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14. Accumulated depreciation amounts are shown as deductions from the cost of building and equipment accounts accounts receivable account. b, accounts payable account. prepaid insurance account. d. 15. A formal statement of the assets, liabilities, and owners equity of a business at a specified date is known as a(n) balance sheet. b, c. statement of owners equity. statement of cash flows 16. Cash and all other assets that may be reasonably expected to be converted to cash or consumed within one year or the normal operating cycle of the business are classified as a. temporary investments. b. marketable securities current assets. d. investments 17. Assets that are used for several years in the operation of a business are called marketable securities. b. current assets. C. investments. property, plant, and equipment. 18. The following information was taken from the financial statements of Ashleys Linens: Total current assets Property, plant, and equipment 6,000 Current liabilities Long-term liabilities Owners equity Beginning inventory Ending inventory $53,000 21,000 4,000 34,000 31,000 33,000 152,000 Cost of goods sold Net income 42,000 The working capital of Ashleys Linens is a. $32,000. b. $33,000. c. $34,000 d. $38,000. 19. The ability of a business to meet its current obligations may be determined by the b. C. d. current ratio. inventory turnover. working ratio. accounts receivable turnover.
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Answer #1

14. Answer (a) Cost Of Building & Equipment Accounts

REASON :

In the given Options Except (a) , remaining are not Tangible/Intangible Fixed Assets Which we are  normally calculate depreciation .

So, depreciation on Fixed Assets which accumulated every year , we have to be shown as deduction under (a) Cost Of Building & Equipment Accounts (In the given case).

15. Answer(a) Balance Sheet

REASONS :

1.(a).Balance Sheet

It is a Statement of Assets ,Liabilities & Equity. Every company wants to know the Financial Position on a single(Specified) Date, normally end of the financial year.So, it is to find the Position on a specified (Point of time)date instead/ irrespective of specified Period.

Income Statement is a statement of Revenue & Expenses for the Specified Period Usually a Financial Year Instea.d of Specified Date.

Statement of owner's Equity is normally used in Individual Business(proprietorship) for the Known changes in Capital of Business.

Statement of Cash Flows is normally used to know the changes in funds (Either Inflow or Outflow) by Bifurcating the company's activities into Operating, Investing & Financial Activities.

16.(c) Current Assets.

REASONS:

1.(c) Current Assets

Current Assets includes Cash,Cash Equivalence (Marketable Securities & Temporary investments),Stock( Expected to be converted/Consumed into cash within year),Debtors ,Prepaid Expenses etc.

In the given Options,

Temporary investments means which normally converted in to cash in the very near future(based on company requirement or for exploitation of interest.

Marketable Securities means which normally converted in to cash with in one Year.

Investments are those which not traded with in 1year are classified long term Investments.

So, Currents assets is the legible answer for the given Question .

17. Answer (d) Property, Plant & Equipment.

REASON :

In the given options except (d),remaining all are not used in operation of business for several years.

Because Property,Plant & equipment are used in business for the manufacturing of products till the winding of company/Close of business.

18 Answer (a)$32,000

REASON :

Working Capital = Current Assets - Current Liabilities

For Current Assets whatever included is discussed above .So, Let's have check.

For Current liabilities includes Trade Payables , Accrued income taxes , Accrued liabilities Etc.

In the given Question , Current Assets includes Inventory also. So, We have no need to calculate separately.

  Working Capital = 53000 - 21000 = $ 32000

19.Answer (a) Current Ratio

Current Ratio = Current Assets / Current Liabilities

Current Ratio is referred as a liquidity ratio which measures the company has enough resources or not to meet it's short term obligations.

Thank You.

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