(i) Depreciation is charged on current Assets only.

(i) Depreciation is charged on current Assets only.
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Do you agree or disagree with the following statements : (i) Depreciation is charged on ... depreciation is charged on assets purchased on credit.
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(i) Depreciation is cash expenses.

Description : (i) Depreciation is cash expenses.

Last Answer : Correct the following statement and rewrite the statement : (i) Depreciation is cash expenses. ... v) Depreciation increases the value of an asset.

Depreciation is always charged on __________ assets. 

Description : Depreciation is always charged on __________ assets. 

Last Answer : Depreciation is always charged on __________ assets. (a) Current (b) Fixed (c) Fictitious (d) Intangible

Sale of products from test run before production run is a) Deducted from actual cost b) Added to actual cost of assets c) Charged as pre-profits d) Charged as preliminary expenses

Description : Sale of products from test run before production run is a) Deducted from actual cost b) Added to actual cost of assets c) Charged as pre-profits d) Charged as preliminary expenses

Last Answer : a) Deducted from actual cost

Identify the incorrect statement in connection with working capital management. A. Long-term funds are more expensive than short-term funds but also riskier B. The objectives of working capital management are profitability and liquidity C. Permanent current assets should be financed from long-term sources if a moderate or matching policy is adopted D. Conservative financing policies use short-term funds to finance only part of fluctuating current assets E. Aggressive financing policies increase profitability at the cost of higher risk

Description : Identify the incorrect statement in connection with working capital management. A. Long-term funds are more expensive than short-term funds but also riskier B. The objectives of ... fluctuating current assets E. Aggressive financing policies increase profitability at the cost of higher risk

Last Answer : A. Long-term funds are more expensive than short-term funds but also riskier

The assets of a business can be classified as A. Only fixed assets B. Only current assets C. Fixed and current assets D. None of the above

Description : The assets of a business can be classified as A. Only fixed assets B. Only current assets C. Fixed and current assets D. None of the above

Last Answer : C. Fixed and current assets

Capacitance in an AC circuit will _____________. A. stop current flow once the capacitor is fully charged B. allow current flow in only one direction C. oppose any change in circuit voltage D. rectify the current

Description : Capacitance in an AC circuit will _____________. A. stop current flow once the capacitor is fully charged B. allow current flow in only one direction C. oppose any change in circuit voltage D. rectify the current

Last Answer : Answer: C

State the meaning of Current assets.

Description : State the meaning of Current assets.

Last Answer : State the meaning of Current assets.

Which one of the following ratios is likely to be affected the most on account of price level changes ? (A) Current Ratio (B) Inventory Turnover Ratio (C) Debtors’ Turnover Ratio (D) Fixed Assets Turnover Ratio

Description : Which one of the following ratios is likely to be affected the most on account of price level changes ? (A) Current Ratio (B) Inventory Turnover Ratio (C) Debtors’ Turnover Ratio (D) Fixed Assets Turnover Ratio

Last Answer : Answer: Debtors’ Turnover Ratio

The current ratio is 3 : 2 and the amount of current liabilities is Rs. 40,000. What is the amount of current assets ? (A) Rs. 60,000 (B) Rs. 70,000 (C) Rs. 80,000 (D) Rs. 1,00,000

Description : The current ratio is 3 : 2 and the amount of current liabilities is Rs. 40,000. What is the amount of current assets ? (A) Rs. 60,000 (B) Rs. 70,000 (C) Rs. 80,000 (D) Rs. 1,00,000

Last Answer : Answer: Rs. 60,000

Goodwill, Copyright and Trademarks should be classified as– (A) Tangible assets (B) Intangible assets (C) Current assets (D) Fictitious assets

Description : Goodwill, Copyright and Trademarks should be classified as– (A) Tangible assets (B) Intangible assets (C) Current assets (D) Fictitious assets

Last Answer : Answer: Intangible assets

For the purpose of preparation of fund flow statement, fund means– (A) Total resources (B) Cash/bank balances (C) Current Assets (D) Working capital

Description : For the purpose of preparation of fund flow statement, fund means– (A) Total resources (B) Cash/bank balances (C) Current Assets (D) Working capital

