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CAIE IGCSE Business Studies 5.4 Statement of Financial Position Questions

Use this financial-position page to define asset and liability categories, classify entries and interpret balance-sheet information.

Syllabus
2027–2029
Course
Business 0264

Exam points

  • Define non-current assets as resources used by a business for more than one year.
  • Classify items such as overdraft, trade receivables, trade payables and cash.
  • Explain shareholders' equity using owner investment, reserves or assets minus liabilities.

Covered syllabus points

5.4.1—The main elements of a statement of financial position

Question 1

[Maximum number: 2]

WFT is a primary sector business which harvests timber (wood) from trees. The Operations Manager knows there are many legal controls over business activity affecting the environment. WFT has 30 employees and uses a lot of technology to process the timber. The business is always considering ways to increase added value. WFT often needs finance. An extract from WFT's statement of financial position is shown in Table 1.1.

Table 1.1

Table 1.1

Identify one non-current asset and one non-current liability.

Non-current asset:

Non-current liability:

Question 2

[Maximum number: 6]

IDT manufactures clothes for the mass market. It is a multinational company with factories in 4 countries. IDT has short-term and long-term financial needs. The Finance Director is analysing IDT's statement of financial position. An extract is shown in Table 3.1. He has been asked to calculate working capital and to explain how an increase in non-current liabilities might affect IDT.

Table 3.1

Table 3.1

Explain two ways an increase in non-current liabilities might affect IDT.

Way 1:

Explanation:
Way 2:
Explanation:

Question 3

[Maximum number: 6]

HRO manufactures children's toys. It is a private limited company. The main objective of HRO 's shareholders is to increase profit. This might conflict with the objectives of other stakeholder groups, including its 30 suppliers. HRO's Managing Director knows that market research can help when making marketing decisions. The Finance Director is preparing HRO's statement of financial position. An extract is shown in Table 3.1.

Table 3.1

Table 3.1

Question (a)

(a)

Define 'non-current assets'.

[ 2 ]

Question (b)

(b)

State whether each of the following would be classified as a current asset or as a current liability.

Trade receivables:
Trade payables:
Overdraft:
Inventory:

[ 4 ]
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