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Concept explainers
Assets are listed on the
a. purchase date.
b. adjustments.
c. liquidity.
d. balance.
![Check Mark](/static/check-mark.png)
Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources, on a specific date. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.
To identify: The basis of order of listing assets on the balance sheet.
Answer to Problem 1QC
Explanation of Solution
Explanation for correct answer: The assets and liabilities of the balance sheet are listed based on the order of liquidity. The order of liquidity states that list of assets and liabilities that are quickly and easily available to convert into immediate cash are listed first and so on. In order of liquidity, the assets are listed as current assets, fixed assets, and intangible assets. However, the liabilities are listed as current liabilities and long-term liabilities.
Explanation for incorrect answers:
- Option (a) is incorrect because the format of the balance sheet does not contain date column. The balance sheet only shows the items of assets, liabilities, and equity along with their amount.
- Option (b) is incorrect because the balance sheet records the accounts balances of those assets and liabilities which are already adjusted and transferred to the adjusted trial balance.
- Option (d) is incorrect because the assets and liabilities on the balance sheet are listed in order of their nature of occurrences. But, they not listed in order of their balance.
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Chapter 4 Solutions
Horngren's Financial & Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (6th Edition)
- Cordova Accounting Services had $150,000 in gross receipts for the year. It cost the company $42,000 to lease and operate its offices for the year. The company's landlord gave the company a $150 monthly discount in return for accounting services. One client gave the company a printer with a retail price of $3,500 and a fair market value of $2,800 in exchange for accounting services. Based on these facts, what is the company's gross income for the year?arrow_forwardneed correct answer of this question of general accountingarrow_forwardNeed helparrow_forward
- Team Shirts, Inc. had net cash from operating activities of $125,000. It paid $105,000 to buy a new computer system by signing a $85,000 note and paying the balance. Net cash from (or used for) investing activities for the period was _. No AI ANSWERarrow_forwardneed this general accounting subjects solutionsarrow_forwardThe cost of good soldarrow_forward
- Correct answer please general accountingarrow_forwardTeam Shirts, Inc. had net cash from operating activities of $125,000. It paid $105,000 to buy a new computer system by signing a $85,000 note and paying the balance. Net cash from (or used for) investing activities for the period was _.arrow_forwardWhat is the company's unit contribution margin of this financial accounting question?arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
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