Activity 1

Queen Company provided the following account balances on December 31, 2020:
Notes Receivable 250,000
Computer Sofware 3,250,000
Prepaid expenses 70,000
Trading Securities 280,000
Unearned rent income 40,000
Retained earnings (deficit) (1,800,000)
Share premium-preference 500,000
Premium on bonds payable 1,000,000
Preference share capital 2,000,000
Share premium-ordinary 200,000
Notes payable 300,000
SSS payable 10,000

Accounts payable 400,000

Accrued salaries 100,000

Accumulated depreciation-building 2,000,000

Accumulated depreciation-equipment 200,000
Allowance for doubtful accounts 20,000
Bonds payable 5,000,000
Dividends payable 120,000
Ordinary share capital 5,000,000

Withholding tax payable 30,000

Preference share redemption fund 350,000

Accounts receivable 400,000

Advances to officers-not currently collectible 100,000
Sinking fund 400,000

Building 5,000,000
Long-term refundable deposit 50,000
Cash and cash equivalents 500,000
Cash surrender value 60,000
Equipment 1,000,000
Patent 100,000
Accrued interest on notes receivable 10,000
Inventories 1,300,000
Land 1,500,000
Land held for speculation 500,000
Required:
Prepare a properly classified statement of financial position on December 31, 2020.

Activity 2
Primo Company provided the following information for the purpose of presenting the statement of
financial position on December 31, 2020.
Cash 400,000

Accounts Receivable 800,000

Allowance for doubtful accounts 50,000

Inventories 1,000,000
Land 500,000
Building 5,000,000
Accumulated Depreciation-building 2,000,000
Machinery 3,000,000
Accumulated Depreciation-machinery 1,200,000
Investment in associate 1,300,000
Prepaid Expense 100,000
Notes Payable 750,000
Accounts Payable 350,000
Income tax payable 50,000
Accrued Expenses 60,000
Mortgage note payable in quarterly installments 2,000,000

Of 100,000
Estimated Liability for damages 140,000
Retained earnings appropriated for plant expansion 1,000,000
Retained earnings appropriated for contingencies 100,000
Share capital 3,000,000
Share premium 300,000
Retained earnings unappropriated 1,250,000
Trademark 150,000
Secret processes and formulas 200,000
Bank loan payable-due to June 30, 2022 500,000
Required:
Prepare in good form a properly classified statement of financial position on December 31,2020 with
supporting notes and computations.
Activity 3 multiple choice
1. The major financial statements include all,except
a.Statement of financial position
b.Statement of changes in financial position

c.Statement of comprehensive income

d.Statement of changes in equity

2. The major financial statements include all,except

A. Statement of financial position
b.Income statement
c.Statement of comprehensive income
d.Statement of retained earnings

3. What is the objective of financial statements?

a.To provide information about the financial position,financial performance,and changes in
financial position of an entity that is useful to a wide range of users in making economic
decisions.
b.To present a statement of financial position and statement of comprehensive income.
c.To present relevant,reliable,comparable and understandable information to investors.
d.To present financial statements in accordance with all applicable standards.

4. Financial statements must be prepared at least

a.Annually
b.Quarterly
c.Semi annually
d.Every two years

5. When entity changed the end of reporting period longer or shorter than one year,the entity
a.Period covered by the financial statements
b.The reason for using a longer or shorter period
c.The fact that amounts presented are not entirely comparable
d.The fact that similar entities have done so.

6. An entity shall classify an asset as current under all of the following conditions,except
a.The entity expects to realize the asset or intends to sell or consume it within the entity‟s
normal operating cycle.
b.The entity holds the asset 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 a cash equivalent that is restricted to settle a liability for more than
twelve months after the reporting period.

7. An entity shall classify a liability as current when under all of the following conditons,except
a.The entity expects to settle the liability within the entity‟s 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 an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period.

8. Assets to be sold,consumed or realized as part of the normal operating cycle are

a.Current assets
b.Non current assets
c.Classified as current or non current in accordance with other criteria
d.Noncurrent investments

9. Liabilities that an entity expects to settle within the normal operating cycle are classified as
a.Non current liabilities
b.Current or noncurrent liabilities in accordance with other criteria
c.Current liabilities
d.Equity

10. The statement of financial position is useful for analyzing all of the following,except.
a.Liquidity
b.Solvency
c.Profitability
d.Financial flexibility