Learning Objective 1.2 Questions
1) A liability that results from a purchase of goods or services on open account is referred to as a(n)
A) accounts receivable.
B) notes payable.
C) accounts payable.
D) notes receivable.
E) capital stock.
2) Which of the following statements is true?
A) Owners' equities are economic sacrifices after deducting liabilities.
B) Assets are expected to benefit no one.
C) Liabilities are future cash inflows.
D) Assets are always the sum of liabilities and owners' equities.
E) Owners' equities have priority over liabilities for assets upon liquidation.
3) The accounting equation can be stated as which of the following?
A) Assets – liabilities = owners' equity
B) Assets + liabilities = owners' equity
C) Liabilities + assets = owners' equity
D) Owners' equity + assets = liabilities
E) Liabilities – owners' equity = assets
4) Which of the following describes a liability?
A) Future economic benefit
B) Economic obligations to creditors
C) Paid-in capital
D) Investment by owners
E) Present value of customer future payments
5) Notes Payable are classified as
C) owner investments.
6) Income taxes owed to the federal government would be classified as a(n)
A) liability on the balance sheet.
B) asset on the balance sheet.
C) liability on the statement of cash flows.
D) equity on the balance sheet.
E) They would not appear on a financial statement.
7) An example of stockholders' equity is
A) accounts payable.
B) accounts receivable.
C) capital stock.
D) marketable securities.
E) cash and cash equivalents.
8) Statement of financial position is another name for the balance sheet.
9) Assets and owners' equity are presented on the right side of the balance sheet.
10) The balance sheet equation is assets = liabilities – owner's equity.