Liabilities Are Generally Classified On A Balance Sheet As

Question: Efficient management of net working capital can result in:

higher profits.

fewer sales.

lower cash flow.

greater costs.

Answer: higher profits.

Question: The following accounts were taken from the financial statements of Lee Company. Match each of the accounts to its proper balance sheet classification. If the item would not appear on a balance sheet, use “Not Applicable.”

Answer:

Question: All of the following are property, plant, and equipment except:

machinery.

supplies.

land.

buildings.

Answer: supplies.

Question: A current asset is:

an asset that a company expects to convert to cash or use up within one year.

an asset which is currently being used to produce a product or service.

the last asset purchased by a business.

usually found as a separate classification in the income statement.

Answer: an asset that a company expects to convert to cash or use up within one year.

Question: An intangible asset:

is worthless because it has no physical substance.

does not have physical substance, yet often is very valuable.

cannot be classified on the balance sheet because it lacks physical substance.

is converted into a tangible asset during the operating cycle.

Answer: does not have physical substance, yet often is very valuable.

Question: Liabilities are generally classified on a balance sheet as:

tangible liabilities and intangible liabilities.

small liabilities and large liabilities.

present liabilities and future liabilities.

current liabilities and long-term liabilities.

Answer: current liabilities and long-term liabilities.

Question: Which of the following would not be classified a long-term liability?

Lease liabilities

Current maturities of long-term debt

Bonds payable

Mortgage payable

Answer: Current maturities of long-term debt

Question: On a classified balance sheet, current assets are customarily listed:

with the largest dollar amounts first.

in the order of liquidity.

in alphabetical order.

in the order of acquisition.

Answer: in the order of liquidity.

Question: All of the following are stockholders’ equity accounts except:

Investment in Stock.

Dividends.

Common Stock.

Retained Earnings.

Answer: Investment in Stock.

Question: Salaries and Wages Payable is classified as a:

current liability

.

long-term liability.

intangible liability.

non-current liability.

Answer: current liability

Salaries and Wages Payable is classified as a current liability since it will be paid within the coming year.