IGCSE Cambridge (CIE) Business 58 mins 12 questions

Exam Questions

5.4 Statement of
Financial Position
The Main Features of a Statement of Financial Position / Using the Statement of
Financial Position To Make Decisions

Easy (7 questions) /16 Scan here to return to the course

Hard (2 questions) /24

Total Marks /58

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Easy Questions
1 Define ‘current liabilities’.

(2 marks)

2 Define ‘shareholders’ equity’.

(2 marks)

3 Define ‘statement of financial position’.

(2 marks)

4 Define ‘current assets’.

(2 marks)

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5 State whether each of the following is classified as a current asset or a current liability:

Overdraft

Trade receivables

Trade payables

Cash in bank

(4 marks)

Case Study
AHG is an established business as it has been operating for a long time. It sells
garden products including plants and flowers. AHG uses competitive pricing. The
business has 4 managers and 30 other employees. All AHG’s managers use
delegation. The Finance Manager is analysing AHG’s statement of financial
position as she is interested in its liquidity. An extract is shown in Table 1.1.

Table 1.1: Extract from AHG’s statement of financial position at 30 March 2022
($000)

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 Non-current assets 800

Current assets 660

Inventories 360

Current liabilities 600

Calculate AHG's acid test ratio.

Show your working.

(2 marks)

7 Identify two examples of non-current assets.

(2 marks)

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Medium Questions
1 Do you think having a high level of non-current liabilities is always a problem for a
growing business? Justify your answer.

(6 marks)

Case Study
VCG manufactures high-quality briefcases and travel bags. VCG has 50 skilled
production workers in its factory. VCG is planning to expand by building a second
factory. Different locations are being considered. The Managing Director is
reviewing VCG’s financial statements. An extract from its statement of financial
position is shown in Table 3.1. Both internal and external stakeholder groups of
VCG are interested in this information.

Table 3.1: Extract from VCG’s 2021 statement of financial position ($)

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 Current assets 300,000

Current liabilities 250,000

Non-current assets 1,500,000

Shareholders' equity 800,000

Explain two ways VCG's internal stakeholders might use the information from its
statement of financial position.

(6 marks)

Case Study
AHG is an established business, as it has been operating for a long time. It sells
garden products, including plants and flowers. AHG uses competitive pricing. The
business has 4 managers and 30 other employees. All AHG’s managers use
delegation. The finance manager is analysing AHG’s statement of financial
position as she is interested in its liquidity. An extract is shown in Table 1.1.

Table 1.1: Extract from AHG’s statement of financial position at 30 March

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 Non-current assets 800

Current assets 660

Current liabilities 600

Explain two ways AHG's external stakeholders may use its statement of financial
position.

(6 marks)

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Hard Questions
1 Using Appendix 2 and other information, consider TT’s financial position. Do you think TT
is in a good financial position to expand? Justify your answer using suitable calculations.

Refer to the following insert when answering the question

(12 marks)

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2 Consider how each of the following three factors from Tasty Tapas' Statement of
Financial Position could affect the decision to expand into Country Y.

Non-current assets of $800,000

Current ratio of 1.33

Long-term loan of $500,000

Which factor is likely to have the greatest impact on the expansion decision? Justify your
answer.

Refer to the following insert when answering the question

(12 marks)

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