61
What is the main limitation of the Statement of Affairs?
A.
B.
C.
D.
Answer & Solution
The Statement of Affairs is not as accurate as a Balance Sheet because it relies on estimated values.
62
Which of the following is included in the Statement of Affairs?
A.
B.
C.
D.
Answer & Solution
The Statement of Affairs includes assets, liabilities, and capital to determine the financial position.
63
The Statement of Affairs is prepared on which basis?
A.
B.
C.
D.
Answer & Solution
The Statement of Affairs is based on estimates because it is derived from incomplete records.
64
The Statement of Affairs is useful for:
A.
B.
C.
D.
Answer & Solution
Small businesses with incomplete records
65
If total capital at the end of the year is lower than at the beginning, it indicates:
A.
B.
C.
D.
Answer & Solution
A decrease in capital means the business incurred a net loss.
66
Which of the following is NOT a part of the Statement of Affairs?
A.
B.
C.
D.
Answer & Solution
The Statement of Affairs does not include net income directly; it focuses on assets, liabilities, and capital.
67
In a Statement of Affairs, capital can be calculated as:
A.
B.
C.
D.
Answer & Solution
Capital is calculated by adjusting the opening capital for profit or loss and drawings during the period.
68
The Statement of Affairs is primarily used for:
A.
B.
C.
D.
Answer & Solution
The Statement of Affairs helps estimate capital in businesses that do not maintain a complete accounting system.
69
The Statement of Changes in Owner’s Equity shows:
A.
B.
C.
D.
Answer & Solution
The Statement of Changes in Owner’s Equity reports changes in capital, net income, drawings, and additional investments during a specific period.
70
Which of the following affects the Owner’s Equity?
A.
B.
C.
D.
Answer & Solution
Owner’s Equity is impacted by revenues, expenses, additional investments, and withdrawals (drawings).
