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) _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 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) _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ 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. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 2
