Analysis Intermediate: Understanding the Balance Sheet

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1.
Which of the following is not a current asset?
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Stock. Stock is not a current asset. On the balance sheet, it is a liability.
2.
How do you know when a document is a balance sheet?
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Its assets equal its liabilities and shareholder equity. To be a balance sheet, all of the assets must equal all of the liabilities and shareholder equity.
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.
Which of the following pieces of information about a company do balance sheets not provide?
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The stock quote of the company. Balance sheets provide financial information on a company. They do not include stock quotes.
5.
Balance sheets balance taxes with income.
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False. Balance sheets balance assets with liabilities. Taxes and income are included in assets and liabilities.
6.
Shareholder equity is the value of stock on the market.
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False. Shareholder equity is the amount of capital invested by the owners.
7.
Current liabilities are those that are paid ______.
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Within one year. This is the accepted time limit.
8.
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.