Last Answer : Answer: Working capital

According to Balance Sheet equation concept, the capital will be– (A) Capital = Liabilities – Assets (B) Capital = Fixed Assets – Current Assests (C) Capital = Assets – Liabilities (D) Capital = Assets + Liabilities

Description : According to Balance Sheet equation concept, the capital will be– (A) Capital = Liabilities – Assets (B) Capital = Fixed Assets – Current Assests (C) Capital = Assets – Liabilities (D) Capital = Assets + Liabilities

Last Answer : Answer: Capital = Assets – Liabilities

Which of the following is defined as the difference between current assets and current liabilities? A. Venture Capital B. Working Capital C. Equitable Mortgage D. None of the Above

Description : Which of the following is defined as the difference between current assets and current liabilities? A. Venture Capital B. Working Capital C. Equitable Mortgage D. None of the Above

Last Answer : B. Working Capital Explanation: The capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Permanent working capitalA. varies with seasonal needs B. includes fixed assets C. is the amount of current assets required to meet a firm's long-term minimum needs D. includes accounts

Description : Permanent working capital A. varies with seasonal needs B. includes fixed assets C. is the amount of current assets required to meet a firm's long-term minimum needs D. includes accounts

Last Answer : C. is the amount of current assets required to meet a firm's long-term minimum needs

Net working capital refers to A. total assets minus fixed assets B. current assets minus current liabilities C. current assets minus inventories D. current

Description : Net working capital refers to A. total assets minus fixed assets B. current assets minus current liabilities C. current assets minus inventories D. current

Last Answer : B. current assets minus current liabilities

Which of the following statements relating to working capital financing is not correct? A. An aggressive policy uses long-term debt to finance fluctuating current assetsB. Long-term debt is less risky that short-term debt C. A conservative policy uses long-term debt to finance fixed assets D. Short-term debt is cheaper than long-term debt E. The matching principle indicates that fluctuating current assets should be financed by short-term debt

Description : Which of the following statements relating to working capital financing is not correct? A. An aggressive policy uses long-term debt to finance fluctuating current assets B. Long-term debt ... . The matching principle indicates that fluctuating current assets should be  financed by short-term debt

Last Answer : A. An aggressive policy uses long-term debt to finance fluctuating current assets

Risk, as it relates to working capital, means that there is jeopardy to the firm for not maintaining sufficient current assets to . A. meet its cash obligations as they occur and take advantage of prompt payment B. discounts C. support the proper level of sales and take prompt payment discounts D. maintain current and acid-test ratios at or above industry norms E. meet its cash obligations as they occur and support the proper level of

Description : Risk, as it relates to working capital, means that there is jeopardy to the firm for not  maintaining sufficient current assets to . A. meet its cash obligations as they occur and take advantage ... above industry norms E. meet its cash obligations as they occur and support the proper level of

Last Answer : D. maintain current and acid-test ratios at or above industry norms

How can a firm provide a margin of safety if it cannot borrow on short notice to meet its needs? A. Maintain a low level of current assets (especially cash and marketable securities). B. Shorten the maturity schedule of financing. C. Increasing the level of fixed assets (especially plant and equipmentD. Lengthening the maturity schedule of financing

Description : How can a firm provide a margin of safety if it cannot borrow on short notice to meet its  needs? A. Maintain a low level of current assets (especially cash and marketable securities) ... the level of fixed assets (especially plant and equipment D. Lengthening the maturity schedule of financing

Last Answer : D. Lengthening the maturity schedule of financing

Which of the following statements is correct for a conservative financing policy for a firm relative to a former aggressive policy? A. The firm uses long-term financing to finance all fixed and current assets. B. The firm will see an increase in its expected profits. C. The firm will see an increase in its risk profile. D. The firm will increase its dividends per share (DPS) this period.

Description : Which of the following statements is correct for a conservative financing policy for a firm  relative to a former aggressive policy? A. The firm uses long-term financing to finance all fixed and current ... its risk profile. D. The firm will increase its dividends per share (DPS) this period.

Last Answer : B. The firm will see an increase in its expected profits.

Under a conservative financing policy a firm would use long-term financing to finance some of the temporary current assets. What should the firm do when a "dip" in temporary current assets causes total assets to fall below the total long-term financing? A. Use the excess funds to pay down long-term debt. B. Invest the excess long-term financing in marketable securities. C. Use the excess funds to repurchase common stock. D. Purchase additional plant and equipment.

