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Stocks 302: Understanding the Balance Sheet

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1.
Liabilities are what a company _______.
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Owes to others. Whatever a company must pay to another party is a liability.
2.
If you want to learn the kinds of assets a company is buying, you can find them on the balance sheet.
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True. The balance sheet will identify assets that the company has bought.
3.
The company E-Publisher.com owns exclusive rights to its material. This copyright is an asset.
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True. Copyright is an intangible asset.
4.
When assets outweigh liabilities and shareholder equity on a balance sheet, the sheet has not been constructed correctly.
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True. Balance sheets balance the two sides so that all assets and their sources of payment are accounted for.
5.
Shareholder equity is ________.
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The amount of capital invested by the owners. This is evidenced by stock ownership.
6.
Current assets are called "current" because they are usually converted to cash _______.
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Within one year. This is the defining quality of current assets.
7.
Balance sheets balance _______.
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Assets with liabilities. Equity, debt, taxes, and income are all included in assets and liabilities.
8.
A companys assets are paid for with liabilities and shareholder equity.
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True. Liabilities (debt) and shareholder equity (stock) finance the purchase of assets.