Projected Statement of Financial Position

Question 1

commonly known as the balance sheet, is a financial statement that reports a company’s assets, liabilities, and equity at a specific point in time.

Answer 1

Statement of Financial Position

Question 2

The statement is structured based on the accounting equation:
The statement is structured based on the accounting equation

Answer 2

Assets = Liabilities + Equity

Question 3

Convertible to cash within a year.
Money owed by customers
Inventory
Prepaid expenses (e.g., rent, insurance)
Marketable securities

Answer 3

Current Assets

Question 4

Long-term investments.
Fixed assets (e.g., buildings, equipment)
Depreciation must be accounted for.

Answer 4

Non-Current Assets

Question 5

Components of a Statement of Financial Position

Answer 5

A. Assets (What the Business Owns)
B. Liabilities (What the Business Owes)
C. Equity (Owner’s Share in the Business)

Question 6

Short-term debts due within a year.

Wages, accounts payable, taxes, utility bills, rent, short-term loans

Answer 6

Current Liabilities

Question 7

Long-term obligations.

Long-term interest, lease liabilities, bonds payable, deferred tax.

Answer 7

Non-Current Liabilities

Question 8

Represents money from owners and shareholders, plus retained earnings.
Components:

Common stock (ownership shares)

Preferred stock (priority shares)

Retained earnings (profits after dividends)

Treasury stock (reacquired shares)

Additional paid-in capital (excess payment on shares)

Answer 8

Equity (Owner’s Share in the Business)