Statement of Financial Position Line Items

What does 'assets' represent on the balance sheet?

• a) The company’s debts and obligations

• b) Items of value owned by the company that can provide future economic benefits

• c) Expenses incurred in the business

• d) Cash and cash equivalents only

Liabilities are defined as:

• a) The total value of goods sold

• b) The owner’s financial interest in the company

• c) The company’s debts or obligations that are expected to be settled over time

• d) The total revenue earned by the company

Equity on the balance sheet refers to:

• a) The company’s cash reserves

• b) The owner’s claim on the company after liabilities have been deducted from assets

• c) The total liabilities owed by the company

• d) Funds invested in inventory

Accounts Receivable represents:

• a) Cash paid for business expenses

• b) Money owed to the company by customers for goods and services delivered

• c) Future expenses for purchasing goods

• d) Company’s debt to suppliers

What is the purpose of Inventory on the balance sheet?

• a) It represents cash reserves for the company

• b) Goods owned by the company and available for sale to customers

• c) A form of liabilities owed to suppliers

• d) Fixed assets used in production

Prepaid Expenses are:

• a) Future expenses that have been paid in advance and will be recognized over time

• b) Short-term debts owed by the company

• c) Money received for future services

• d) Cash reserves used for emergencies

Fixed Assets refer to:

• a) Assets that will be sold within a year

• b) Long-term assets used in the company’s operations, such as property, plant, and

  equipment

• c) Investments that can be liquidated quickly

• d) Cash assets only

Accounts Payable on the balance sheet represents:

• a) Long-term loans owed by the company

• b) Expenses already paid for goods or services yet to be received

• c) Money the company owes to suppliers for goods and services received but not yet

  paid for

• d) Revenue earned but not yet recorded

Retained Earnings on the balance sheet refer to:

• a) The company’s total revenue before expenses

• b) Profits that have been reinvested into the business rather than distributed to

  shareholders

• c) Money borrowed for expansion

• d) Cash reserves held in a foreign currency

Current Liabilities are:

• a) Debts that the company expects to settle within a year

• b) Liabilities that will be paid off over multiple years

• c) Long-term debts owed to banks

• d) The total value of assets available