Understanding Assets and Liabilities

What is an example of an asset?

• Loan from the bank

• Building owned by a company

• Rent to be paid

• Supplier payments

What is a liability?

• Cash in hand

• Equipment owned by the business

• Money the business owes to others

• Profit earned from sales

Which of the following is an asset for a restaurant?

• A bank loan

• Furniture in the dining area

• Rent to be paid

• Amount owed to suppliers

What should a business do to manage liabilities?

• Increase debts

• Pay on time to avoid extra charges

• Spend more on assets

• Ignore liabilities

What is an example of a liability for a hotel?

• Buildings it owns

• Bank loan for renovation

• Furniture in guest rooms

• Cash in the bank

Which of the following is true about assets?

• They are things the business owes.

• They are things that help the business make money.

• They must be paid back with interest.

• They are always in the form of cash.

Why is it important to manage liabilities?

• To earn more money

• To avoid running out of money and going bankrupt

• To increase the number of assets

• To sell assets and raise funds

A loan from the bank is an example of:

• Asset

• Liability

• Revenue

• Profit

Which of these is an example of an asset for a business?

• A rent payment

• A bank loan

• Equipment used for production

• Money owed to suppliers

How can a business manage its assets?

• By selling everything

• By keeping track and maintaining them

• By ignoring them

• By taking more loans