Understanding Financial Position Statements

Which of the following is considered a non-current asset on a statement of financial position?

• Inventory

• Trade receivables

• Property, plant, and equipment

• Cash and cash equivalents

What is the primary difference between current and non-current liabilities?

• Current liabilities are due within one year, while non-current liabilities are due after one year.

• Current liabilities are larger in amount than non-current liabilities.

• Non-current liabilities are always interest-bearing, while current liabilities are not.

• Current liabilities are always secured, while non-current liabilities are unsecured.

How is equity calculated in a statement of financial position?

• Total assets minus total liabilities

• Total liabilities minus total assets

• Current assets minus current liabilities

• Non-current assets minus non-current liabilities

Which financial ratio is used to assess a company's liquidity?

• Debt to equity ratio

• Current ratio

• Return on equity

• Price to earnings ratio

What is the impact of depreciation on the statement of financial position?

• It increases the value of non-current assets.

• It decreases the value of non-current assets.

• It has no impact on the statement of financial position.

• It increases the value of current liabilities.

Which of the following is a consequence of poor cash flow management?

• Increased profitability

• Improved credit rating

• Inability to meet short-term obligations

• Higher equity value

What does the quick ratio measure?

• The ability to pay off all liabilities with all assets

• The ability to pay off current liabilities with current assets excluding inventory

• The profitability of a company

• The efficiency of asset utilisation

Which of the following is an example of a current asset?

• Land

• Machinery

• Inventory

• Goodwill

How does an increase in accounts payable affect the cash flow statement?

• It increases cash flow from operating activities.

• It decreases cash flow from operating activities.

• It has no effect on the cash flow statement.

• It increases cash flow from investing activities.

Which of the following is a non-current liability?

• Trade payables

• Bank overdraft

• Long-term loan

• Accrued expenses