Bookkeeping 03

Question 1

ACCOUNTS RECEIVABLE is:

Answer 1

the money owed by customers
of the business for goods or
services they have purchased
on credit.

Question 2

List CURRENT ASSETS in order of LIQUIDITY:

Answer 2

1. Cash
2. Accounts Receivable
3. Inventories
4. Supplies
5. Prepaid Items

Question 3

List PLANT ASSETS (CAPITAL ASSETS) in order of LIQUIDITY:

Answer 3

1. Land
2. Buildings
3. Equipment

Question 4

An EQUITY is:

Answer 4

any debt a business owes, whether to outsiders or its owners.

Question 5

LIABILITIES are:

Answer 5

legal claims against the business by persons or corporations other than the owners.
These claims come before the rights of the owners.

Question 6

The amount that would be left after all debts of the business had been satisfied is:

Answer 6

THE OWNER’S EQUITY.

Question 7

Like ASSETS, LIABILITIES are classified as:

Answer 7

LONG TERM or SHORT TERM.

Question 8

Generally, LIABILITIES are considered SHORT TERM if:

Answer 8

they must be paid within the current accounting year.

Question 9

LIABILITIES are listed in the following order:

Answer 9

CURRENT LIABILITIES:
    -Accounts Payable
    -Wages Payable
    -Short Term Notes Payable
LONG TERM LIABILITIES;
    -Long Term Notes Payable
    -Mortgage Payable
    -Bonds Payable