3. Preparation of Financial Statements

Statement Of Financial Position — Quiz

Test your understanding of statement of financial position with 5 practice questions.

Practice Questions

Question 1

A company purchases a machine for $$ \$50,000 $ with a useful life of $ 10 $$ years and no salvage value. Using the straight-line depreciation method, what is the carrying amount of the machine after $$ 3 $$ years on the Statement of Financial Position?

Question 2

Which accounting principle primarily dictates that a business's financial statements should present a 'true and fair view' of its financial position?

Question 3

A company revalues its land from its historical cost of $$ \$200,000 $ to a current market value of $ \$350,000 $$. How would this revaluation be reflected in the Statement of Financial Position?

Question 4

A business has the following balances: Accounts Payable $$ \$25,000 $, Bank Overdraft $ \$10,000 $, Loan (due in $ 4 $ years) $ \$60,000 $, Accrued Expenses $ \$5,000 $$. What is the total amount of current liabilities?

Question 5

Which of the following scenarios would lead to a decrease in the owner's capital (equity) on the Statement of Financial Position?