7453 Statement of Financial Position Flashcards
(17 cards)
An entity provided the following trial balance on December 31, 2025:
Cash overdraft ( 200,000)
Accounts receivable net 700,000
Inventory 1,200,000
Prepaid expenses 200,000
Land held for resale 2,000,000
PPE, net 1,900,000
Accounts payable 700,000
Share capital 3,000,000
Share premium 500,000
Retained earnings 1,600,000
Checks amounting to P600,000 were written to vendors and recorded on December 31, 2025 resulting in cash overdraft of P200,000. The checks were mailed on January 15, 2026. Land held for resale was sold for cash on January 31, 2026.
I. The total current-assets should be reported at P4,500,000 on December 31, 2025
II. The total current liabilities should be reported at P1,300,000 on December 31, 2025.
III. The total shareholders’ equity should be reported at P5,100,000 on December 31, 2025.
IV. An entity shall classify an asset as noncurrent if the asset is held primarily for the purpose of
trading.
A. All statements are true
B. All statements are not true
C. Only statements I, II and III are true
D. Only statements I and II are true.
C. Only statements I, II and III are true
Cash 600k
AP 600k
I.
Cash (-200k+600k) 400k
AR 700k
Inv 1.2M
Prep Exp 200k
Land HFS 2M
Tot CA 4.5M
II.
AP (700k+600k) 1.3M
III.
SHE (3M+500k+1.6M) 5.1M
IV current if held for trading
An entity provided the following unadjusted balances on December 31, 2025:
Cash 1,500,000
Accounts receivable 1,650,000
Prepaid taxes 250,000
Accounts payable 200,000
Share capital 1,000,000
Share premium 500,000
Retained earnings 1,500,000
Translation adjustment – debit 800,000
Revenue 4,000,000
Expenses 3,000,000
During 2025, estimated tax payments of P250,000 were charged to prepaid taxes. The entity has not yet recorded income tax expense. There were no differences between financial income and taxable tax income and the tax rate is 25%.
Included in accounts receivable is P500,000 due from a customer. Special terms granted to this customer require payment in equal semiannual installments of P125,000 every April 1 and October 1.
I. The total current assets should be reported at P2,900,000 on December 31, 2025.
II. The total shareholders’ equity should be reported at P2,950,000 on December 31, 2025.
III. The translation adjustment is a component of other comprehensive income.
A. All statements are true
B. All statements are not true
C. Only statements I and III are true
D. Only statement III is true
A. All statements are true
Prepaid taxes 250k
Cash 250k
Income tax expense 250k
Prepaid tax 250k
I.
AR from customer 500k
CA - 1 yr (250k)
NCA - >1 yr 250k
Cash 1.5M
AR 1.4M (1,650,000-250k)
CA 2.9M
II.
Rev 4M
Exp (3M)
NI b4 tax 1M
* 75%
NI after tax 750k
Share Cap 1M
Share Prem 500k
RE (1.5M+750k) 2,250,000
Trans - OCI (800k)
Total SHE 2,950,000
An entity was incorporated on January 1, 2025 with proceeds from the issuance of P7,500,000 in share
capital and borrowed funds of P1,100,000. During 2025, revenue from sales and consulting amounted to P8,200,000, and operating costs and expenses totaled P6,400,000. On December 15, 2025, the entity declared a P300,000 dividend, payable to shareholders on January 2026. The liabilities increased to P2,000,000 by December 31, 2025.
On December 31, 2025, what amount should be reported as total assets?
A. 11,000,000
B. 11,300,000
C. 10,100,000
D. 12,100,000
A. 11,000,000
Share Cap 7.5M
RE (1.8M-300k) 1.5M
Total SHE 9M
Asset = Liab + SHE
11M = 2M + 9M
An entity reported the following liabilities on December 31, 2025:
Accounts payable 2,000,000
Short-term borrowings 1,500,000
Bonds payable due December 31, 2027 3,000,000
Discount on bonds payable 500,000
Mortgage payable, current portion P500,000 3,500,000
Bank loan, due June 30, 2026 1,000,000
Note payable due October 31, 2026 2,000,000
The P1,000,000 bank loan was refinanced with a 5-year loan on December 31, 2025. The financial statements were issued March 1, 2026.
Under the loan agreement, the entity has the right on December 31, 2025 to roll over the note payable
for a least twelve months after December 31, 2025.
What total amount should be reported as current liabilities on December 31, 2025?
A. 7,500,000
B. 5,000,000
C. 8,500,000
D. 4,000,000
D. 4,000,000
2M
1.5M
500k
The end of reporting period of an entity is December 31, 2025 and the financial statements for 2025 are authorized for issue on March 31, 2026
- The entity had equity investments held for trading. On December 31, 2025, these investments were recorded at the fair value of P5,000,000. During the period up to February 15, 2026, there was a steady decline in the fair value of the shares in the portfolio and on February 15, 2026, the fair value had fallen to P2,000,000.
- The entity had reported contingent liability on December 31, 2025 related to court case in which the entity was the defendant. The case was not heard until the first week of February 2026. On March 1, 2026, the judge handed down a decision against the entity and determined that the entity was liable to pay damages and costs totaling P3,000,000.
- On December 31, 2025 the entity had accounts receivable from a large customer in the amount of P4,000,000. On March 15, 2026, the entity was advised in writing by the liquidator of the said customer that the customer was insolvent and that only 10% of the accounts receivable will paid on December 31, 2026.
