XIV. Revise the information given in Chapter III and decide which of these statements are true or false. Discuss the answers with your partner

1. Balance sheets are prepared on one day.
2. Balance sheets show a company’s financial situation on 31 December.
3. The totals in balance sheets generally include sums of money that have not yet been paid.
4. Assets are what you own; liabilities are what you owe.
5. Liabilities represent the indebtedness of the business to the owner of the business.
6. Depreciation is a source rather than a use of funds.
7. The two sides of balance sheet should not always balance because of the accounting equation.
8. A profit and loss account calculates the assets and liabilities of the company.
9. A profit and loss account provides the detail for the stewardship and management functions of accounting.
10. Cash inflows represent money spent by the business, cash outflows represent money that has been received into a business.

SITUATIONS FOR DISCUSSION