Exam 8: The Balance Sheet: Content, Use and Analysis

__________ __________ is the total amount of depreciation expense recorded over the life of an asset to date.

What is the debt ratio, how is it calculated, and why is it important?

The higher a business' debt ratio, the higher its financial flexibility.

A limitation of the income statement and balance sheet is that they do not provide much information about a business' cash management because they are based on accrual accounting.

Managers are concerned with the business' balance sheet because it is used to evaluate their own ____________________.

What are long-term investments? Provide four examples of long-term investments.

The non-current liabilities section of the balance sheet shows the past financing decisions of the business' managers.

The accounts receivable turnover ratio should be high, which shows that the business collects cash faster.

____________ are assets that do not have a physical substance but the ownership of which entitles the business to future economic benefits.

Activity ratios help evaluate the operating capability of a business.

Which of the following is a financial statement that reports the types and the monetary amounts of a business' assets, liabilities, and owner's equity on a specific date?

The balance sheet presents a business' financial position on a specific date such as '30 June 2019'.

The balance sheet is an accounting report that summarises a business' financial________________ on a given date.

What are current assets? Provide four examples of current assets.

The income statement and balance sheet provide different, yet ____________________ types of information.

Which of the following is NOT a question that can be answered with the balance sheet?

The inventory turnover ratio is used to evaluate inventory purchasing decisions with, for example, a high inventory turnover ratio indicating that stockouts (empty shelves) could be occurring.

Any asset not classified as a current asset is referred to as a past due asset.

____________________ are a business' economic resources that it expects will provide future benefits to the business.

The current ratio is an indicator of a business' short-term operating capability.