BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Asset
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Liabilities
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Income
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Owner’s Equity
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Detailed explanation-1: -The most liquid of all assets, cash, appears on the first line of the balance sheet. Cash Equivalents are also lumped under this line item and include assets that have short-term maturities under three months or assets that the company can liquidate on short notice, such as marketable securities.
Detailed explanation-2: -The statement of financial position is formatted like the accounting equation (assets = liabilities + owner’s equity). Thus, the assets are always listed first.
Detailed explanation-3: -Current assets are usually listed in the order of their liquidity and frequently consist of cash, temporary investments, accounts receivable, inventories and prepaid expenses.
Detailed explanation-4: -An asset is defined as a present economic resource controlled by the entity as a result of past events. On the statement of financial position, assets are divided into two subsections, current and non-current assets. These are assets that can be converted into cash within the next 12 months.