Description : Under a conservative financing policy a firm would use long-term financing to finance some of the temporary current assets. What should the firm do when a "dip" in temporary current assets causes ... C. Use the excess funds to repurchase common stock. D. Purchase additional plant and equipment.

Last Answer : B. Invest the excess long-term financing in marketable securities.

Having defined working capital as current assets, it can be further classified according to . A. financing method and time B. rate of return and financing method C. time and rate of return D. components & time

Description : Having defined working capital as current assets, it can be further classified according to  . A. financing method and time B. rate of return and financing method C. time and rate of return D. components & time

Last Answer : D. components & time

The amount of current assets that varies with seasonal requirements is referred to as working capital. A. permanent B. net C. temporary D. gross

Description : The amount of current assets that varies with seasonal requirements is referred to as  working capital. A. permanent B. net C. temporary D. gross

Last Answer : C. temporary

The amount of current assets required to meet a firm's long-term minimum needs is referred to as working capital. A. permanent B. temporary C. net D. gross

Description : The amount of current assets required to meet a firm's long-term minimum needs is  referred to as working capital. A. permanent B. temporary C. net D. gross

Last Answer : A. permanent

Which of the following statements is most correct? A. For small companies, long-term debt is the principal source of external financing. B. Current assets of the typical manufacturing firm account for over half of its total assets. C. Strict adherence to the maturity matching approach to financing wD. Similar to the capital structure management, working capital management requires the financial manager to make a decision and not address the issue again for several months.ould call for all current assets to be financed solely with current liabilities.

Description : Which of the following statements is most correct? A. For small companies, long-term debt is the principal source of external financing. B. Current assets of the typical manufacturing firm account ... the financial manager to make a decision and not address the issue again for several months.

Last Answer : B. Current assets of the typical manufacturing firm account for over half of its total assets.

To financial analysts, "working capital" means the same thing as . A. Total assets B. fixed assets C. current assets D. current assets minus current liabilities.

Description : To financial analysts, "working capital" means the same thing as . A. Total assets B. fixed assets C. current assets D. current assets minus current liabilities.

Last Answer : C. current assets

In deciding the optimal level of current assets for the firm, management is confronted with . A. a trade-off between profitability and risk B. a trade-off between liquidity and risk C. a trade-off between equity and debt D. a trade-off between short-term versus long-term borrowing

Description : In deciding the optimal level of current assets for the firm, management is confronted with  . A. a trade-off between profitability and risk B. a trade-off between liquidity and risk C. a trade-off between equity and debt D. a trade-off between short-term versus long-term borrowing

Last Answer : A. a trade-off between profitability and risk

Which of the following illustrates the use of a hedging approach to financing assets? A. Temporary current assets financed with long-term liabilities. B. Permanent working capital financed with long-term liabilities. C. Short-term assets financed with equity D. All assets financed with a mixture of 50% equity and 50% long-term debt

Description : Which of the following illustrates the use of a hedging approach to financing assets? A. Temporary current assets financed with long-term liabilities. B. Permanent working capital financed with long-term ... equity D. All assets financed with a mixture of 50% equity and 50% long-term debt

Last Answer : B. Permanent working capital financed with long-term liabilities.

Patents and copyrights fall under the category of 1. Current assets 2. Liquid assets 3. Intangible assets 4. Nominal assets 5. None of these

Description : Patents and copyrights fall under the category of 1. Current assets 2. Liquid assets 3. Intangible assets 4. Nominal assets 5. None of these

Last Answer : Intangible assets

The __________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities. (A) Cash ratio (B) Net working capital (C) Current ratio

Description : The __________ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities. (A) Cash ratio (B) Net working capital (C) Current ratio

Last Answer : (B) Net working capital

In the balance sheet, ending merchandise inventory is reported a. in current assets immediately following accounts receivable. b. in current assets immediately following prepaid expenses. c. in current assets immediately following cash. d. under property, plant, and equipment.

Description : In the balance sheet, ending merchandise inventory is reported a. in current assets immediately following accounts receivable. b. in current assets immediately following prepaid expenses. c. in current assets immediately following cash. d. under property, plant, and equipment.

