Pre-lesson Activity- Understanding Financial Statements

I. Classify the following statement of financial position items as current or noncurrent. (1 pt.
each for a total of 7 pts.)

1. Accounts Payable- Current 5. Bonds Payable- Noncurrent

2. Prepaid Expenses- Current 6. Accrued Wages Payable- Current
3. Plant and Equipment- Noncurrent 7. Accounts Receivable – Current
4. Inventory- Current

II. Fill in the blanks. The first two items are done for you to serve as an example on how the activity
goes. (Total of 24 pts.)

Indicate whether items is on If on Statement of Financial Item

Statement of Financial Position, Designate which
Position (SFP) or Income category
Statement (IS)
Ex. SFP Current asset Cash
Ex. IS N/A Sales
IS (1 pt.) N/A (1 pt.) Income Tax Expense
SFP Current asset Accounts Receivable
SFP Noncurrent liability Bonds Payable
SFP Current liability Notes Payable
IS N/A Net income
IS N/A Selling and Admin Expenses
SFP Current Asset Inventories
SFP Current Liability Accrued Expenses
SFP Noncurrent asset Plant and Equipment
IS N/A Operating Expenses
IS N/A Interest Expense
SFP Current Liability Income Tax Payable

III. True or false (4 pts.)

1. The total assets and the total liabilities and shareholders’ equity must be equal at all times.
True
2. To compute for the operating income, the interest and taxes must be deducted. False
3. A loss is incurred in the Income Statement when the expenses are greater than the income of
the company for a given period. True
4. The three primary activities in the cash flow statement are operating, investing, and
managing. False