Question

5- The current retio measures a firm's a) Profitability b) Ability to pay long--term liability c)...

5- The current retio measures a firm's

a) Profitability
b) Ability to pay long--term liability
c) Ability to pay shot-trem liability
d) a,b and c


6- Which of the follwoing woulf NOT be classified as long-term asset?

a) Equipment
b) Accounts Payable
c) Automobiles
d) Building

7- What is the going concern assumption?

a) Assumes that a company will go thae distance for their customers.
b) Assumes company will go out of business for ten years
c) Assumes that a company will follow proper accounting rules
d) Assumes that the compeny will continue to operate indefinitely

8- A clssifed balance sheet

a) Does not balance
b) Shows depits and Credits
c) Arranges assets and liabilities by liquidity
d) Lists all revenues and expenses.

Business   Accounting   
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Homework Answers

Answer #1

5)

Answer is (c) ability to pay short term liabilities.

Explanation: The current ratio measures the ability of a company to cover its short-term liabilities with its current assets.

6)

Answer is (b) Account Payable.

Explanation: Account Payable is current liabilities ,hence it is not classified as long term asset.

7)

Answer is (d) Assume that the company will continue to operate indefinitely.

Explanation: Company prepare his financial statement on the assumption that company will continue its operation in the future and neither there is intention nor there is need to materially curtail the scale of operation.

8)

Answer is (c) Arranges assets and liabilities by liquidity.

Explanation: In classified balance sheet, assets and liabilities are classified into sub cateogory of accounts and assets and liabilities are arranged in the order of liquidity.

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