Analysis Intermediate: Understanding the Balance Sheet

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1.
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.
2.
On the balance sheet, plants and machinery are included under _______.
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Assets. Since they provide economic benefit to a company, they are assets.
3.
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.
4.
If the total liabilities of a company are 2 million dollars, and total assets are 5 million dollars, how much is shareholder equity?
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3 million dollars. Shareholder equity is the difference between total assets and total liabilities. When creating a balance sheet, however, you must include shareholder equity with liabilities.
5.
Balance sheets balance _______.
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Assets with liabilities. Equity, debt, taxes, and income are all included in assets and liabilities.
6.
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.
7.
Shareholder equity is ________.
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The amount of capital invested by the owners. This is evidenced by stock ownership.
8.
Current liabilities are those that are paid ______.
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Within one year. This is the accepted time limit.