Finance basics - Multiple choice.

1.  The common characteristic possessed by all assets is

a.         Long life.

b.        Great monetary value.

c.         Tangible nature.

d.        Future economic benefit.

2.  Expenses are incurred

a.         Only on rare occasions.

b.        To produce assets.

c.         To produce liabilities.

d.        To generate revenues.

3.  Debt and obligations of a business are referred to as

a.         Assets.

b.        Equities.

c.         Liabilities.

d.        Expenses.

4.  A current asset is

a.         The last asset purchased by a business.

b.        An asset which is currently being used to produce a product or service.

c.         Usually found as a separate classification in the income statement.

d.        Expected to be converted to cash or used in the business within a relatively short period of time, usually less than one year.

5.  Which of the following is not classified properly as a current asset?

a.         Supplies

b.        Marketable securities

c.         A fund to be used to purchase a building within the next year

d.        A receivable from the sale of an asset to be collected in two years

6.  Which of the following is not considered an asset?

a.         Equipment

b.        Dividends

c.         Accounts receivable

d.        Inventory

7.  Liabilities are generally classified on a balance sheet as

a.         Small liabilities and large liabilities.

b.        Present liabilities and future liabilities.

c.         Tangible liabilities and intangible liabilities.

d.        Current liabilities and long-term liabilities.

8.  Which of the following is not a current liability?

a.         Wages payable

b.        Accounts payable

c.         Taxes payable

d.        Bonds payable

9.  On a classified balance sheet, companies usually list current assets

a.         in alphabetical order.

b.        with the largest dollar amounts first.

c.         in the order in which they are expected to be converted into cash.

d.        In the order of acquisition.

10.  These are selected account balances on December 31, 2007. Land (location of the corporation's office building) $100,000 Land (held for future use) 150,000 Corporate Office Building 600,000 Inventory 200,000 Equipment 450,000 Office Furniture 100,000 Accumulated Depreciation 300,000 What is the total amount of property, plant, and equipment that will appear on the balance sheet?

a.         $1,300,000

b.        $1,100,000

c.         $1,600,000

d.        $950,000