Elements of Financial Statements – Page 2

FA – May 2012 – L1 – SA – Q32 – Elements of Financial Statements

Identifying the intangible business asset related to reputation and customer loyalty.

Question

An intangible business asset which relates to reputation, customers’ loyalty, and popularity garnered over the years, and due to the expertise of the business owner or the quality of goods produced or services rendered, is called ………………………….

Answer

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Tags: Financial Statements, Goodwill, Intangible Assets
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2012

FA – May 2012 – L1 – SA – Q10 – Elements of Financial Statements

Identifying which element is not affected when the proprietor consumes goods.

Question

The value of goods taken by the proprietor of a firm for his consumption will affect all but ONE of the following:

A. Gross profit
B. Net profit
C. Inventory balance
D. Company’s capital
E. Inventory valuation.

Answer

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Tags: Gross Profit, Inventory Valuation, Net Profit
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2012

FA – May 2012 – L1 – SA – Q1 – Elements of Financial Statements

Identifying the item that does not belong in the statement of financial position of a club.

Question

The following items normally feature in the statement of financial position of a club EXCEPT:

A. Current year’s subscription
B. Salary in arrears
C. Rental income received in advance
D. Advance subscription in respect of a coming year
E. Subscription in arrears.

Answer

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Tags: Club Accounting, Rental Income, Salary, Subscription
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2012

FA – Nov 2020 – L1 – SB – Q5 – Elements of Financial Statements

Classify expenditure as capital or revenue and state recognition in financial statements.

Question

Given below are items of revenue and capital expenditure:

A number of new cars recently cleared by a motor car dealing company.
Two new motor boats acquired by a ferry service agency.
Vacant houses owned by an estate developing company, for which negotiations are ongoing for sale to prospective landlords.
New buildings acquired for the purpose of holding items of plant and machinery belonging to a detergent manufacturing company.
Cost of acquiring a leasehold property for office use.
Granites purchased by an engineering contractor for use at a construction site.
Cost of rehabilitating a dilapidated housing unit owned by an estate developer.
Pre-production testing cost.

Required:

a. Using the tabular format below, classify the above transactions into capital or revenue expenditure. (8 Marks)

S/N | Capital Expenditure | Revenue Expenditure

b. State whether each of the items above will be recognized in the statement of profit or loss or in the statement of financial position. (8 Marks)

c. In respect of the information in (a) above, outline the details of information of the capital expenditure that should be included in the property, plant, and equipment (PPE) register. (4 Marks)

Answer

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Tags: Capital Expenditure, Depreciation, Financial Statements, Leasehold Property, PPE, Revenue Expenditure
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

Question

Which of the following is NOT a component of financial statements under IAS 1?
A. Statement of financial position
B. Statement of profit or loss and other comprehensive income
C. Statement of equity
D. Statement of changes in equity
E. Statement of cash flows

Answer

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Tags: Financial Statements, IAS 1, Statement of Financial Position
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q9 – Elements of Financial Statements

Determines the balance on the share premium account after a rights issue.

Question

What will be the balance on the share premium account after the rights issue?

Item	N’000
Ordinary share capital: 200,000 shares of 50k each	100
Premium account	150

The company made a rights issue of 1 for 5 at N1.50, and the rights issue was fully subscribed.

A. N90,000
B. N140,000
C. N150,000
D. N190,000
E. N200,000

Answer

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Tags: Capital structure, Rights Issue, Share Premium
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q8 – Elements of Financial Statements

Determines the amount credited to share capital from a rights issue.

Question

The capital structure of Baba Oba Limited is shown below:

Item	N’000
Ordinary share capital: 200,000 shares of 50k each	100
Premium account	150

The company made a rights issue of 1 for 5 at N1.50, and the rights issue was fully subscribed.

What is the amount of the rights issue credited to share capital?
A. N20,000
B. N40,000
C. N50,000
D. N70,000
E. N100,000

Answer

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Tags: Capital structure, Rights Issue, Share Capital
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q4 – Elements of Financial Statements

Identification of correct and incorrect items in the statement of cash flows.

Question

Which of the following is/are correct?

I. A statement of cash flow prepared using the direct method produces a different figure for operating cash flow than that produced by the indirect method.
II. Rights issue of shares does not feature in the statement of cash flow.
III. Revaluation surplus of a non-current asset is not recognized as an item in the statement of cash flow.
IV. A profit on the sale of a non-current asset is recognized as an item under cash flows from investing activities in a cash flow statement.

A. I and IV
B. II and III
C. II and IV
D. III
E. I and III

Answer

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Tags: Cash Flow Methods, Statement of Cash Flow
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements

Calculate the dividend payable to ordinary shareholders.

Question

If a 10% dividend is approved, what is the dividend payable to ordinary shareholders?

Answer

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Tags: Dividends, Equity, Shareholders
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

FA – Nov 2012 – L1 – SB – Q39 – Elements of Financial Statements

Calculate equity shareholder fund from given financial data.

Question

Calculate the company’s equity?

Answer

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Tags: Equity, Financial Statements, Shareholder Fund
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q14 – Elements of Financial Statements

Identifying the definition of a company's net worth.

Question

Which of the following defines the net worth of a company?

A. Equity interest
B. Non-current assets less current assets
C. Non-current assets and current liabilities
D. Changes in the loan notes
E. Non-current assets and intangible assets

Answer

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Tags: Company, Equity, Net Worth
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q1 – Elements of Financial Statements

Determining which of the listed options is not part of retained earnings.

Question

Which of the following is NOT part of retained earnings?

