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Questions and Answers
What type of asset is typically held for a period of 3 years or less?
What type of asset is typically held for a period of 3 years or less?
- Current Asset (correct)
- Fixed Asset
- Short-term Liability
- Long-term Liability
What is the opposite of a Current Liability on a balance sheet?
What is the opposite of a Current Liability on a balance sheet?
- Long-term Asset
- Current Asset (correct)
- Non-Current Liability
- Fixed Asset
What type of account would 'Accounts Receivable' fall under?
What type of account would 'Accounts Receivable' fall under?
- Current Asset (correct)
- Long-term Liability
- Short-term Liability
- Fixed Asset
What is the term for a company's ability to pay its short-term debts?
What is the term for a company's ability to pay its short-term debts?
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What type of liability is typically settled within a year or within the company's normal operating cycle, whichever is longer?
What type of liability is typically settled within a year or within the company's normal operating cycle, whichever is longer?
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Study Notes
Classification of Assets
- A fixed asset is a type of non-current asset.
- Fixed assets are not expected to be converted into cash within a year or within the company's normal operating cycle.
Classification of Liabilities
- A short-term liability is a current liability.
- Current liabilities are expected to be paid within a year or within the company's normal operating cycle.
Accounts Receivable
- Accounts receivable is also known as "receivables" or "acct receivable".
- It represents the amount of money that customers owe to a business, typically from credit sales.
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Description
Understand the classification of assets and liabilities, including fixed assets and accounts receivable. Learn about current and non-current assets and liabilities.
