Flashcard #1

Front

What are examples of current assets?

Back

Current assets include cash, accounts receivable, and prepaid expenses.

Front

What is notes receivable?

Back

Notes receivable are written promises for amounts to be received, typically involving interest.

Front

Define cash in accounting.

Back

Cash refers to currency, coins, and amounts on deposit in bank accounts.

Front

What is accounts receivable?

Back

Accounts receivable is money owed to a company by its customers for goods or services delivered.

Front

What are prepaid expenses?

Back

Prepaid expenses are payments made in advance for goods or services to be received in the future.

Front

What is the difference between cash and cash equivalents?

Back

Cash equivalents are short-term investments that are easily convertible to cash, such as treasury bills.

Front

What is the purpose of a balance sheet?

Back

A balance sheet provides a snapshot of a company's financial position at a specific point in time.

Front

What does liquidity mean in finance?

Back

Liquidity refers to how easily assets can be converted into cash.

Front

What is the accounting equation?

Back

The accounting equation is Assets = Liabilities + Equity.

Front

Define current liabilities.

Back

Current liabilities are obligations that a company expects to settle within one year.