Assumptions and Estimates Relating to the Statement of Financial Position

question 79

Multiple Choice

Assumptions and estimates relating to the statement of financial position would generally NOT include which of the following?

• A)Profit
• B)Loans raised and repaid
• C)New capital raised and the amount of profit retained
• D)Working capital

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Definitions:

Year-End

The end of an accounting period, typically culminating in the closing of books and preparation of financial statements.

Deferral

An accounting principle where revenue or expenses are recognized at a later date than when they were initially incurred.

Nominal Accounts

Accounts that are closed at the end of every accounting period, which include revenues, expenses, gains, and losses.

Real Accounts

Permanent accounts in accounting that show the ongoing financial state of a company's assets, liabilities, and shareholders' equity.