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Questions and Answers
The income statement shows the assets, liabilities, and equity of a business.
The income statement shows the assets, liabilities, and equity of a business.
False
Land held for sale is reported in the property, plant, and equipment section of the balance sheet.
Land held for sale is reported in the property, plant, and equipment section of the balance sheet.
False
The account form and the report form of the balance sheet are both allowed under Philippine GAAP.
The account form and the report form of the balance sheet are both allowed under Philippine GAAP.
True
Fair values are always included in the statement of financial position due to the historical cost principle.
Fair values are always included in the statement of financial position due to the historical cost principle.
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Cash and cash equivalents are always reported as current assets even if they are to be used as payment for long-term debt.
Cash and cash equivalents are always reported as current assets even if they are to be used as payment for long-term debt.
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On the statement of financial position, a contra account increases either an asset, a liability, or an owners' equity account.
On the statement of financial position, a contra account increases either an asset, a liability, or an owners' equity account.
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Study Notes
Balance Sheet
- The balance sheet reports a company's assets, liabilities, and equity.
- The property, plant, and equipment section includes land held for sale.
- Philippine GAAP allows for two formats: the account form and the report form.
Statement of Financial Position
- Historical cost principle does not always require fair values to be included.
- Cash and cash equivalents are reported as current assets, regardless of their intended use (e.g., payment for long-term debt).
Accounting Conventions
- A contra account is an account that increases one of the following: an asset, a liability, or an owner's equity account.
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Description
Test your knowledge on financial statements by determining if statements given are true or false. Topics covered include balance sheets, income statements, and liabilities.