Last Answer : a. in current assets immediately following accounts receivable.

Land held for future use will be reported in the ____________ section of a classified balance sheet. a. Long-term assets. b. Long-term investments. c. Property, Plant and Equipment. d. Current assets..

Description : Land held for future use will be reported in the ____________ section of a classified balance sheet. a. Long-term assets. b. Long-term investments. c. Property, Plant and Equipment. d. Current assets..

Last Answer : b. Long-term investments.

The current assets should be listed on Cerner’s balance sheet in the following order: a. cash, accounts receivable, prepaid insurance, equipment. b. cash, prepaid insurance, supplies, accounts receivable. c. cash, accounts receivable, prepaid insurance, supplies. d. equipment, supplies, prepaid insurance, accounts receivable, cash

Description : The current assets should be listed on Cerner's balance sheet in the following order: a. cash, accounts receivable, prepaid insurance, equipment. b. cash, prepaid insurance, supplies, ... receivable, prepaid insurance, supplies. d. equipment, supplies, prepaid insurance, accounts receivable, cash

Last Answer : c. cash, accounts receivable, prepaid insurance, supplies.

The sub-classifications on the company’s classified balance sheet would include all of the following except: a. Current Assets. b. Property, Plant, and Equipment. c. Current liabilities. d. Long-term Assets.

Description : The sub-classifications on the company’s classified balance sheet would include all of the following except: a. Current Assets. b. Property, Plant, and Equipment. c. Current liabilities. d. Long-term Assets.

Last Answer : d. Long-term Assets.

What are total current assets at December 31, 2008? a. $26,000 b. $32,000 c. $36,000 d. $218,000

Description : What are total current assets at December 31, 2008? a. $26,000 b. $32,000 c. $36,000 d. $218,000

Last Answer : c. $36,000

The most important information needed to determine if companies can pay their current obligations is the a. net income for this year. b. projected net income for next year. c. relationship between current assets and current liabilities. d. relationship between short-term and long-term liabilities.

Description : The most important information needed to determine if companies can pay their current obligations is the a. net income for this year. b. projected net income for next year. c. ... between current assets and current liabilities. d. relationship between short-term and long-term liabilities.

Last Answer : c. relationship between current assets and current liabilities.

The relationship between current assets and current liabilities is important in evaluating a company's a. profitability. b. liquidity. c. market value. d. accounting cycle.

Description : The relationship between current assets and current liabilities is important in evaluating a company's a. profitability. b. liquidity. c. market value. d. accounting cycle.

Last Answer : b. liquidity.

Intangible assets are a. listed under current assets on the balance sheet. b. not listed on the balance sheet because they do not have physical substance. c. noncurrent resources. d. listed as a long-term investment on the balance sheet.

Description : Intangible assets are a. listed under current assets on the balance sheet. b. not listed on the balance sheet because they do not have physical substance. c. noncurrent resources. d. listed as a long-term investment on the balance sheet.

Last Answer : Intangible assets are a. listed under current assets on the balance sheet. b. not listed on the balance sheet because they do not have physical substance. c. noncurrent resources. d. listed as a long-term investment on the balance sheet.

On a classified balance sheet, current assets are customarily listed a. in alphabetical order. b. with the largest dollar amounts first. c. in the order of liquidity. d. in the order of acquisition.

Description : On a classified balance sheet, current assets are customarily listed a. in alphabetical order. b. with the largest dollar amounts first. c. in the order of liquidity. d. in the order of acquisition.

Last Answer : c. in the order of liquidity.

It is not true that current assets are assets that a company expects to a. realize in cash within one year. b. sell within one year. c. use up within one year. d. acquire within one year.

Description : It is not true that current assets are assets that a company expects to a. realize in cash within one year. b. sell within one year. c. use up within one year. d. acquire within one year.

Last Answer : d. acquire within one year.

