Accounting Basics Quiz - Assets

1.

A(n) ................ is something that has future or potential value.

Liability

Asset

Stockholder

An asset is something that has future or potential value. It can be a physical object, such as property or equipment, or it can be an intangible item, such as intellectual property or goodwill. Assets are typically owned or controlled by an individual or an organization and can be used to generate income or provide future benefits.

Explanation

An asset is something that has future or potential value. It can be a physical object, such as property or equipment, or it can be an intangible item, such as intellectual property or goodwill. Assets are typically owned or controlled by an individual or an organization and can be used to generate income or provide future benefits.

2. Which one of the following items is not an asset?

Prepayment of rent

Inventory

Bank Loan

Building

A bank loan is not considered an asset because it represents a liability for the borrower. It is a debt that needs to be repaid to the bank, and therefore it does not have any intrinsic value or generate future economic benefits for the borrower. In contrast, the other options listed - prepayment of rent, inventory, and building - are all tangible or intangible assets that have value and can contribute to the financial position of an individual or a company.

Explanation

A bank loan is not considered an asset because it represents a liability for the borrower. It is a debt that needs to be repaid to the bank, and therefore it does not have any intrinsic value or generate future economic benefits for the borrower. In contrast, the other options listed - prepayment of rent, inventory, and building - are all tangible or intangible assets that have value and can contribute to the financial position of an individual or a company.

3. Pens, paper and printing cartridges are all examples of prepayments

True

False

They are all examples of supplies

Explanation

They are all examples of supplies

4. Credit card receipts are examples of ACOUNTS PAYABLE

True

False

They are examples of ACCOUNTS RECEIVABLE

Explanation

They are examples of ACCOUNTS RECEIVABLE

5. Which of the following items below would be classified as Long Life Assets?

Land and Buildings

Inventory

Motor Vehicles

Supplies

Fixtures and Fitings

Cash at bank

Inventory, Supplies and Cash/bank are short term assets or Current Assets.

Explanation

Inventory, Supplies and Cash/bank are short term assets or Current Assets.

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6. Insurance paid in advance is known as a

Insurance paid in advance is known as a prepayment. This term refers to the act of paying for insurance coverage before it is actually needed or utilized. It is a common practice in the insurance industry for policyholders to make prepayments to ensure continuous coverage and avoid any lapses in their insurance policies. The terms "prepayments," "prepay," and "prepaid" are all related to the concept of making advance payments for insurance services.

Explanation

Insurance paid in advance is known as a prepayment. This term refers to the act of paying for insurance coverage before it is actually needed or utilized. It is a common practice in the insurance industry for policyholders to make prepayments to ensure continuous coverage and avoid any lapses in their insurance policies. The terms "prepayments," "prepay," and "prepaid" are all related to the concept of making advance payments for insurance services.

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