in the first and second year?

• House

• Building

• Cars

• Machines

How to count NRV (net realisable value) ?

• the amount for which the existing inventory can be sold + the cost of selling it

• the amount for which the existing inventory can be sold - the cost of selling it

• the cost of selling it- the amount for which the existing inventory can be sold

• the cost of selling it + the amount for which the existing inventory can be sold

A statement that records the revenue, costs and profits of a business over a given period of time

• Financial position

• profit or loss

• Balance Sheet

• Asset