Assets – What Do You Own? Quiz:Understanding Financial Statements: Company Position (Fundamentals of Accounting Specialization) Answers 2025

Question 1

Inventory is listed as a current asset on the balance sheet, which means inventory should be used up within a year. True or false?
✅ True
❌ False

Question 2

Which balance sheet item represents investments that can be converted to cash quickly?
✅ Marketable securities
❌ Accounts receivable
❌ Inventory
❌ Prepaid expense

Question 3

Which account would NOT be listed on the balance sheet for a bakery?
✅ Sugar
❌ Inventory
❌ Accounts receivable
❌ Cash

(Sugar would be part of inventory, but not listed separately.)

Question 4

What the company is in the business to sell determines whether an item can be presented in raw materials inventory or finished goods inventory. True or false?
✅ True
❌ False

Question 5

Which is not one of the three categories of inventory that a manufacturing company would include on the balance sheet?
✅ Uncollectable inventory
❌ Work in progress inventory
❌ Raw materials inventory
❌ Finished goods inventory

Question 6

A prepaid expense, such as prepaid rent, is an example of what?
✅ Current asset
❌ Liability
❌ Equity
❌ Non-current asset

Question 7

Accounts receivable can be described as
✅ A) The amount the company is owed by its customers who purchased goods or services on account
❌ B) The amount the company owes to its customers due to purchasing goods or services on account
❌ C) Both A and B
❌ D) None of the above

Question 8

The amount the company is owed by customers that it estimates it will NOT receive is called what?
✅ Allowance for doubtful accounts
❌ Accounts payable
❌ Prepaid expenses
❌ Accounts receivable

Question 9

What kind of asset is not expected to be converted to cash or used up within a year?
✅ Non-current asset
❌ Current asset
❌ Both A and B
❌ None of the above

Question 10

Which is a non-current asset?
✅ Property, plant, and equipment
❌ Accounts receivable
❌ Inventory
❌ Cash

Question 11

Which is NOT a fixed asset at a running shoe store?
✅ Running shoes
❌ Shelving for clothing
❌ Display racks holding shoes
❌ Treadmill to try out shoes

Question 12

What can be thought of as the estimated amount of property, plant, and equipment that the company has used up since it was first acquired?
✅ Accumulated depreciation
❌ Allowance for doubtful accounts
❌ Expense
❌ None of the above

Question 13

What is the unidentifiable asset that coincides with purchasing a company for more than the value of the assets acquired?
✅ Goodwill
❌ Patent
❌ Copyright
❌ Property, plant, and equipment

Question 14

Intangible assets cannot be listed on the balance sheet. True or false?
✅ False
❌ True

Question 15

Say you just bought a company from a friend. If you bought the company’s assets for $70,000, and the total value of the assets was actually $50,000, what would the goodwill be reported as on the balance sheet?
✅ $20,000
❌ $70,000
❌ $120,000
❌ $50,000

(Goodwill = Purchase price – Fair value of net assets → $70,000 – $50,000 = $20,000)

Question 16

In general, accounting regimes allow companies to record intangible assets that they have created themselves. True or false?
✅ False
❌ True

Question 17

Which of the following is classified as a non-current asset on the balance sheet?
✅ D) Both A and B (Property, plant, and equipment & Goodwill)
❌ A) Property, plant, and equipment
❌ B) Goodwill
❌ C) Marketable securities

Question 18

Inventory can be under current or non-current assets depending on what the company chooses to list it as. True or false?
✅ False
❌ True

(Inventory is generally a current asset because it’s expected to be sold within a year.)

Question 19

Which of the following are intangible assets?
✅ All of the above (Patents, Trademarks, Copyrights)
❌ Patents
❌ Trademarks
❌ Copyrights

Question 20

Goodwill, patents, and copyrights are examples of current assets. True or false?
✅ False
❌ True