Accounting and finance
Name _________________________________
Date ______________________ Hour ______
Week 7 Assessment
1. An accountant prepared a statement of financial position for a business. In this
statement, the equity of the owner was shown next to the liabilities. This confused the
owner, who argued: ‘My equity is my major asset and so should be shown as an asset
on the statement of financial position.’ How would you explain this misunderstanding to
the owner?
(3 marks)
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2. In recent years there have been attempts to place a value on the ‘human assets’ of a
business in order to derive a figure that can be included on the statement of financial
position. Do you think humans should be treated as assets? Would ‘human assets’ meet
the conventional definition of an asset for inclusion on the statement of financial
position?
(3 marks)
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3. The following is a list of the assets and claims of Crafty Engineering Ltd at 30 June
last year:
£000
Trade payables
86
Motor vehicles
38
Long-term borrowing from Industrial Finance Co.
260
Equipment and tools
207
Short-term borrowings
116
Inventories
153
Property
320
Trade receivables
185
Equity
441
Required: Prepare the statement of financial position of the business as at 30 June last
year from the above information. Classify all assets and liabilities.
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