Accounting Quiz on Assets

Powerful Essays
Chapter 02 Student Revision Quiz
1.
According to Australian Accounting Standards (AAS), assets are carried on the financial statements at the higher of current market value or historical cost.

| True | | False |

The Australian Accounting Standards state the assets are to be 'carried on the books ' (recorded) at what the firm paid for them.
2.
Suppose KLM Inc. just received a patent on a new anti-cholesterol drug. This patent is an intangible fixed asset.

| True | | False |

Patents are intangible fixed assets.
3.
A non-cash item is an expense charged against revenues that does not directly affect the cash flow.

| True | | False |

Accounting income differs from cash flow as it includes non-cash items such as depreciation.
4.
Operating cash flow is the cash generated from a firm 's normal business activities related to production and sales.

| True | | False |

This is a definition of operating cash flow
5.

A highly liquid asset is an asset that can be converted into cash quickly by greatly reducing the selling price.

| True | | False |

A highly liquid asset can be converted into cash quickly without significant loss of value, such as cash and money market securities. 6.
Net capital spending is equal to:

| ending net fixed assets minus beginning net fixed assets minus depreciation plus taxes | | ending net fixed assets minus beginning net fixed assets plus depreciation minus taxes | | beginning net fixed assets minus ending net fixed assets plus depreciation | | beginning net fixed assets plus ending net fixed assets minus depreciation | | ending net fixed assets minus beginning net fixed assets plus depreciation |

Net capital spending for a period is the ending fixed asset amount minus the beginning fixed asset value plus depreciation. Taxes have no impact on calculating net capital spending. 7. hich one of the following statements is true?

| The balance sheet tells

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