Question 1

Cash,marketable securities,notes receivable,and merchandise inventory are examples of
A) current assets.
B) expenses.
C) acid-test assets.
D) fixed assets.
E) overhead costs.

Accepted Answer

Cash, marketable securities, notes receivable, and merchandise inventory are all examples of assets that are expected to be converted into cash within one year or the operating cycle, whichever is longer. These are therefore classified as current assets on the balance sheet.

Question 2

Another name for the statement of financial position is the
A) income statement.
B) statement of owners' equity.
C) earnings statement.
D) statement of changes.
E) balance sheet.

Accepted Answer

The statement of financial position is the same as the balance sheet. The income statement measures a company's financial performance over a period of time, the statement of owners' equity shows changes in the owners' equity account, the earnings statement is not a commonly used financial statement, and the statement of changes could refer to various financial statements such as the statement of changes in owners' equity or statement of changes in financial position.

Question 3

A prepaid expense would be classified as
A) an expense.
B) an unearned revenue.
C) a liability.
D) an asset.
E) cost of goods sold.

Accepted Answer

A prepaid expense is an expenditure paid for in advance of receiving the benefit. This means that it is an asset because it represents a future economic benefit. As the prepaid expense is used up over time, it will be gradually recognized as an expense on the income statement. Therefore, the correct choice is (D) an asset.

Question 4

Assets = liabilities + owners' equity is the equation for information reported on the
A) checking balance.
B) balance sheet.
C) income statement.
D) earnings statement.
E) statement of owners' equity.

Accepted Answer

The equation Assets = liabilities + owners' equity is used to report information on the balance sheet, which shows a company's financial position at a specific point in time by listing its assets, liabilities, and owners' equity. It is not used for checking balances, income statements, earnings statements, or statements of owners' equity.

Question 5

What is the correct order for the balance sheet?
A) Assets,owners' equity,liabilities
B) Owners' equity,financial position,assets
C) Liabilities,owners' equity,assets
D) Assets,liabilities,owners' equity
E) Owners' equity,assets,liabilities

Accepted Answer

The correct order for a balance sheet is assets, liabilities, and owners' equity. This order represents the fundamental accounting equation: assets = liabilities + owners' equity. By listing assets first, the balance sheet shows what the company owns, followed by what it owes (liabilities), and finally, the residual value that belongs to the owners (owners' equity). This order makes it easy to see the financial position of the company and how it is funded.

Question 6

All of the following are current assets except
A) office equipment.
B) cash.
C) prepaid insurance.
D) accounts receivable.
E) marketable securities.

Accepted Answer

Office equipment is a fixed asset, not a current asset. The other options (cash, prepaid insurance, accounts receivable, and marketable securities) are all current assets.

Question 7

Television sets that Walmart owns for selling to its customers are classified as
A) equipment.
B) machinery.
C) receivables.
D) merchandise inventory.
E) prepaid merchandise.

Accepted Answer

The television sets that Walmart owns for selling to customers are classified as merchandise inventory, since they are goods held for sale in the normal course of business.

Question 8

The value of goods on hand for sale to customers is called
A) sales.
B) merchandise inventory.
C) cost of goods sold.
D) prepaid expenses.
E) operating expenses.

Accepted Answer

The value of goods on hand for sale to customers is called merchandise inventory. Sales refer to the revenue generated from the sale of goods or services, cost of goods sold refers to the cost of the merchandise that has already been sold, prepaid expenses refer to expenses paid in advance, and operating expenses refer to expenses incurred in running a business.

Question 9

Pam's Copy Shop is in the process of organizing its assets in the appropriate order.They ask you for help in arranging the following assets: equipment,accounts receivable,cash,merchandise inventory,and notes receivable.You list ____ first and ____ last.
A) merchandise inventory;notes receivable
B) accounts receivable;equipment
C) notes receivable;accounts receivable
D) equipment;accounts receivable
E) cash;equipment

Accepted Answer

Assets are typically listed in order of liquidity, with cash being the most liquid and equipment being the least liquid among the given options.

Question 10

All of the following are classified as fixed assets except
A) factory equipment.
B) a company car.
C) computers held for resale.
D) property.
E) buildings.

Accepted Answer

Fixed assets are long-term assets that have a useful life of more than one year and are not held for resale. Factory equipment, property, buildings, and company cars are all examples of fixed assets because they are used in the operations of a business and are not intended for resale. However, computers held for resale would be classified as inventory, not fixed assets.

Question 11

For Caterpillar,a tractor and farm equipment manufacturer,spark plugs to be installed in its equipment would be classified on the balance sheet as
A) prepaid expenses.
B) supplies.
C) equipment.
D) depreciation.
E) inventory.

Accepted Answer

Spark plugs that are to be installed in Caterpillar's equipment are considered as inventory, as they are goods held for sale in the normal course of business.

Question 12

If a company has $50,000 of assets,which of the following could be true?
A) It has −$50,000 in stockholders' equity and $100,000 in liabilities.
B) The company has fewer assets than it does liabilities.
C) It has $30,000 in liabilities and $80,000 in owners' equity.
D) The company has more owners' equity than assets.
E) It has $23,000 in owners' equity and $27,000 in liabilities.

Accepted Answer

The answer of If a company has $50,000 of assets,which...

