Chapter 5

Question 1

Balance sheet AKA

Answer 1

statement of financial position

Question 2

most assets and liabilities are reported at

Answer 2

historical cost

Question 3

Balance sheets show

Answer 3

liquidity, solvency, and financial flexibility

Question 4

The correct order to present current assets is:

Answer 4

cash, A/R, inventories, prepaid items

Question 5

current assets

Answer 5

cash and other assets a company expects to convert into cash, sell, or consumer either within one year or in the operating cycle, whichever is longer.

Question 6

Cash Equivalents

Answer 6

short- term, highly liquid investments that mature within 3 months

Question 7

All equity valued at

Answer 7

fair value

Question 8

Inventories

Answer 8

anything the business buys to sell to their customers

Question 9

prepaid expense

Answer 9

payment of cash that is recorded as an asset because service or benefit will be useful in the future

Question 10

Noncurrent prepaid

Answer 10

will have to be split between current and noncurrent

Question 11

securities

Answer 11

bonds, common stock, or long term investments

Question 12

tangible fixed assets

Answer 12

not currently used in operations

Question 13

special funds

Answer 13

sinking fund, pension fund, plant expansion fund, or cash surrender value of life insurance

Question 14

long term investments

Answer 14

securities, tangible fixed assets, special funds, nonconsolidated securities, and affiliated companies

Question 15

depreciation

Answer 15

value lost on property, plant, and equipment (buildings)

Question 16

depletion

Answer 16

value lost on natural resources (oil)

Question 17

intangible assets

Answer 17

lack physical substance and are not financial instruments

Question 18

Have to disclose collateral in the

Answer 18

notes

Question 19

working capital

Answer 19

not usually disclosed but calculated by creditors

Question 20

statement of cash flows

Answer 20

presents a detailed summary of all the cash inflows and outflows or the sources and uses of cash during the period