Solution Manual for Financial Accounting for Managers
1st Edition By Thomas, Spiceland, Nelson
What statement is true:?
a. The Statement of Cash Flows shows the profitability of the entity.
b. The Statement of Changes in Equity presents changes in the ownership interest of
an entity from the start to the end of the period.
c. The Statement of Profit or Loss presents the cash inflow and cash outflows of an
entity during the period.
d. The Statement of Financial Position presents the financial position of the entity
during the period. - ANSWER: b
Define share capital - ANSWER: Name given to the total amount of cash which the
shareholders have contributed to the company
Define share premium - ANSWER: The claim which owners have on the assets of a
company as shares have been purchased from the company at a price greater than
the nominal value.
Define trade payable - ANSWER: Amounts due to suppliers
Define trade receivables - ANSWER: Amounts due from customers
What is the main objective of financial statements, according to the Conceptual
Framework?
a. To provide information to calculate the dividend payment.
b. To provide information to calculate the corporation tax charge.
c. To provide information to help users make economic decisions
d. To provide information to help managers make business decisions. - ANSWER: c
Which of these statements is correct?
a. Verifiability refers to the ability to agree numbers back to evidence.
b. Comparability means that users can make sense of the information given in the
financial statements.
c. Understandability refers to using standard layouts for the statement of profit or
loss and statement of financial position.
d. Timeliness involves waiting until all information in financial statements can be
verified before they are released. - ANSWER: a
Which of these is not one of the primary statements?
Select one:
a. Statement of Profit or Loss
,b. Statement of Cash Flows
c. Accounting policies
d. Statement of Financial Position - ANSWER: c
What economic decision is a bank likely to take on the basis of financial information?
Select one:
a. Whether to sell the shares they hold in the business.
b. Whether to lend money to the business.
c. Whether to buy shares in the business.
d. Whether to sell goods to the business on credit. - ANSWER: b
Which of these is not part of the financial statements?
a. The Chairman's Statement
b. The notes to the financial statements
c. The accounting policies
d. The primary statements - ANSWER: a
The use of standard layouts for the primary financial statements, such as the
statement of profit or loss, is an example of applying the principle of:
a. Prudence.
b. Comparability.
c. Accruals.
d. Timeliness. - ANSWER: b
What is the missing word?_________ is a characteristic of faithful representation
and means that the financial statements are free from bias.
a. Completeness.
b. Prudence.
c. Neutrality.
d. Relevance. - ANSWER: c
How do you account for trade receivables? - ANSWER: Asset
How do you account for trade payables? - ANSWER: Liability
How do you account for tax? - ANSWER: Liability and an Expense
How do you account for share capital? - ANSWER: Equity
How do you account for a bank loan? - ANSWER: Liability
How do you account for a computer? - ANSWER: Asset
How do you account for patents? - ANSWER: Asset
How do you account for employees? - ANSWER: None
, How do you account for a customer deposit? - ANSWER: Liability
How do you account for goods purchased but not invoiced yet? - ANSWER: Liability
How do you account for rent paid in advance? - ANSWER: Asset
How do you account for a purchase order? - ANSWER: None
What is the accounting equation?
a. Assets = Liabilities + Owners Equity
b. Liabilities = Assets + Owners Equity
c. Assets = Liabilities - Owners Equity
d. Owners Equity = Assets + Liabilities - ANSWER: a
If Assets = £50,000, Liabilities = £30,000 and assuming the business has no reserves,
what is the amount of capital?
a. £80,000
b. - £20,000
c. £20,000
d. Information missing, can't calculate the figure - ANSWER: c
Which accounts are affected when an owner invests money into the business?
a. Income and cash
b. Cash and capital
c. Cash and Investments
d. Accounts payable and capital - ANSWER: b
How will accounts be affected when owner invests cash into the business?
a. Cash increases and capital increases
b. Cash increases and capital decreases
c. Cash decreases and capital decreases
d. Cash decreases and capital increases - ANSWER: a
How will accounts be affected when the business pays its rent?
a. Cash increases and rent expense increases
b. Cash increases and rent expense decreases
c. Cash decreases and rent expense decreases
d. Cash decreases and rent expense increases - ANSWER: d
The business paid 400 pounds cash to suppliers for amount previously owed
a. Debit cash; credit trade payables
b. Debit cash; credit trade receivables
c. Debit trade payables; credit cash
d. Debit trade receivables; credit cash - ANSWER: c
The business received 800 pounds in cash from customers who previously purchased
on credit
1st Edition By Thomas, Spiceland, Nelson
What statement is true:?