Question 13

The term ____ describes assets that can be quickly converted into cash or consumed in one year or less.
A) expenses
B) overhead costs
C) current assets
D) acid-test assets
E) fixed assets

Accepted Answer

Current assets are assets that can be quickly converted into cash or consumed in one year or less. Examples of current assets include cash, accounts receivable, inventory, and prepaid expenses. Expenses (A) are the costs incurred to generate revenue and are not assets. Overhead costs (B) are indirect costs that cannot be directly attributed to a specific product or service, and are also not assets. Acid-test assets (D) refer to a specific subset of current assets that can quickly be converted to cash, but are not as comprehensive as current assets as a whole. Fixed assets (E) are long-term assets that cannot be easily converted to cash and are used to generate revenue over a longer period of time.

Question 14

James Howard graduated from college and obtained a full-time job in accounting.At the end of his first year of employment,his assets totaled $9,000.His liabilities totaled $3,000.His ____ was $6,000.
A) asset total
B) profit
C) net worth
D) cost of living
E) allocated total

Accepted Answer

Net worth is calculated as assets minus liabilities, which in this case equals $6,000.

Question 15

Since furniture and store equipment for Billy's Boutique will be held or used for a period longer than one year,they are considered
A) fixed assets.
B) owners' equity.
C) revenue.
D) current assets.
E) prepaid expenses.

Accepted Answer

Furniture and store equipment are long-term assets that are used in the business for more than one year. Therefore, they are considered fixed assets. Owners' equity refers to the amount of the business that belongs to the owner(s). Revenue is the income earned by the business from its operations. Current assets are assets that can be easily liquidated into cash within one year. Prepaid expenses are payments made in advance for goods or services that will be consumed in the future.

Question 16

The balance sheet is composed of
A) owners' equity,assets,and liabilities.
B) expenses,revenue,and net income.
C) revenue,expenses,and owners' equity.
D) assets,expenses,and net income.
E) assets,liabilities,and revenues.

Accepted Answer

The balance sheet is a financial statement that presents the company's financial position at a given point in time. It reflects the resources owned by the company (assets), its obligations (liabilities), and the amount invested by the owners (owners' equity). Therefore, the correct answer is A, which lists all three of these components. The other answer choices are incorrect because they only include some of the elements of a balance sheet or include items that are not typically found on a balance sheet.

Question 17

Dr.Rick Torres runs a chiropractic clinic.He typically bills his customers for services he performs and gives them about 30 days to make the payments.These amounts of money that his customers owe are called
A) allowances for doubtful accounts.
B) prepaid expenses.
C) unearned revenue.
D) intangible assets.
E) accounts receivable.

Accepted Answer

The amounts of money that Dr. Torres' customers owe him for services performed are called accounts receivable. This is an asset on Dr. Torres' balance sheet because he expects to receive payment from his customers within a certain timeframe.

Question 18

Which of the following presents assets in the correct balance sheet order?
A) Cash,land,accounts receivable,equipment
B) Marketable securities,equipment,prepaid insurance,inventory
C) Cash,inventory,equipment
D) Accounts receivable,buildings,inventory,land
E) Buildings,prepaid expenses,inventory,equipment

Accepted Answer

Assets on a balance sheet are typically listed in order of liquidity, starting with the most liquid assets. Cash is the most liquid asset, followed by inventory and equipment, which are less liquid. This makes option C the correct order.

Question 19

The ease with which an asset can be converted into cash is referred to as its
A) liquidity.
B) profitability.
C) solvency.
D) convertibility.
E) capitalization capacity.

Accepted Answer

Liquidity refers to the ease with which an asset can be converted into cash without affecting its market value. This is an important measure of an asset's ability to be used for immediate financial needs. Profitability refers to the returns or profits generated by an asset, while solvency refers to an entity's ability to meet its long-term financial obligations. Convertibility refers to an asset's ability to be converted into a different form, such as equity or debt, and capitalization capacity refers to an entity's ability to raise capital through various means.

Question 20

The most liquid asset is
A) sales.
B) accounts receivable.
C) marketable securities.
D) cash.
E) capital.

Accepted Answer

Cash is the most liquid asset as it is readily available for use and can be easily converted into other assets. Marketable securities and accounts receivable may also be considered liquid assets, but they may not be as quickly and easily converted into cash. Sales and capital are not assets, but rather sources of revenue and financing, respectively.

Quiz 15: Using Management and Accounting Information

Cash,marketable securities,notes receivable,and merchandise inventory are examples of

Another name for the statement of financial position is the

A prepaid expense would be classified as

Assets = liabilities + owners' equity is the equation for information reported on the

What is the correct order for the balance sheet?

All of the following are current assets except

Television sets that Walmart owns for selling to its customers are classified as

The value of goods on hand for sale to customers is called

Pam's Copy Shop is in the process of organizing its assets in the appropriate order.They ask you for help in arranging the following assets: equipment,accounts receivable,cash,merchandise inventory,and notes receivable.You list first and last.

All of the following are classified as fixed assets except

For Caterpillar,a tractor and farm equipment manufacturer,spark plugs to be installed in its equipment would be classified on the balance sheet as

If a company has $50,000 of assets,which of the following could be true?

The term ____ describes assets that can be quickly converted into cash or consumed in one year or less.

James Howard graduated from college and obtained a full-time job in accounting.At the end of his first year of employment,his assets totaled $9,000.His liabilities totaled $3,000.His ____ was $6,000.

Since furniture and store equipment for Billy's Boutique will be held or used for a period longer than one year,they are considered

The balance sheet is composed of

Dr.Rick Torres runs a chiropractic clinic.He typically bills his customers for services he performs and gives them about 30 days to make the payments.These amounts of money that his customers owe are called

Which of the following presents assets in the correct balance sheet order?

The ease with which an asset can be converted into cash is referred to as its

The most liquid asset is