Quiz 6- Recognize Important terms

Which of the following is considered a current asset?

• Land

• Inventory

• Equipment

• Buildings

What distinguishes current liabilities from non-current liabilities?

• Current liabilities are due within one year, while non-current liabilities are due after one year.

• Current liabilities are always larger in amount than non-current liabilities.

• Non-current liabilities are due within one year, while current liabilities are due after one year.

• Current liabilities are only related to operating expenses.

According to the revenue recognition principle, when should revenue be recognised?

• When cash is received

• When the service is performed or goods are delivered

• At the end of the fiscal year

• When the invoice is sent

Which of the following is an example of a non-operating expense?

• Rent

• Salaries

• Interest expense

• Utilities

Which of the following is a form of equity financing?

• Issuing bonds

• Taking a bank loan

• Issuing common shares

• Leasing equipment

How does depreciation impact the value of an asset on the balance sheet?

• It increases the asset's value.

• It decreases the asset's value.

• It has no impact on the asset's value.

• It converts the asset into a liability.

Which of the following is considered a non-current asset?

• Cash

• Accounts receivable

• Machinery

• Prepaid expenses

What is the primary purpose of recognising expenses in financial statements?

• To increase net income

• To match expenses with revenues

• To decrease liabilities

• To increase assets

Which of the following is a characteristic of equity financing?

• It requires regular interest payments.

• It dilutes ownership of existing shareholders.

• It must be repaid within a fixed period.

• It is secured by company assets.

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

• Mortgage payable

• Accounts payable

• Bonds payable

• Long-term lease obligations