Accounting Chapter 4C

Which of the following defines long-term liabilities?

Long-term liabilities are debts of a business that are not due to be settled within one year.

Identify the accounts below that would be classified as intangible assets on a classified balance sheet.

- Copyrights - Franchise - Patent - Trademark - Goodwill

Describe an unclassified balance sheet.

An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity.

Define "current" as it applies to assets and liabilities on a classified balance sheet.

Current items are those expected to come due within one year or the company's operating cycle, whichever is longer.

What are current liabilities?

- Current liabilities are reported in the order of those to be settled first. - Current liabilities are usually settled by paying out current assets such as cash. - Current liabilities are liabilities due to be paid within one year.

Identify which of the accounts below would be classified as a plant asset account.

- Equipment - Building - Land used to produce or sell products and services - Machinery

Identify the accounts below that would be classified as current liabilities on a classified balance sheet.

- Taxes payable - Unearned rent - Accounts payable

Define equity by completing the following statement. Equity is the ____ claim on the assets of a business and is reported in the ____ section of a balance sheet.

- owner's - equity

Current assets are:

cash and other resources that are expected to be sold, collected or used within one year

What is an intangible asset?

- Intangible assets are long-term resources that benefit business operations, but lack physical form. - The value of intangible assets comes from the privileges or rights granted to or held by the owner.

Identify the accounts below that would be classified as a long-term investment.

- Investments in stocks - Investments in bonds - Notes receivable due in 2 years

What defines a long-term investment?

- Long-term investments are investments in stocks and bonds when they are expected to be held for more than one year or the operating cycle. - Notes receivable and stock and bond investments are assets that are expected to be held for more than one year.

Identify the accounts below that would be classified as long-term liabilities on a classified balance sheet.

- Notes payable - Mortgage payable - Bonds payable

Define plant assets by selecting the correct statements below.

- Plant assets are equipment and other assets that have a life greater than one year. - Plant assets are used to produce or sell products or services. - Plant assets are property, plant and equipment that are tangible.

Identify which of the accounts below would be classified as a current asset.

- Prepaid rent - Office supplies - Accounts receivable - Cash

Review the statements below and select the items that are correct regarding the operating cycle for a business.

- The length of a company's operating cycle depends on its activities. - The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods or services. - Most companies use a one-year period or operating cycle in deciding which assets and liabilities are current. - Most operating cycles are less than one year.

The following categories are on a classified balance sheet. List them in the order that they would appear.

- current assets - long-term investment - plant asset - current liabilities - noncurrent liabilities

A classified balance sheet can be described as a balance sheet that:

- organizes assets and liabilities into important subgroups. - lists current assets in the order of how quickly they can be converted to cash.

Current items can be described as those expected to come due within one ____ and are listed in the order of how ____ they could be converted to or paid in cash.

- year - quickly

Which of the accounts below would appear in the equity section of a classified balance sheet?

Owner, Capital