Which of the following statements about provisions and contingencies is/are corr-新东方在线职业题库

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Which of the following statements about provisions and contingencies is/are correct?

1 A company should disclose details of the change in carrying amount of a provision from the beginning to the end of the year.

2 Contingent assets must be recognised in the financial statements in accordance with the prudence concept.

3 Contingent liabilities must be treated as actual liabilities and provided for if it is probable that they will arise.

A

3 only

B

2 and 3 only

C

1 and 3 only

D

All three statements are correct

Chapter11Provisionsandcontingencies

Contingent assets should not be recognised in the financial statements. However, they should bedisclosed if it is probable

that the economic benefits associated with the asset will flow to the entity. If it becomes probable that the a transfer of

economic benefits associated with a contingent liability will happen, then the contingent liability is no longer contingent and a

liability should be recognised in the financial statements

多做几道

Which of the following is a ratio which is used to measure how much a business owes in relation to its size?

A

Asset turnover

B

Profit margin

C

Gearing

D

Return on capital employed

A business operates on a gross profit margin of 331/3%. were $680. Gross profit on a sale was $800, and expenses

What is the net profit margin?

A

3.75%

B

5%

C

11.25%

D

22.67%

A company has the following details extracted from its statement of financial position：

$'000

Inventories 1,900

Receivables 1,000

Bank overdraft 100

Payables 1,000

The industry the company operates in has a current ratio norm of 1.8. Companies who manage liquidity well in this industry

have a current ratio lower than the norm.

Which of the following statements accurately describes the company’s liquidity position?

A

Liquidity appears to be well managed as the bank overdraft is relatively low

B

Liquidity appears to be poorly-controlled as shown by the large payables balance

C

Liquidity appears to be poorly-controlled as shown by the company’s relatively high current ratio

D

Liquidity appears to be poorly-controlled as shown by the existence of a bank

Why is analysis of financial statements carried out?

A

So that the analyst can determine a company’s accounting policies

B

So that the significance of financial statements can be better understood through comparisons

with historical performance and with other companies

C

To get back to the ‘real’ underlying figures, without the numbers being skewed by the

requirements of International Financial Reporting Standards

D

To produce a report that can replace the financial statements, so that the financial statements

no longer need to be looked at

Which of the following transactions would result in an increase in capital employed?

A

Selling inventory at a profit

B

Writing off a bad debt

C

Paying a payable in cash

D

Increasing the bank overdraft to purchase a non-current asset

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