Chapter 4

Question 1

Cash and other assets expected to be sold, collected or used within one year or the company’s operating cycle, whichever is longer.

Answer 1

Current assets

Question 2

Obligations due to be paid or settled within one year or the company’s operating cycle, whichever is longer.

Answer 2

Current liabilities

Question 3

Ratio used to evaluate a company’s ability to pay its short-term obligations, calculated by dividing current assets by current liabilities.

Answer 3

Current ratio

Question 4

Long-term assets (resources) used to produce or sell products or services; usually lack physical form and have uncertain benefits.

Answer 4

Intangible assets

Question 5

Long-term assets not used in operating activities such as notes receivable and investments in stocks and bonds.

Answer 5

Long-term investments

Question 6

Obligations not due to be paid within one year or the operating cycle, whichever is longer.

Answer 6

Long-term liabilities

Question 7

Accounts that reflect activities related to one or more future periods; balance sheet accounts whose balances are not closed.

Answer 7

Permanent or Real accounts

Question 8

Accounts used to record revenues, expenses, and withdrawals (dividends for a corporation) and the Income Summary account; they are closed at the end of each period.

Answer 8

Temporary or Nominal accounts