21-25 21. Which of the following would not be classified as a current asser? A.

Question

21-25 21. Which of the following would not be classified as a current asser? A. Marketable securities B. Plant property and equipment C. Prepaid expenses D. Inventory 22. Which of the following would represent a use of funds and, indirectly, a reduction in cash balances? A. An increase in inventories B. A decrease in marketable securities C. An increase in accounts payable D. The sale of new bonds by the firm 23. Reinvested funds into retained eanings theoretically belong to A. bond holders. B. common stockholders C. employees. D. All of the options 24. Asset accounts on the balance sheet are listed in order of A. liquidity B. profitability C. dollar amount. D. importance. 25. Which account represents the cumulative earnings of the firm since the firm started, minus dividends paid? A. Paid-in capital B. Common stock C. Retained earnings D. Accumulated depreciation

Explanation / Answer

21) Answer : Option (B) Plant Property and Equipment.

Plant Property and Equipment are Fixed Assets. so they are not current assets

22) Answer : Option (A) An Increase in Inventories.

An Increase in Inventory indicates Reduce of cash Balance of the company. Because An increase In Inventory indicates purchase of Inventory to the Company so it shows impact on cash balance of the company.

23) Answer : Option (B) Common Stockholders.

ReInvested Fund into Retained Earnings always Belongs to Commom stockholders.

24) Answer : Option (A) Liquidity

Assets Accounts in Balance sheet are listed in the order of Liquidity of the Assets.

25) Answer : Option (C) Retained Earnings

Retained earnings Account is a cummulative earnings of the firm because every year Net income is credited to retained earnings account and Dividends are deducted from thhe same account.

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