Accounting - Study Mode
[#1056] Which is the most important characteristic that all assets of a business have?
Correct Answer
(D) Future economic benefits
Explanation
Solution: Future economic benefits is the most important characteristic that all assets of a business have.
[#1057] What is the basic accounting equation?
Correct Answer
(A) Capital + Liabilities = assets
Explanation
Solution: Capital + Liabilities = assets is the basic accounting equation. The fundamental accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a person or business. It is the foundation for the double-entry bookkeeping system.
[#1058] Which of the following is a liability?
Correct Answer
(D) Creditors
Explanation
Solution: Creditors are a liability. Creditors means the persons to whom business owes money. Creditors are the persons to whom the money is payable by the business in future. So it is a liability of business towards creditors to pay them in future so it comes under current liabilities in balance sheet.
[#1059] What is equity?
Correct Answer
(C) Owner's claim on total assets
Explanation
Solution: Owner's claim on total assets is equity. Total claims include liabilities, which are all the debts that the business owes but has not yet paid out, as well as owners' equity, the value of the business that was granted by owner investment.
[#1060] Identify the asset from the following
Correct Answer
(A) Cash and cash equivalent
Explanation
Solution: Cash and cash equivalent are the asset from the following. Cash and cash equivalents (CCE) are the most liquid current assets found on a business's balance sheet. Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount".