BAF3M1 - Test Prep - Ch 1 & 2

The heading of a balance sheet answers three questions: Who? What? When?

Assets - Owner's Equity = Liabilities

Creditors are those who are owed money by a business.

A double ruled line should be placed below the figure for total liabilities.

Liquidity refers to the order in which assets are converted into cash.

A single ruled line should be placed below the figure for total assets.

Which of the following statements about the format of a balance sheet is true?

According to the ________ principle, assets should be recorded at their historical cost price.

Creditors are customers who owe money to a business.

Which of the following is a liability?

Overstating the value of the assets is in violation of the principle of conservatism.

Assets are placed on the left side of the balance sheet.

Accounts Payable would be listed before a mortgage on a balance sheet.

A person's net worth can be calculated by subtracting liabilities from assets.

Liabilities represent the claims of the owner against the business.

Which of the following would normally appear first in the liabilities section of a classified balance sheet?

Which of the following is an asset?

Which of the following is the most liquid asset?

The terms capital and asset have essentially the same meaning.