6    At 31 December 20X5 the following require inclusion in a company's financial statements:

(1)   On 1 January 20X5 the company made a loan of $12,000 to an employee, repayable on 1 January 20X6,

charging interest at 2% per year. On the due date she repaid the loan and paid the whole of the interest due on

the loan to that date.

(2)   The company paid an annual insurance premium of $9,000 in 20X5, covering the year ending 31 August 20X6.

(3)   In January 20X6 the company received rent from a tenant of $4,000 covering the six months to 31 December

20X5.

For these items, what total figures should be included in the company's statement of financial position as at

31 December 20X5?

A    Current assets $10,000            Current liabilities $12,240

B    Current assets $22,240            Current liabilities $nil

C    Current assets $10,240            Current liabilities $nil

D    Current assets $16,240            Current liabilities $6,000

7    A company's income statement for the year ended 31 December 20X5 showed a net profit of $83,600. It was later

found that $18,000 paid for the purchase of a motor van had been debited to the motor expenses account. It is the

company's policy to depreciate motor vans at 25% per year on the straight line basis, with a full year's charge in the

year of acquisition.

What would the net profit be after adjusting for this error?

A    $106,100

B    $70,100

C    $97,100

D    $101,600

Which of the following statements is correct?

A    Xena's liquidity and working capital has improved in 20X9

B    Xena is receiving cash from customers more quickly in 20X9 than in 20X8

C    Xena is suffering from a worsening liquidity position in 20X9

D    Xena is taking longer to pay suppliers in 20X9 than in 20X8

9    Which of the following statements is/are correct?

(1)   A statement of cash flows prepared using the direct method produces a different figure to net cash from operating

activities from that produced if the indirect method is used

(2)   Rights issues of shares do not feature in a statement of cash flows

(3)   A surplus on revaluation of a non-current asset will not appear as an item in a statement of cash flows

(4)   A profit on the sale of a non-current asset will appear as an item under cash flows from investing activities in the

statement of cash flows

A     1 and 3 only

B    3 and 4 only

C    2 and 4 only

D    3 only

11   Which of the following are differences between sole traders and limited liability companies?

(1)   A sole trader's financial statements are private and never made available to third parties; a company's financial

statements are sent to shareholders and may be publicly filed

(2)   Only companies have share capital

(3)   A sole trader is fully and personally liable for any losses that the business might make

(4)   Only drawings would appear in a sole trader's financial statements

A     1 and 4 only

B    2, 3 and 4

C    2 and 3 only

D     1, 3 and 4

12   Which of the following statements is true?

A    The interpretation of an entity's financial statements using ratios is only useful for potential investors

B     Ratios based on historical data can predict the future performance of an entity

C    The   analysis   of   financial   statements   using   ratios   provides   useful   information   when   compared   with   previous

performance or industry averages

D    An entity's management will not assess an entity's performance using financial ratios