Balance sheet quiz

Resources controlled by a company as a result of past events are

• equity.

• Assets

• Liabilities

Equity equals

• Assets - Liabilities.

• Liabilities - Assets.

• Assets + Liabilities.

All of the following are current assets except

• cash.

• Goodwill

• Inventories

When a company buys shares of its own stock to be held in treasury, it records a

reduction in

• both assets and liabilities.

• both assets and shareholders ’ equity.

• assets and an increase in shareholders ’ equity.

An investor worried that a company may go bankrupt would most likely examine its

• current ratio.

• return on equity.

• debt - to - equity ratio.

An investor concerned whether a company can meet its near - term obligations is most

likely to calculate the

• current ratio.

• debt - to - equity ratio.

• return on total capital.

A common - size analysis of the balance sheet is most likely to signal investors that the

company

• has increased sales.

  B. is using assets effi ciently.

  C. is becoming more leveraged.

• is using assets efficiently.

• is becoming more leveraged.

When a company pays its rent in advance, its balance sheet will reflect a reduction in

• assets and liabilities.

• liabilities and shareholders ’ equity.

• one category of assets and an increase in another.

An investor concerned whether a company can meet its near - term obligations is most

likely to calculate the

• current ratio.

• debt - to - equity ratio.

• return on total capital.

The most stringent test of a company ’ s liquidity is its

• cash ratio.

• quick ratio.

• current ratio.