Understanding Balance Sheets

What is a balance sheet?

• A statement of a company's income and expenses

• A financial document that shows a company's assets, liabilities, and equity at a specific point in time

• A summary of cash flows in and out of a business

• A report showing the number of shares owned by stakeholders

Which of the following is considered a current liability?

• Bank loan due in 10 years

• Wages payable to employees

• Land owned by the company

• Equipment purchased on credit

What type of liability is due within the next 12 months?

• Long-term liability

• Current liability

• Fixed liability

• Non-current liability

Which of the following is a type of asset?

• Accounts payable

• Equipment

• Wages payable

• Mortgage payable

Which of the following is NOT considered an asset on the balance sheet?

• Cash

• Inventory

• Accounts payable

• Equipment

What is the difference between fixed assets and current assets?

• Fixed assets are expected to be used in the business for more than a year; current assets are expected to be used or converted to cash within a year

• Fixed assets include cash and accounts receivable; current assets include land and buildings

• Fixed assets are long-term loans; current assets are short-term loans

• There is no difference

Which of the following is an example of a current asset?

• Machinery

• Accounts receivable

• Land

• Trademark

What are the two types of capital listed on the balance sheet?

• Fixed and current

• Opening and working

• Short-term and long-term

• Cash and non-cash

What is opening capital?

• The capital a business has at the start of a financial year

• The amount of capital raised from investors

• The profit made from operations

• The capital invested by the business owners at the beginning of operations

What is working capital?

• The capital used to purchase long-term assets

• The difference between current assets and current liabilities

• The total value of a company's assets

• The amount of capital in the bank account