Which of the following is an important fact about working capital in Capsim? a. The life blood of any organization b. All of the money tied up in things you one day wish to sell c. Can be seen on the balance sheet under the headings current assets and current liabilities d. The change of working capital can be seen on the cash flow statement e. All of the above are important

Description : Which of the following is an important fact about working capital in Capsim? a. The life blood of any organization b. All of the money tied up in things you one day wish to sell c. Can be ... The change of working capital can be seen on the cash flow statement e. All of the above are important

Last Answer : e. All of the above are important

Depreciation is shown in ____________________. a. P & L statement b. Current Assets c. Investments d. Creditors

Description : Depreciation is shown in ____________________. a. P & L statement b. Current Assets c. Investments d. Creditors

Last Answer : a. P & L statement

. If debt equity ratio is 3:1; the amount of total assets are Rs.20 lakh; current ratio is 1.5:1 and owned funds are Rs.3 lakh. What is the amount of current assets? a) Rs.5 lakh b) Rs.3 lakh c) Rs.12 lakh d) Rs.15 lakh

Description : . If debt equity ratio is 3:1; the amount of total assets are Rs.20 lakh; current ratio is 1.5:1 and owned funds are Rs.3 lakh. What is the amount of current assets? a) Rs.5 lakh b) Rs.3 lakh c) Rs.12 lakh d) Rs.15 lakh

Last Answer : c) Rs.12 lakh

Fixed assets are double the current assets and half the capital. The current assets are Rs.3,00,000 andinvestments are Rs.4,00,000. Then the current liabilities recorded in balance sheet will be a) 2,00,000 b) 1,00,000 c) 3,00,000 d) 4,00,000

Description : Fixed assets are double the current assets and half the capital. The current assets are Rs.3,00,000 andinvestments are Rs.4,00,000. Then the current liabilities recorded in balance sheet will be a) 2,00,000 b) 1,00,000 c) 3,00,000 d) 4,00,000

Last Answer : b) 1,00,000

Stock is A. Included in the category of fixed assets B. Part of current assets C. Intangible D. Tangible

Description : Stock is A. Included in the category of fixed assets B. Part of current assets C. Intangible D. Tangible

Last Answer : B. Part of current assets

Unpaid calls are shown in the balance sheet of a company A. By adding it to the share capital B. By deducting it from the called-up share capital C. Under the head 'current assets' D. Under the head 'current liabilities'

Description : Unpaid calls are shown in the balance sheet of a company A. By adding it to the share capital B. By deducting it from the called-up share capital C. Under the head 'current assets' D. Under the head 'curent liabilities'

Last Answer : B. By deducting it from the called-up share capital

Current assets include A. Stores & Spare parts B. Stock in trade C. Sundry Debtors D. All of the above

Description : Current assets include A. Stores & Spare parts B. Stock in trade C. Sundry Debtors D. All of the above

Last Answer : D. All of the above

Which of the following statement is correct? A. Fixed assets must always be shown at market value B. Book-keeping and accounting are different terms C. Owner's Equity = Assets + Liabilities D. Patents is an example of current asset

Description : Which of the following statement is correct? A. Fixed assets must always be shown at market value B. Book-keeping and accounting are different terms C. Owner's Equity = Assets + Liabilities D. Patents is an example of current asset

Last Answer : A. Fixed assets must always be shown at market value

Liquid assets is determined by A. Current assets-stock-Prepaid expenses B. Current assets +stock+ prepaid expenses C. Current assets +Prepaid expenses D. None of the above

Description : Liquid assets is determined by A. Current assets-stock-Prepaid expenses B. Current assets +stock+ prepaid expenses C. Current assets +Prepaid expenses D. None of the above

Last Answer : A. Current assets-stock-Prepaid expenses

Current liabilities are equals to------------------------------- a) Working capital +current assets b) Working capital-current assets c) Current assets-working capital d) Current asset + working capital

Description : Current liabilities are equals to------------------------------- a) Working capital +current assets b) Working capital-current assets c) Current assets-working capital d) Current asset + working capital

Last Answer : c) Current assets-working capital

Current assets are Rs.6,00,000 current liabilities are Rs.3,00,000 the debtors realized Rs.40,000, the impact on net working capital would be------------------------- a) No change in working capital b) Decrease of working capital by Rs.80,000 c) Increase of working capital by Rs.40,000 d) None of these

Description : Current assets are Rs.6,00,000 current liabilities are Rs.3,00,000 the debtors realized Rs.40,000, the impact on net working capital would be------------------------- a) No change in working ... Decrease of working capital by Rs.80,000 c) Increase of working capital by Rs.40,000 d) None of these

Last Answer : a) No change in working capital