Question 1

The balance sheet doesn't always show each asset's ____________ value.

Accepted Answer

current

Question 2

The balance sheet provides information that helps internal and external users evaluate a business' ability to achieve its primary goals of earning a satisfactory profit and remaining _____________.

Accepted Answer

solvent

Question 3

Owner's equity is the owner's current ____________________ in the assets of the business.

Accepted Answer

investment

Question 4

The return on total assets evaluates management's use of resources, essentially evaluating the return on the owner's investment.

Accepted Answer

A) True 
 B)False

Question 5

__________ __________ are amounts owed to suppliers.

Accepted Answer

The answer of __________ __________ are amounts owed to suppliers....

Question 6

The definition of assets is best summarised as:

Accepted Answer

A)   tangible resources that are owned by a business.
B)   all resources owned by a business.
C)   resources that a business expects will provide future benefits.
D)   owner's investments in a business.

Question 7

Financial assets, like bonds and other securities, are always classified as current assets.

Accepted Answer

A) True 
 B)False

Question 8

Current assets of $68 400 less current liabilities of $36 300 will equal working capital of $32 100.

Accepted Answer

A) True 
 B)False

Question 9

As a general rule, the _______________ the inventory turnover, the more efficient the business is in its purchasing and sales activities.

Accepted Answer

The answer of As a general rule, the _______________ the...

Question 10

The advantage of using the current ratio to measure liquidity is that is allows for a relative comparison between different sized businesses.

Accepted Answer

A) True 
 B)False

Question 11

The return on owner's equity ratio does not add interest expense back to net income, because net income is a measure of a business' profits available to owners.

Accepted Answer

A) True 
 B)False

Question 12

___________ _________ are cash and other assets that the business expects to convert to cash, sell, or use up within one year.

Accepted Answer

The answer of ___________ _________ are cash and other assets...

Question 13

____________________ are obligations that the business expects to pay within one year by using current assets.

Accepted Answer

The answer of ____________________ are obligations that the business expects...

Question 14

Example 8.1
The information below pertains to the following questions.
ABC reported $356 500 for current assets and $100 500 for other assets. It also had $175 000 of current liabilities. ABC's quick assets totalled $222 000, and its long-term liabilities totalled $105 000.
-Refer to Example 8.1. Determine ABC's quick ratio.

Accepted Answer

A)   0.79:1
B)   1.27:1
C)   2.04:1
D)   3:22:1

Question 15

Example 8.1
The information below pertains to the following questions.
ABC reported $356 500 for current assets and $100 500 for other assets. It also had $175 000 of current liabilities. ABC's quick assets totalled $222 000, and its long-term liabilities totalled $105 000.
-Refer to Example 8.1. Determine ABC's working capital.

Accepted Answer

A)   $256 000
B)   $181 500
C)   $457 000
D)   $31 000

Question 16

The current ratio is an indicator of a business' long-term financial flexibility.

Accepted Answer

A) True 
 B)False

Question 17

Accounts payable, salaries payable, unearned revenues, and short-term notes payable are all examples of ______________ _______________.

Accepted Answer

The answer of Accounts payable, salaries payable, unearned revenues, and...

Question 18

Liabilities are generally classified as:

Accepted Answer

A)   short-term and medium-term.
B)   current and non-current.
C)   now and future.
D)   Liquid and illiquid.

Question 19

Total assets of $48 400 less total liabilities of $36 300 will equal working capital of $12 100.

Accepted Answer

A) True 
 B)False

Question 20

A measure of how quickly a business can convert its assets into cash to pay its bills is called:

Accepted Answer

A)   solvency.
B)   flexibility.
C)   working capital.
D)   liquidity.

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

The balance sheet doesn't always show each asset's ____________ value.

The balance sheet provides information that helps internal and external users evaluate a business' ability to achieve its primary goals of earning a satisfactory profit and remaining _____________.

Owner's equity is the owner's current ____________________ in the assets of the business.

The return on total assets evaluates management's use of resources, essentially evaluating the return on the owner's investment.

are amounts owed to suppliers.

The definition of assets is best summarised as:

Financial assets, like bonds and other securities, are always classified as current assets.

Current assets of $68 400 less current liabilities of $36 300 will equal working capital of $32 100.

As a general rule, the _______________ the inventory turnover, the more efficient the business is in its purchasing and sales activities.

The advantage of using the current ratio to measure liquidity is that is allows for a relative comparison between different sized businesses.

The return on owner's equity ratio does not add interest expense back to net income, because net income is a measure of a business' profits available to owners.

___ _ are cash and other assets that the business expects to convert to cash, sell, or use up within one year.

____________________ are obligations that the business expects to pay within one year by using current assets.

The current ratio is an indicator of a business' long-term financial flexibility.

Accounts payable, salaries payable, unearned revenues, and short-term notes payable are all examples of _.

Liabilities are generally classified as:

Total assets of $48 400 less total liabilities of $36 300 will equal working capital of $12 100.

A measure of how quickly a business can convert its assets into cash to pay its bills is called: