BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Classify the assets into current and non-current accounts, and place them in the assets column.
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Compute the totals of current and non-current liabilities and total equity.
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Copy the Ending Capital and place it under the subheading of Owner’s Equity.
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Determine the totals of current and non-current assets from the general ledgers.
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Detailed explanation-1: -Companies that follow IFRS to prepare a statement of financial position generally use the following order of classification: noncurrent assets, current assets, equity, noncurrent liabilities, current liabilities.
Detailed explanation-2: -The elements of the financial statements will be assets, liabilities, net assets/equity, revenues and expenses.
Detailed explanation-3: -A statement of financial position contains 3 main items which include assets, liabilities and owner’s equity. The amount on the assets should be equal to the amount on liabilities added to the owner’s equity otherwise, the balance sheet will be incorrect because it will not balance.
Detailed explanation-4: -Balance sheet Based on the basic accounting equation, or balance sheet equation [Assets = Liabilities + Equity], the balance sheet provides a snapshot of a business’s assets, liabilities, and equity.