Accounting Basics 4

Define fixed assets in accounting.

• Long-term tangible assets used in the production of income and not expected to be converted into cash within a year.

• Investments in stocks and bonds

• Current liabilities that are expected to be paid off within a year

• Short-term intangible assets with high liquidity

Define current assets in accounting.

• Assets that are expected to be converted into cash or used up within one year.

• Assets that are expected to be converted into liabilities within one year.

• Assets that are intangible and cannot be converted into cash.

• Assets that are expected to increase in value over time.

Provide examples of fixed assets.

• Patents

• Inventory

• Accounts payable

• Buildings, machinery, vehicles, furniture, land

List examples of current assets.

• Cash, accounts receivable, inventory, prepaid expenses

• Accounts payable, notes payable, common stock

• Accrued expenses, long-term investments, intangible assets

• Land, buildings, equipment, patents

Explain what current liabilities are.

• Current liabilities are obligations due within one year or the normal operating cycle of the business, whichever is longer.

• Current liabilities are assets owned by a company.

• Current liabilities are long-term debts of a business.

• Current liabilities are expenses incurred in the past.

Define long term liabilities in accounting.

• Amounts due within one year from the date of the balance sheet.

• Assets that can be easily converted into cash.

• Investments held for less than a year.

• Obligations due beyond one year from the date of the balance sheet.

Define capital in accounting.

• Capital in accounting is the profit earned by a company.

• Capital in accounting refers to the physical buildings owned by a business.

• Capital in accounting is the total number of employees in a company.

• Capital in accounting refers to the financial assets or resources available for use in generating income.

Give examples of current liabilities.

• Accounts payable, wages payable, short-term loans

• Accrued expenses, deferred revenue, long-term loans

List examples of long term liabilities.

• Inventory

• Long-term loans, bonds payable, pension obligations, lease liabilities

• Short-term loans

• Accounts receivable

What are fixed assets?

• Fixed assets are long-term tangible assets used in production and not for sale.

• Fixed assets are liabilities that a company owes.

• Fixed assets are assets that can be easily converted into cash.

• Fixed assets are short-term intangible assets used in production.