1. On a classified balance sheet, companies usuality ist ourrent assets a. in al
ID: 2600702 • Letter: 1
Question
1. On a classified balance sheet, companies usuality ist ourrent assets a. in alphabetical order b with the largest dollar amounts first c. in the order in which they are expected to be converted into cash d. in the order of aoquisition 2 Michaels Company has assets of $1,000.000, liabilities of $600.000 and Equity of $400.000 What is Michael's current ratio? a. 3.333 b. 1.667 c. 2.5 d. 1.5 cash. As a result of this event, a. equity decreased by $1,500 b. assets increased by $1,500 c. total assets remained unchanged d. Both assets and equity decreased by $1,500. 4. Long term refers to something that will last a. more than a year b. less than a year c. at least 5 years d. at least 10 years 5. The historical cost principle requires that when assets are acquired, they be recorded at a. market value. b. the amount paid for them. c. selling price. d. list price. . Valuing assets at their fair value rather than at their cost is inconsistent with the a. economic entity assumption. b. historical cost principle. c. periodicity assumption. d. full disclosure principle.Explanation / Answer
1) The correct choice is C
Explanation : - On the balance sheet, current assets are recorded in the order of liquidity i.e. the amount of time required to convert them into cash. The asset with the shortest liquidity is recorded first and then other assets based on the order of their liquidity.
2) The correct choice is B
Explanation : - Current ratio = current assets / current liabilities
current ratio = 1,000,000 / 600,000
current ratio = 1.667
3) The correct choice is b
Explanation : - The purchase of asset increases the long term assets as equipment purchased is generally for long term.
4) The correct choice is a
Explanation : - In accounting long term is an accounting period of more than twelve months .
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