Assets

Question 1

What is the definition of short term in financial terms?

Answer 1

Less than 12 months

Refers to financial obligations or assets that are due within a year.

Question 2

What is the definition of long term in financial terms?

Answer 2

More than 12 months

Refers to financial obligations or assets that are due beyond a year.

Question 3

What does non-current refer to in financial terminology?

Answer 3

Also known as fixed assets

Indicates assets or liabilities that are not expected to be settled within one year.

Question 4

What are considered permanent in nature?

Answer 4

Land & building, vehicles, equipment

These are long-term assets that are not intended for resale.

Question 5

What is the characteristic of assets bought for use?

Answer 5

Not resale

These assets are intended for operational use rather than for selling.

Question 6

What is the lifespan of assets considered in the context of long-term assets?

Answer 6

Relatively long lifespan

This implies that these assets will be useful for an extended period.

Question 7

Fill in the blank: Short term refers to assets or obligations that last _______.

Answer 7

less than 12 months

Question 8

True or False: Land and buildings are considered non-current assets.

Answer 8

True

They are categorized as long-term assets.

Question 10

What are current assets?

Answer 10

Items bought for resale and converted to cash within a short time frame

Current assets are typically used in the operations of a business and are expected to be converted into cash within one year.

Question 11

How do current assets fluctuate?

Answer 11

They fluctuate in value throughout the year

This fluctuation can be due to market conditions, inventory levels, and demand.

Question 12

What is the order of liquidity for current assets?

Answer 12

Current assets are placed in order of liquidity

Liquidity refers to how quickly an asset can be converted into cash.

Question 13

Which type of assets is the most difficult to convert into cash?

Answer 13

The least liquid assets

These assets may include inventory or accounts receivable that are not easily converted into cash.

Question 14

What are the most liquid assets?

Answer 14

Cash and cash equivalents

These assets are at the top of the liquidity hierarchy and can be quickly used for transactions.

Question 15

Fill in the blank: Current assets are converted to cash within less than _______.

Answer 15

12 months