Elements of Financial Statements – Page 5

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 – May 2017 – L1 – SA – Q13 – Elements of Financial Statements

Identifies components of equity in financial statements.

Question

The following are components of equity EXCEPT:
A. Ordinary share capital
B. Share premium
C. Revaluation reserves
D. Retained earnings
E. Loan notes

Answer

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Tags: Equity, Financial Statements, Loan Notes, Share Capital
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2017

FA – Nov 2019 – L1 – SA – Q11- Elements of Financial Statements-

Identify which of the following is not an element of financial statements.

Question

Which of the following is not an element of financial statements?

A. Asset
B. Liability
C. Equity interest
D. Income
E. Profit

Answer

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Tags: Asset, Elements of Financial Statements, Equity, Liability
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2019

FA – May 2016 – L1 – SB – Q6 – Elements of Financial Statements

Classify various expenditures as revenue or capital and their impact on financial statements and non-current asset register.

Question

Given below are items of “Revenue” and “Capital” expenditure:

(i) A number of new cars that had recently been cleared by a motor car dealing company.

(ii) Two new motor boats acquired by a ferry service agency.

(iii) Vacant houses owned by an estate developing company in respect of which negotiations are ongoing for assistance for their sale to prospective landlords.

(iv) New buildings acquired for the purpose of holding the items of plant and machinery belonging to a detergent manufacturing company.

(v) Cost of acquiring a leasehold property for office use.

(vi) Granites purchased by an engineering contractor for use at a construction site.

(vii) Cost of rehabilitating a dilapidated housing unit owned by an estate developer.

(viii) Repairs to plant and machinery in a manufacturing company.

Required:

a. For each of the above, state whether it is a “Revenue” or “Capital” expenditure. (4 Marks)

b. State how each will be recognised in the statement of profit or loss and the statement of financial position as the case may be. (12 Marks)

c. State how the non-current assets register will be affected by any of the transactions. (4 Marks)

Answer

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Tags: Capital Expenditure, Classification, Expenditure Recognition, Financial Statements, Non-current Assets, Revenue Expenditure
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2016

FA – May 2016 – L1 – SA – Q3 – Elements of Financial Statements

A question about the best description of equity in the statement of financial position.

Question

In the statement of financial position, equity is best described as:
A. Market value of the shares of the owners
B. Issued capital and reserves
C. Issued capital and loan notes
D. Revenue and gains
E. Expenses and losses

Answer

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Tags: Capital, Equity, Financial Position, Reserves
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2016

FA – MAY 2015 – L1 – SB – Q1a – Elements of Financial Statements

Define income and list characteristics of capital and revenue income.

Question

The elements which are directly related to the measurement of profit are Income and Expenses.

i. In line with the above statement, what is Income? (2 Marks)
ii. List TWO characteristics each of Capital Income and Revenue Income. (4 Marks)

Answer

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Tags: Capital Income, Income, Journal Entries, Revenue Income, Transactions
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2015

FA – MAY 2015 – L1 – SA – Q7 – Elements of Financial Statements

Identify the item that cannot be defined as income.

Question

Which of these statements CANNOT be defined as income?
A. Decrease in economic benefits during the accounting period
B. Increase in economic benefits during the accounting period
C. Decrease in liabilities
D. Gains arising on the disposal of non-current assets
E. Activities that enhance the net assets

Answer

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Tags: Economic Benefits, Financial Statements, Income
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 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 – May 2017 – L1 – SA – Q13 – Elements of Financial Statements

Identifies components of equity in financial statements.

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FA – Nov 2019 – L1 – SA – Q11- Elements of Financial Statements-

Identify which of the following is not an element of financial statements.

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FA – May 2016 – L1 – SB – Q6 – Elements of Financial Statements

Classify various expenditures as revenue or capital and their impact on financial statements and non-current asset register.

You're reporting an error for "FA – May 2016 – L1 – SB – Q6 – Elements of Financial Statements"

FA – May 2016 – L1 – SA – Q3 – Elements of Financial Statements

A question about the best description of equity in the statement of financial position.

You're reporting an error for "FA – May 2016 – L1 – SA – Q3 – Elements of Financial Statements"

FA – MAY 2015 – L1 – SB – Q1a – Elements of Financial Statements

Define income and list characteristics of capital and revenue income.

You're reporting an error for "FA – MAY 2015 – L1 – SB – Q1a – Elements of Financial Statements"

FA – MAY 2015 – L1 – SA – Q7 – Elements of Financial Statements

Identify the item that cannot be defined as income.

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