A. Revenue reserve
B. Accumulated profits
C. Profits on exceptional activities
D. Undistributed profits
E. Unappropriated profits

Answer

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Tags: Financial Statements, Profit, Reserves, Retained Earnings
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

FA – May 2014 – L1 – SA – Q3 – Elements of Financial Statements

Identifies a non-component of financial statements under IFRS.

Question

Which of the following is NOT a component of financial statements under IFRS?
A. Statement of financial position
B. Statement of profit or loss and other comprehensive income
C. Statement of changes in equity
D. Statement of affairs
E. Statement of cashflows

Answer

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Tags: Basic Accounting Principles, Financial Statements, IFRS
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2014

FA – Nov 2013 – L1 – SA – Q38 – Elements of Financial Statements

Calculating the original cost of goods using mark-up information.

Question

Jenson Manufacturing Company has the policy of transferring manufactured goods from the factory to the sales department at cost plus 25% mark-up. In the current accounting period, the value of goods transferred from the production to sales department amounted to ₦2,000,000. What was the original cost of the goods to the production department?

Answer

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Tags: Cost Determination, Inventory Valuation, Mark-Up
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q31 – Elements of Financial Statements

Identifying the accounting entries when royalty payable exceeds minimum rent.

Question

What are the accounting entries when the royalty payable exceeds the minimum rent?

Answer

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Tags: Accounting Entries, Minimum Rent, Royalty
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q30 – Elements of Financial Statements

Identifying the term for payments made by tenants for property use.

Question

The amount agreed to be paid by a tenant to a landlord for the use of his property for economic reasons is known as ____________.

Answer

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Tags: Property Use Payments, Rental Income, Tenancy
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q22 – Elements of Financial Statements

Understanding the term for the face value of shares.

Question

The “face value” of the shares in limited companies is known as ____________.

Answer

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Tags: Company Capital, Face Value, Shares
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements

Determining the dividend payable to a shareholder.

Question

A dividend of 10% on the nominal value of a company with 100,000 ordinary shares of 50k nominal value has been declared. How much will a shareholder receive as dividend if he has 10,000 shares?

A. N200
B. N400
C. N500
D. N1,000
E. N5,000

Answer

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Tags: Accounting Calculations, Dividends, Shareholder Payments
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2013

FA – Nov 2015 – L1 – SB – Q5a – Elements of Financial Statements

Define an intangible non-current asset and provide an example.

Question

a. Define intangible non-current asset and give one example. (2 Marks)

Answer

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Tags: Financial Reporting, Intangible Assets, Non-current Assets
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q13 – Elements of Financial Statements

This question identifies the best explanation of the term "Capital Expenditure."

Question

Which of the following can best explain the term “Capital Expenditure”?
A. Expenditure relating to the issue of share capital
B. Expenditure on expensive assets
C. Expenditure relating to the acquisition or improvement of non-current assets
D. Expenditure on non-current assets including repairs and maintenance
E. Expenditure relating to entertainment of guests

Answer

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Tags: Accounting principles, Capital Expenditure, Non-current Assets
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2015

Topic: Elements of Financial Statements

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FA – May 2012 – L1 – SA – Q32 – Elements of Financial Statements

Identifying the intangible business asset related to reputation and customer loyalty.

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FA – May 2012 – L1 – SA – Q10 – Elements of Financial Statements

Identifying which element is not affected when the proprietor consumes goods.

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FA – May 2012 – L1 – SA – Q1 – Elements of Financial Statements

Identifying the item that does not belong in the statement of financial position of a club.

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FA – Nov 2020 – L1 – SB – Q5 – Elements of Financial Statements

Classify expenditure as capital or revenue and state recognition in financial statements.

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FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

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FA – Nov 2020 – L1 – SA – Q9 – Elements of Financial Statements

Determines the balance on the share premium account after a rights issue.

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FA – Nov 2020 – L1 – SA – Q8 – Elements of Financial Statements

Determines the amount credited to share capital from a rights issue.

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FA – Nov 2020 – L1 – SA – Q4 – Elements of Financial Statements

Identification of correct and incorrect items in the statement of cash flows.

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FA – Nov 2012 – L1 – SB – Q40 – Elements of Financial Statements

Calculate the dividend payable to ordinary shareholders.

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FA – Nov 2012 – L1 – SB – Q39 – Elements of Financial Statements

Calculate equity shareholder fund from given financial data.

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FA – Nov 2012 – L1 – SA – Q14 – Elements of Financial Statements

Identifying the definition of a company's net worth.

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FA – Nov 2012 – L1 – SA – Q1 – Elements of Financial Statements

Determining which of the listed options is not part of retained earnings.

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FA – May 2014 – L1 – SA – Q3 – Elements of Financial Statements

Identifies a non-component of financial statements under IFRS.

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FA – Nov 2013 – L1 – SA – Q38 – Elements of Financial Statements

Calculating the original cost of goods using mark-up information.

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FA – Nov 2013 – L1 – SA – Q31 – Elements of Financial Statements

Identifying the accounting entries when royalty payable exceeds minimum rent.

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FA – Nov 2013 – L1 – SA – Q30 – Elements of Financial Statements

Identifying the term for payments made by tenants for property use.

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FA – Nov 2013 – L1 – SA – Q22 – Elements of Financial Statements

Understanding the term for the face value of shares.

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FA – Nov 2013 – L1 – SA – Q17 – Elements of Financial Statements

Determining the dividend payable to a shareholder.

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FA – Nov 2015 – L1 – SB – Q5a – Elements of Financial Statements

Define an intangible non-current asset and provide an example.

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FA – Nov 2015 – L1 – SA – Q13 – Elements of Financial Statements

This question identifies the best explanation of the term "Capital Expenditure."

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