I. The total adjusting events should be reported at P6,600,000 on December 31, 2025.
II. Financial statements are authorized for issue when the shareholders approve the financial statements and authorize then for issue.
A. Statement I and II are true
B. Statement I and II are not true
C. Only statement I is true
D. Only statement II is true
C. Only statement I is true
- the 3M is nonadjusting event. Since decline is in 2026. Disclose lang
- adjusting event. May kaso na. Condition/liab meron na.
Loss 3M
Est Liab 3M - adjusting event
DA expense 3.6M (4M*90%)
Allowance for DA 3.6M
DA sa 2025. Write off sa 2026
What is the objective of financial statements?
A. To provide information about the financial position, financial performance and changes in the financial position useful to a wide range of users
B. To prepare a statement of financial position and statement of comprehensive income
C. To present relevant, reliable, comparable and understandable information
D. To prepare financial statements in accordance with all applicable standards
A. To provide information about the financial position, financial performance and changes in the financial position useful to a wide range of users
When an entity changes the end of the reporting period longer or shorter than one year, an entity shall disclose all of the following, except
A. Period covered by the financial statements.
B. The reason for using a longer or shorter period.
C. The fact that amounts presented in the financial statements are not entirely comparable.
D. The fact that similar entities in the geographical area in which the entity operates have done so.
D. The fact that similar entities in the geographical area in which the entity operates have done so.
An entity must disclose comparative information for
A. The previous comparable period for all amounts reported.
B. The previous comparable period for all narrative and descriptive information.
C. The previous comparable period for all amounts reported, and for all narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements.
D. The previous two comparable periods for all amounts reported.
C. The previous comparable period for all amounts reported, and for all narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements.
In presenting a statement of financial position, an entity
A. Must make the current and noncurrent presentation.
B. Must present assets and liabilities in the order of liquidity.
C. Must choose either the current and noncurrent or the liquidity presentation.
D. Must make the current and noncurrent presentation except when a presentation based on liquidity provides information that is reliable and more relevant.
D. Must make the current and noncurrent presentation except when a presentation based on liquidity provides information that is reliable and more relevant.
An entity shall classify an asset as current under all of the following conditions, except
A. The entity expects to realize, or intends to sell or consume it within normal operating cycle.
B. The entity holds the asset primarily for the purpose of trading.
C. The entity expects to realize the asset within twelve months after the reporting period.
D. The asset is cash or cash equivalent restricted to settle a liability for more than twelve months after the reporting period.
D. The asset is cash or cash equivalent restricted to settle a liability for more than twelve months after the reporting period.
An entity shall classify a liability as current under all of the following conditions, except
A. The entity expects to settle the liability within the normal operating cycle.
B. The entity holds the liability primarily for the purpose of trading.
C. The liability is due to be settled within twelve months after the reporting period.
D. The entity has the right at the end of reporting period to defer settlement of the liability for at least twelve months after the reporting period.
D. The entity has the right at the end of reporting period to defer settlement of the liability for at least twelve months after the reporting period.
When a long-term loan is subject to covenants that must be complied with at the end of reporting period, the liability is classified as
A. Current under all circumstances
B. Noncurrent under all circumstances
C. Current or noncurrent at the discretion of management
D. Noncurrent if the borrower has already complied with the covenants at the end of reporting period.
D. Noncurrent if the borrower has already complied with the covenants at the end of reporting period.
All of the following components of OCI should be reclassified to profit or loss, except
A. Gain and loss arising from translating the financial statements of a foreign operation.
B. Gain and loss on remeasuring debt investment at FVOCI.
C. The effective portion of gain or loss on hedging instrument in a cash flow hedge
D. Gain or loss on remeasuring equity investment at FVOCI.
D. Gain or loss on remeasuring equity investment at FVOCI.
The presentation of notes to financial statements in a systematic manner is mandatory, as far as practical. What is the purpose of the notes to financial statements?
A. To provide disclosures required by IFRS.
B. To correct improper presentation in financial statements
C. To provide recognition of amounts not included in financial statements
D. To present management response to auditor comments
A. To provide disclosures required by IFRS.
What is the “first item” presented in the notes to financial statements?
A. Statement of compliance with IFRS.
B. Summary of significant accounting policies
C. Supporting information for items presented in the financial statements
D. Other disclosures, including contingent liabilities and nonfinancial disclosures
A. Statement of compliance with IFRS.
1-4 ang a-d. ga sunod ang order
Financial statements are said to be authorized for issue when
A. The financial statements are filed with the SEC.
B. The shareholders approve the financial statements at their annual meeting.
C. The management is required to submit the financial statements to a supervisory body.
D. The management reviews the financial statements and authorizes them for issue.
D. The management reviews the financial statements and authorizes them for issue.
An entity was sued in October 2025 for breach of contract, Based on the advice of counsel, the entity recognized a P2,000,000 estimated lawsuit loss on December 31, 2025. The lawsuit was settled in February 2026 in the amount of P2,200,000 before the 2025 financial statements were available for issue. What is the appropriate accounting procedure for the 2025 statements?
A. Recognize the P200,000 loss in the 2026 statements.
B. Recognize the entire P2,200,000 loss in the 2025 statements.
C. Report P200,000 as retrospective adjustment to the 2025 statements
D. Recognize the entire P2,200,000 loss in the 2026 statements.
B. Recognize the entire P2,200,000 loss in the 2025 statements.
AJE 12/31/25
Loss 200k
Provision 200k
