Podcast
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 (B)
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 (B)
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 (A)
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.
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.
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.
Flashcards
Income statement contents?
Income statement contents?
False. The income statement reports revenues and expenses.
Land for sale classification?
Land for sale classification?
False. Land held for sale is typically classified as inventory or a current asset.
Balance sheet formats?
Balance sheet formats?
True. Both account form (side-by-side) and report form (vertical) are acceptable.
Fair value always on balance sheet?
Fair value always on balance sheet?
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Cash for long-term debt: current?
Cash for long-term debt: current?
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Contra account: increase?
Contra account: increase?
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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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