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Accounting Game Chapter 9
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Accounting Game Chapter 9

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@LawfulJadeite

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Questions and Answers

Why should inventory be written off when it goes bad?

  • To inflate the value of assets
  • To increase earnings
  • To accurately reflect the true value of assets (correct)
  • To reduce taxes

    • What is the order of assets on the balance sheet?

  • In order of purchase date.
  • In descending order of liquidity. (correct)
  • In alphabetical order.
  • In ascending order of liquidity.

    • What happens if the fixed assets are sold for more than book value?

  • A gain is recognized as profit. (correct)
  • A loss is recognized.
  • Profit is not recognized.
  • No impact on profit.

    • Why is it important to accurately value inventory when buying or selling a business?

    <p>To determine the true financial position of the business</p> Signup and view all the answers

    Which of the following is true about the Balance Sheet?

    <p>The Balance Sheet shows the financial position of a company at a specific point in time.</p> Signup and view all the answers

    What does liquidity refer to in the context of the Balance Sheet?

    <p>How quickly assets can be converted to cash.</p> Signup and view all the answers

    Why are Fixed Assets listed last on the Balance Sheet?

    <p>Fixed Assets are the least liquid assets.</p> Signup and view all the answers

    What is the purpose of an Income Statement?

    <p>To show the revenue and expenses of a company over a period of time.</p> Signup and view all the answers

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