When deciding whether to discontinue a segment of a business, relevant costs include ________.
Hence, fixed asset is not correct option. Expense are used the generate revenue and are part of income statement. Expenses are not assets; hence expense is a wrong option. The classifications used to define assets change when viewed from an investment perspective. In this situation, there are growth assets and defensive assets.
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- On June 30, the equipment is
discarded. - The entry to record the amortization of a patent would include a debit to __________ and a credit to
__________. - Assets which are used in the normal course of business and used for more than one year are called fixed assets.
- Fixed asset is used in the normal business activity.
The entry to record the discard would be to debit
__________ and credit __________. The entry to record the sale of equipment at book value would include a __________ to __________. Assume that equipment acquired at a cost of $10,000 is fully depreciated. On June 30, the equipment
is discarded. The entry to record the discard would be to debit __________ and credit __________. If assets are classified based on their usage or purpose, assets are classified as either operating assets or non-operating assets.
Types of Assets
Example of contra-asset is Allowance for doubtful accounts account. Hence, contra asset is not correct option. The entry to record the sale of equipment at
book value would include a __________ to __________. Assume that equipment acquired at a cost of
$10,000 is fully depreciated. On June 30, the equipment is
discarded.
- Expense is not a balance sheet item.
- Contra asset is not purchased, it is an asset with negative balance.
- Accounts receivable comes under current asset as it is converted into cash within one year.
- An alternative expression of this concept is short-term vs. long-term assets.
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Types of assets
The entry to record the amortization of a patent would include a debit to __________ and a credit to
__________. Accounts receivable comes under current asset as it is converted into cash within one year. The next step is explaining the assets which are depreciable. The journal entry to record costs related to
extraordinary repairs would include a __________ to __________. The fixed asset turnover ratio is computed as __________ divided by __________. The journal entry to record costs related to extraordinary repairs would include a __________ to
__________.
Classification of Assets: Physical Existence
Items which are not used in the normal course of business does not come under fixed assets. Those long-lived purchases which are not for normal business activity comes under investments. Hence, investment is the correct option. Assets are resources of the organization, and useful to produce goods or services. Assets which are used in the normal course of business and used for more than one year are called fixed assets.
Business Accounting MCQs
Classifying assets is important to a business. For example, understanding which assets are current assets and which are fixed assets is important in understanding the net working capital of a company. In the scenario of a company in a high-risk industry, understanding which assets are tangible and intangible helps to assess its solvency and risk.
If assets are classified based on their convertibility into cash, assets are classified as either current assets or fixed assets. An alternative expression of this concept is short-term vs. long-term assets. Expense is not a balance sheet item. Fixed asset is used in the normal business activity. Contra asset is not purchased, it is an asset with negative balance. Investments are not used in the business activities hence, investment is the correct option.
All of the following are assets except ________.
The journal entry to record depletion would include a __________ to __________. Straight-line method
2. Double-declining-balance method
3. Units-of-activity method
4.
The next step is providing an explanation about the investments. The journal entry to record depletion would
include a __________ to __________. Depreciable cost. Book value. Residual value. Accumulated value.
These types are used to differentiate between the manner in which investment income is generated from different types of assets. The two main types of assets are current assets and non-current assets. Land is not a depreciable asset as it has an unlimited life and what is a mixed cost is not subjects to wear and tear unlike the other fixed assets. Hence, land is not depreciated. Contra-asset is an account with negative balance. Unlike assets, contra-asset is debited when its balance decreases, and it is credited when its balance increases.
