FINFIT KIT SET 2

which of the following is classified as a current asset ?

• buildings

• accounts receivable

• equipment

Answer explanation

Accounts receivable is classified as a current asset because it represents money owed to a company that is expected to be received within a year. In contrast, buildings and equipment are long-term assets.

which item appears in the liabilities section of the Statement of Financial Position (SOFP) ?

• inventory

• cash

• retained earnings

• accounts payable

Answer explanation

Accounts payable is a liability representing amounts owed to suppliers, making it a key item in the liabilities section of the Statement of Financial Position. The other options are assets or equity, not liabilities.

in Statement of Financial Position (SOFP), how is total equity calculated ?

• total assets + total liabilities

• total liabilities - total assets

• total assets - total liabilities

• total revenue - total expenses

Answer explanation

Total equity in the Statement of Financial Position is calculated as total assets minus total liabilities. This reflects the residual interest of the owners in the assets after deducting liabilities.

how are current liabilities defined in the Statement of Financial Position (SOFP) ?

• debts payable within one year

• debts payable within 5 years

• debts that do not need to be paid back

Answer explanation

Current liabilities are defined as debts payable within one year. This means they are obligations that a company must settle in the short term, making the first answer choice correct.

a company has total assets of RM500,000 and total liabilities of RM200,000. What is the company's equity ?

• RM100,000

• RM200,000

• RM300,000

• RM500,000

Answer explanation

To find the company's equity, subtract total liabilities from total assets: RM500,000 - RM200,000 = RM300,000. Therefore, the company's equity is RM300,000.

drag & drop the following items into the correct section :

Assets :​ ​ (a)  

Liabilities : ​ (b)  

• cash  &  inventory
• account payables  &  bank loan
• salary & bad debts
• drawings
• retained earnings

Answer explanation

Assets include cash and inventory, which are resources owned by a business. Liabilities consist of account payables and bank loans, representing obligations. The correct items are categorized accordingly.

if a company's equity is RM400,000 and its liabilities are RM150,000 , what are the company's total assets ?

• RM150,000

• RM250,000

• RM400,000

• RM550,000

Answer explanation

To find total assets, use the formula: Assets = Liabilities + Equity. Here, Assets = RM150,000 + RM400,000 = RM550,000. Therefore, the correct answer is RM550,000.

what is the primary purpose of the Statement of Financial Position (SOFP) ?

• to summarize the cash inflows and outflows for a period

• to show the financial position of a company at a specific point in time

• to calculate the net profit of a company

Answer explanation

The primary purpose of the Statement of Financial Position (SOFP) is to show the financial position of a company at a specific point in time, detailing its assets, liabilities, and equity.

which of the following transactions would increase both assets and liabilities on the Statement of Financial Position (SOFP) ?

• payment of dividends

• purchase of equipment with cash

• borrowing from a bank

• sale of goods on credit

Answer explanation

Borrowing from a bank increases both assets (cash received) and liabilities (loan payable). The other options either decrease assets or do not affect liabilities.

which formula is used to calculate equity in the Statement of Financial Position (SOFP) ?

​ Equity =​ (a)   ​ (b)   ​ (c)  

• Assets

• -

• Liabilities

• +

• expenses

• drawings

• salary

• bad debts

Answer explanation

The formula for calculating equity in the Statement of Financial Position (SOFP) is Assets - Liabilities. This reflects the residual interest in the assets after deducting liabilities.