Statement of Financial Position (SFP) Quiz

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What is the format of the Statement of Financial Position?

It is based on the accounting equation (E=A-L)

It is based on the accounting equation (L=A-E)

It is based on the accounting equation (A=L+E) (correct)

It is based on the accounting equation (A+E=L)

What are the two main parts of the Statement of Financial Position?

Debits and Credits

Assets and Liabilities & Equity (correct)

Income and Expenses

Cash and Investments

What is the definition of cash equivalents?

Funds readily available to be spent (correct)

Money in the bank which can be kept in a savings or checking account

Cash kept in the company's premises

Deposits in the bank that earn higher interest

Which of the following is classified as cash equivalents?

Time deposit account Signup and view all the answers

What is the purpose of disclosing the components of cash equivalents in the accompanying notes to financial statements?

To provide transparency and additional information to the readers Signup and view all the answers

Which of the following is considered a cash equivalent?

Time deposit account with a term of 60 days Signup and view all the answers

What is the main difference between cash and cash equivalents?

Cash is readily available for spending, while cash equivalents are not immediately available for use Signup and view all the answers

Why are time deposits with a term of up to 90 days classified as cash equivalents?

Because they are readily convertible to known amounts of cash Signup and view all the answers

What is the primary purpose of disclosing the components of cash equivalents in the accompanying notes to financial statements?

To provide additional information about the company's liquidity and financial flexibility Signup and view all the answers

What does the accounting equation (A=L+E) represent in the context of the Statement of Financial Position?

The relationship between a company's assets, liabilities, and equity Signup and view all the answers

Statement of Financial Position (SFP) Quiz

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Questions and Answers

What is the format of the Statement of Financial Position?

What are the two main parts of the Statement of Financial Position?

What is the definition of cash equivalents?

Which of the following is classified as cash equivalents?

What is the purpose of disclosing the components of cash equivalents in the accompanying notes to financial statements?

Which of the following is considered a cash equivalent?

What is the main difference between cash and cash equivalents?

Why are time deposits with a term of up to 90 days classified as cash equivalents?

What is the primary purpose of disclosing the components of cash equivalents in the accompanying notes to financial statements?

What does the accounting equation (A=L+E) represent in the context of the Statement of Financial Position?

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