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.

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 2014 – L1 – SB – Q4a – Elements of Financial Statements

Classifying items as capital expenditure for the Statement of Financial Position.

Question

State which of the following items should be classified as capital expenditure for the purpose of preparing the Statement of Financial Position:

i. The purchase of leasehold premises
ii. The annual depreciation of leasehold premises
iii. Solicitor’s fees in connection with the purchase of leasehold premises
iv. The costs of adding extra-storage capacity to a mainframe computer used by the business
v. Computer repairs and maintenance costs
vi. Profit on the sale of an office building
vii. Revenue from sales via credit cards
viii. The cost of new machinery procured
ix. Custom duty charged on machinery procured and imported into the country
x. The carriage costs of transporting new machinery from the supplier’s factory to the buyer’s premises
xi. The wages of the machine operators
xii. Cost of cleaning of the machine room
xiii. Cost of oil and other materials purchased for the repairs of machine

Answer

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Tags: Capital Expenditure, Financial Statements, Revenue Expenditure
Level: Level 1, Level 3

Topic: Elements of Financial Statements
Series: NOV 2014

FA – Nov 2014 – L1 – SB – Q1b – Elements of Financial Statements

Identifying the new IFRS conceptual names for key financial statement elements.

Question

In accordance with the IFRS Conceptual Framework, the following items/elements of financial statements have had their conceptual names changed:

i. Trading profit and loss account
ii. Stocks
iii. Balance sheet
iv. Trade debtors
v. Net book value
vi. Trade creditors
vii. Fixed assets
viii. Profit after tax
ix. Shareholders’ fund
x. Long-term liability

State the new conceptual names for each of the items/elements above.
(Total 10 Marks)

Answer

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Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2014

FA – May 2021 – L1 – SB – Q6a – Elements of Financial Statements

Explain five elements of financial statements and state four models of measurement of elements of financial statements.

Question

The International Accounting Standards Board (IASB) Conceptual Framework describes the elements of financial statements as broad classes of financial effects of transactions and other events.

i. Explain five elements of financial statements.
ii. State four models of measurement of the elements of financial statements.

Answer

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Tags: Assets, Equity, Expenses, Financial Statements, Income, Liabilities
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2021

FA – Nov 2014 – L1 – SA – Q5 – Elements of Financial Statements

Identifying the correct term for a present obligation of an entity arising from past events.

Question

A present obligation of an entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits, is known as:

A. An asset
B. A provision
C. A liability
D. A payable
E. A receivable

Answer

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Tags: Accounting Definitions, Liabilities, Obligations
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2015

FA – Nov 2014 – L1 – SA – Q1 – Elements of Financial Statements

Identifying the item not part of a complete set of financial statements under IFRS.

Question

Which of the following is NOT part of a complete set of financial statements under International Financial Reporting Standard (IFRS)?

A. Statement of changes in equity
B. Statement of financial position
C. Statement of cash flows
D. Statement of corporate governance
E. Notes to the financial statements

Answer

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Tags: Accounting Standards, Elements of Statements, Financial Statements, IFRS, International Financial Reporting Standards
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2014

FA – May 2021 – L1 – SA – Q1 – Elements of Financial Statements

Tests knowledge on the correct definition of assets.

Question

Which of the following is NOT correct about the definition of assets?

A. Resources which an entity must control
B. Resources which an entity must own
C. Resources which are expected to bring future benefits to an entity
D. Resources that their costs can be reliably measured
E. Resources for which liabilities arise from past events

Answer

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Tags: Assets, Definition, Elements, Financial Statements
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2021

FA – May 2023 – L1 – SA – Q17 – Elements of Financial Statements

Identifying expenses that must be recognized on the face of the statement of profit or loss classified by function of expenses.

Question

Which of the following must be recognised on the face of the statement of profit or loss, classified by function of expenses?

I. Depreciation
II. Tax charge
III. Dividends
IV. Finance charges

A. I and II

B. II and III

C. I and IV

D. II and IV

E. III and IV

Answer

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Tags: Expenses Classification, Financial Statements, Profit or Loss
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2023

FA – May 2023 – L1 – SA – Q3 – Elements of Financial Statements

Identifying a component that is not part 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 cash flow

E. Statement of affairs

Answer

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Tags: Components of Financial Statements, Financial Statements, IFRS
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2023

FA – May 2023 – L1 – SA – Q2 – Elements of Financial Statements

Identifying the appropriate measurement basis when a company is not a going concern.

Question

Which of the following is a measurement basis for the elements of financial statement when a company is NOT a going concern?

A. Historical cost

B. Current cost

C. Realisable value

D. Present value

E. Value in use

Answer

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Tags: Financial Statements, Measurement Basis
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2023

FA – May 2017 – L1 – SB – Q2b – Elements of Financial Statements

Define and explain the significance of the elements of financial statements.

Question

State and explain FOUR elements of financial statements in IASB Conceptual Framework. (8 Marks)

Answer

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Level: Level 1