Chapter 4
Assets are: A. Economic obligations B. Economic resources with expected future benefits C. What the organization owns and/or controls D. What the organization owes
B. Economic resources with expected future benefits C. What the organization owns and/or controls
An organization's economic resources include: Selected Answer: A. Accounts receivable and notes receivable B. Notes payable C. Accounts receivable D. Notes receivable E. Accounts receivable and notes payable
A. Accounts receivable and notes receivable
The "language of finance" includes: A. Assets, liabilities, and net worth B. English, French, and Spanish C. Books about finance D. None of these is correct
A. Assets, liabilities, and net worth
The Green Tree Nursing Facility possesses a note receivable in the amount of $12,000. The note will not be paid until Mrs. Jones's estate is settled and her attorneys have informed Green Tree's accountant that payment cannot be expected before, at the earliest, 18 months from now. Consequently the accountant will record this note receivable as a: A. Current, or short-term, asset B. Long-term asset C. Long-term liability D. None of these is correct
B. Long-term asset
Liabilities may be called: A. Insider claims B. Outsider claims C. Insider and outsider claims D. None of these is correct
B. Outsider claims
An organization's economic resources may also include: A. Inventory on hand B. Cash on hand C. Buildings D. All of these are correct
D. All of these are correct
Examples of assets include: A. Inventory B. Land C. Accounts receivable D. Cash E. All of these are correct
E. All of these are correct
Creditors are those who hold equity in the organization. True or False
False
Net worth is what the business is worth, net of receivables. True or False
False
All types of business receivables are assets. True or False
True
By their definition, not-for-profit organizations should not have equity. True or False
True
If a note payable is going to be paid over a 3-year period, the liability may be classified as both short-term and long-term. True or False
True
The term fund balance may be properly used by a: Selected Answers: A. Not-for-profit organization B. U.S. governmental entity C. For-profit sole proprietor D. For-profit corporation
A. Not-for-profit organization B. U.S. governmental entity
The term fund balance may be properly used by a: A. Not-for-profit organization B. For-profit corporation C. For-profit sole proprietor D. U.S. governmental entity
A. Not-for-profit organization D. U.S. governmental entity
Liabilities are: A. What the organization owns B. Economic obligations C. Debts that are payable D. What the organization owes
B. Economic obligations C. Debts that are payable D. What the organization owes
The Green Tree Nursing Facility possesses another note receivable in the amount of $9,000. This note will be paid in three installments: $3,000 in 6 months, $3,000 in 18 months, and the remaining $3,000 in 24 months. The accountant will record this note receivable as a: A. Current, or short-term, asset of $9,000 B. Long-term asset of $9,000 C. current asset of $3,000 and a long-term asset of $6,000 D. Current asset of $6,000 and a long-term asset of $3,000 E. None of these is correct
C. Current asset of $3,000 and a long-term asset of $6,000
An organization's economic resources may also include: Answers: A. Inventory on hand B. Cash on hand C. Buildings D. All of these are correct
D. All of these are correct
An owner has: A. A claim to the entity's assets B. A claim to the entity's liabilities C. Invested in the business D. All of these are correct
D. All of these are correct
An owner has: A. A claim to the entity's assets B. A claim to the entity's liabilities C. Invested in the business D. All of these are correct
D. All of these are correct
The accounting equation that reflects a relationship is often described as "assets equal liabilities plus net worth." The equation "assets equal liabilities plus fund balance" is also correct. True or False
True
The accounting equation that reflects a relationship is often described as "assets equal liabilities plus net worth." The equation "assets equal liabilities plus owners' equity" is also appropriate and correct. True or False
True
The amount owed to vendors is a liability and recognized as accounts payable. True or False
True