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Questions and Answers
Which of the following are considered assets? (Select all that apply)
Which of the following are considered assets? (Select all that apply)
- Long-Term Investments (correct)
- Current Assets (correct)
- Current Liabilities
- Intangible Assets (correct)
What are Current Assets?
What are Current Assets?
Cash, short-term investments, accounts receivable, notes receivable, inventory, supplies, and prepaid expenses.
What are Long-term Investments?
What are Long-term Investments?
Investments in stock or real estate or long-term bonds.
What constitutes Property, Plant, and Equipment?
What constitutes Property, Plant, and Equipment?
Which of the following are considered intangible assets? (Select all that apply)
Which of the following are considered intangible assets? (Select all that apply)
What are Liabilities and Stockholders' Equity?
What are Liabilities and Stockholders' Equity?
What are Current Liabilities?
What are Current Liabilities?
What are Long-term Liabilities?
What are Long-term Liabilities?
What constitutes Stockholders' Equity?
What constitutes Stockholders' Equity?
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Study Notes
Assets
- Defined as resources owned by a company that provide future economic benefits.
- Categories of assets include:
- Current Assets
- Long-Term Investments
- Property, Plant, and Equipment (PP&E)
- Intangible Assets
Current Assets
- Include liquid assets that can be converted into cash within a year.
- Components consist of:
- Cash and cash equivalents
- Short-term investments
- Accounts receivable (money owed by customers)
- Notes receivable (written promises for payment)
- Inventory (goods available for sale)
- Supplies (materials used in operations)
- Prepaid expenses (payments made in advance for services)
Long-Term Investments
- Investments intended to be held for more than one year.
- Common types include:
- Stocks
- Real estate
- Long-term bonds
Property, Plant, and Equipment (PP&E)
- Represents tangible fixed assets used in operations.
- Components include:
- Land
- Office equipment
- Subject to depreciation, which reduces the asset's book value over time.
Intangible Assets
- Non-physical assets that provide value and competitive advantage.
- Key examples include:
- Patents (exclusive rights to inventions)
- Goodwill (value derived from a brand’s reputation)
- Trademarks (brand identifiers)
Liabilities and Stockholders' Equity
- Represents the obligations of a company and the owners' residual interest.
- Main components are:
- Current Liabilities
- Long-Term Liabilities
- Stockholders’ Equity
Current Liabilities
- Short-term obligations expected to be settled within a year.
- Include:
- Notes payable (promissory notes due)
- Accounts payable (amounts owed to suppliers)
- Salaries payable (wages owed to employees)
- Unearned revenue (payments received before services are provided)
- Interest payable (interest expense that has accrued)
Long-Term Liabilities
- Obligations that extend beyond one year.
- Common examples include:
- Mortgage payable (loan secured by real estate)
- Notes payable (long-term debt obligations)
Stockholders' Equity
- Represents the owner's claim after liabilities are settled.
- Includes:
- Common equity (investment made by shareholders)
- Retained earnings (cumulative profits retained for reinvestment)
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