• Profile photo of John Moffat says

      The Statement of financial position does not try to show the ‘true’ value of a business.
      The main reason is because of the non-current assets. In the example statement on page 9 for example, land and buildings are shown at 100,000. This will be what we paid for them (although as you will see in a later chapter, in fact we reduce that amount gradually and call it depreciation). They might however be actually worth a lot more than 100,000 – buildings usually tend to go up in value (or of course they could be worth less).

      All the statement does is list all the assets and liabilities, but again it does not show the ‘true’ value.

  1. avatar says

    Kindly help with this question

    Here is an extended trial balance extract:
    Initial trial Adjustments Accruals and Income Statement of
    balance prepayments statement financial position
    Dr Cr Dr Cr Accruals Prepmnts Dr Cr Dr Cr

    Cell 1 Cell 2 Cell 3 Cell 4

    AT PT

    AT = accruals total
    PT = prepayments total
    To where should AT and PT be transferred?

    A- AT to Cell 3; PT to Cell 4
    B- AT to Cell 1; PT to Cell 2
    C- AT to Cell 4; PT to Cell 4
    D- AT to Cell 2; PT to Cell 1

    • Profile photo of John Moffat says

      The answer at the back of the notes is correct – but the letter is wrong.

      Accruals appear in the Statement of financial position – cell 4.
      Prepayments appear in the Statement of financial position – cell 3

      (Please do not ask these questions under a lecture for F3 – it confuses everyone. I know there is no Ask the Tutor Forum for FA2, so please ask them in the FA2 forums)

  2. avatar says

    Hello, please help!
    Where I can find the answers to chapter 2questions, q3 I am during as mentioned in the comment above, but can’t get the answer c.

    Please help.

    Many thanks. J

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