Assets Quiz

QUESTIONS

1. Two employees working together in order to circumvent a system is known as...

        A) collusion

        B) collaboration

 

2. Internal control is defined as...

        A) any system a company puts in place to protect its resources

        B) a company's authority over its personnel

 

3. The balance sheet measures...

        A) a specific period of time

        B) a specific point in time

 

4. The balance sheet measures a company's assets, liabilities, and owners' equity accounts, and can also be referred to as the...

        A) statement of financial opinion

        B) statement of financial position

 

5. Generally, the most valued asset for a company to have is...

        A) cash

        B) equipment

 

6. Inventory is a list of...

        A) the company's equipment

        B) products ready to sell to the customer

 

7. PP&E is short for...

        A) property, plant, and equipment

        B) property, personnel, and equipment

 

8. Liquidity is defined as...

        A) a company's ability to meet unexpected problems and take advantage of unexpected opportunities

        B) a company's ability to generate sales

 

9. The best method for an auditor to evaluate an equipment purchase is to...

        A) inspect the accounting records

        B) match the accounting records to a document from a third party, such as an invoice or bank statement

 

10. At the top of the balance sheet, one would expect to see...

        A) one date

        B) two dates

 

ANSWER KEY:

1A, 2A, 3B, 4B, 5A, 6B, 7A, 8A, 9B, 10A

 

PRACTICE PROBLEMS

1. A company makes a sale on December 1 worth $100,000. It receives $20,000 immediately with a promise for the remaining $80,000 on March 31. What is its accounts receivable balance on December 31?

2. A company sells 120,000 units at a sales price of $3.50 each and receives $135,000 immediately from the customer with a promise for the rest. What is the accounts receivable balance after the sale?

3. A company makes on a sale on June 1 worth $85,000 and receives 50% of the balance immediately. On July 1, it receives an additional $10,000 from the customer, and then receives the remainder on August 15. What was the company's accounts receivable balance at the end of June, July, and August?

4. A company has $50,000 in cash, $100,000 in inventory, $90,000 in property, plant and equipment (PP&E) and $35,000 in accounts payable. What is the company's total asset balance?

5. If a company's Property, Plant & Equipment (PPE) balance begins the year at $1,200,000 and increases to $1,500,000 at the end of the year, by what percentage did it increase?

  

ANSWER KEY:

1: $80,000

 

2. 120,000 x $3.50 = $420,000

$420,000 - $135,000 = $285,000

 

3. June 30 = $85,000 x .5 = $42,500

July 31 = $42,500 - $10,000 = $32,500

August 30 = $0

 

4. $50,000 + $100,000 + $90,000 = $240,000

 

5. Percentage Change = (New - Old) / Old

($1,500,000 - $1,200,000) / $1,200,000

$300,000 / $1,200,000 = 25%