Question

i) A business owner and guarantor provides you with personal financial statements containing a variety of assets. Which of these assets is likely to have the most reliable valuation?

a)Unlisted securities

b)Listed securities

c)Home furnishing

d)Automobiles

ii) In analyzing a guarantor's liabilities, the payments within the next 12 months on an installment loan with maturity three years from now should be consider to be part of :

a)Current liabilities

b)Long-term liabilities

c)Interim liabilities  

Answer 1

Answer i
The answer is Option b.
Listed securities is likely to have the most reliable valuation.
Listed securities valuation is decided by the market forces and the value is available at stock exchanges.
Answer ii
The answer is Option a.
Loan installment payments due in 12 months is a part of Current Liabilities.
Current liabilities are a company's debts or obligations that are due within one year.