Question

Exercise 6-2 Identifying long-term operational assets Required Which of the following items should be classified as long-term operational assets? a. Prepaid insurance b. Coal mine c. Office equipment d. Accounts receivable e. Supplies f. Copyright g. Delivery van h. Land used in the business i. Goodwill j. Cash k. Filing cabinet I. Tax library of accounting firm

Answer 1

Answer to Exercise 6-2 (First question in the list):

Long-term Operational Reason Items Assets? No Yes Yes No No Yes Yes Yes No No Yes No a. Prepaid insurance b. Coal mine c. Office equipment d.Accounts receivable e.Supplies f. Copyright g.Delivery van h.Land used in the business i. Goodwill j. Cash k. Filing cabinet I. Tax library of accounting firm Current asset and so disqualified of being classified as long-term asset. It is a long-term asset and used for business' operations. It is a long-term asset and used for business' operations. Current asset and so disqualified of being classified as long-term asset. Current asset and so disqualified of being classified as long-term asset. It is a long-term asset and used for business' operations. It is a long-term asset and used for business' operations. It is a long-term asset and used for business' operations. Though it is a long-term asset, it is not used in business operations. Current asset and so disqualified of being classified as long-term asset. It is a long-term asset and used for business' operations. Though it is a long-term asset, it is not used in business operations. NOTE Current assets are those assets which can be converted into cash within one year from the date they are created; If assets cannot be converted into cash within one year, they are classified as long-term assets; Those long term assets which are effectively used in carrying out business operations, are called as long-term operational assets.