a. The Statement of Cash Flows shows the profitability of the entity.
b. The Statement of Changes in Equity presents changes in the ownership interest of
an entity from the start to the end of the period.
c. The Statement of Profit or Loss presents the cash inflow and cash outflows of an
entity during the period.
d. The Statement of Financial Position presents the financial position of the entity
during the period. - ANSWER: b
Define share capital - ANSWER: Name given to the total amount of cash which the
shareholders have contributed to the company
Define share premium - ANSWER: The claim which owners have on the assets of a
company as shares have been purchased from the company at a price greater than
the nominal value.
Define trade payable - ANSWER: Amounts due to suppliers
Define trade receivables - ANSWER: Amounts due from customers
What is the main objective of financial statements, according to the Conceptual
Framework?
a. To provide information to calculate the dividend payment.
b. To provide information to calculate the corporation tax charge.
c. To provide information to help users make economic decisions
d. To provide information to help managers make business decisions. - ANSWER: c
Which of these statements is correct?
a. Verifiability refers to the ability to agree numbers back to evidence.
b. Comparability means that users can make sense of the information given in the
financial statements.
c. Understandability refers to using standard layouts for the statement of profit or
loss and statement of financial position.
d. Timeliness involves waiting until all information in financial statements can be
verified before they are released. - ANSWER: a
Which of these is not one of the primary statements?
Select one:
a. Statement of Profit or Loss
,b. Statement of Cash Flows
c. Accounting policies
d. Statement of Financial Position - ANSWER: c
What economic decision is a bank likely to take on the basis of financial information?
Select one:
a. Whether to sell the shares they hold in the business.
b. Whether to lend money to the business.
c. Whether to buy shares in the business.
d. Whether to sell goods to the business on credit. - ANSWER: b
Which of these is not part of the financial statements?
a. The Chairman's Statement
b. The notes to the financial statements
c. The accounting policies
d. The primary statements - ANSWER: a
The use of standard layouts for the primary financial statements, such as the
statement of profit or loss, is an example of applying the principle of:
a. Prudence.
b. Comparability.
c. Accruals.
d. Timeliness. - ANSWER: b
What is the missing word?_________ is a characteristic of faithful representation
and means that the financial statements are free from bias.
a. Completeness.
b. Prudence.
c. Neutrality.
d. Relevance. - ANSWER: c
How do you account for trade receivables? - ANSWER: Asset
How do you account for trade payables? - ANSWER: Liability
How do you account for tax? - ANSWER: Liability and an Expense
How do you account for share capital? - ANSWER: Equity
How do you account for a bank loan? - ANSWER: Liability
How do you account for a computer? - ANSWER: Asset
How do you account for patents? - ANSWER: Asset
How do you account for employees? - ANSWER: None
, How do you account for a customer deposit? - ANSWER: Liability
How do you account for goods purchased but not invoiced yet? - ANSWER: Liability
How do you account for rent paid in advance? - ANSWER: Asset
How do you account for a purchase order? - ANSWER: None
What is the accounting equation?
a. Assets = Liabilities + Owners Equity
b. Liabilities = Assets + Owners Equity
c. Assets = Liabilities - Owners Equity
d. Owners Equity = Assets + Liabilities - ANSWER: a
If Assets = £50,000, Liabilities = £30,000 and assuming the business has no reserves,
what is the amount of capital?
a. £80,000
b. - £20,000
c. £20,000
d. Information missing, can't calculate the figure - ANSWER: c
Which accounts are affected when an owner invests money into the business?
a. Income and cash
b. Cash and capital
c. Cash and Investments
d. Accounts payable and capital - ANSWER: b
How will accounts be affected when owner invests cash into the business?
a. Cash increases and capital increases
b. Cash increases and capital decreases
c. Cash decreases and capital decreases
d. Cash decreases and capital increases - ANSWER: a
How will accounts be affected when the business pays its rent?
a. Cash increases and rent expense increases
b. Cash increases and rent expense decreases
c. Cash decreases and rent expense decreases
d. Cash decreases and rent expense increases - ANSWER: d
The business paid 400 pounds cash to suppliers for amount previously owed
a. Debit cash; credit trade payables
b. Debit cash; credit trade receivables
c. Debit trade payables; credit cash
d. Debit trade receivables; credit cash - ANSWER: c
The business received 800 pounds in cash from customers who previously purchased
on credit
