1. Which asset category typically includes cash
and cash equivalents?
a) Current assets
b) Fixed assets
c) Intangible assets
d) Long-term investments
2. What is the primary purpose of managing
cash effectively within a business?
a) To maximize the company's borrowing
capacity.
b) To minimize the risk of theft and fraud.
c) To ensure there are enough funds to cover
day-to-day operations.
d) To invest excess cash in long-term assets.
3. What does the term "liquidity" of an asset
refer to?
a) Its ability to be easily converted into cash
without loss
b) Its long-term value appreciation potential
c) Its ability to generate revenue
d) Its legal ownership rights
4. How do accounts receivable contribute to a
company's cash flow?
a) By providing a source of financing for long-
term investments.
b) By representing revenue that has been
earned but not yet received in cash.
c) By reducing the need for inventory financing.
d) By increasing the company's liquidity.
5. Why is it important for companies to track
office supplies as assets?
a) Office supplies are considered fixed assets
and contribute to the company's net worth.
b) Office supplies represent a significant portion
of a company's working capital.
c) Office supplies are used for administrative
purposes and directly impact operational
efficiency.
d) Tracking office supplies helps companies
avoid unnecessary expenses.
6. Why is it important for companies to
maintain accurate inventory records?
a) To minimize taxes on inventory holdings.
b) To accurately report financial statements and
comply with regulations.
c) To inflate the perceived value of the company
to investors.
d) To avoid penalties from regulatory
authorities.
7. What is the purpose of depreciating assets?
a) To increase their value
b) To reduce their carrying value over time
c) To sell them at a higher price
d) To classify them as intangible assets