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- Name – Quiz 20 – Current Assets – (Answers)
- Topic – Current Assets
- Answers with Explanation
Q1. It is considered difficult to convert current assets into cash.
Ans. The given statement is False. Since these are short-term assets and used for daily activities, they can be converted into cash easily.
Q2. Most current assets are used for day-to-day activities.
Ans. The given statement is True. Most current assets like cash, stock, receivables, etc. are used in day to day activities of a business.
Q3. Current Ratio = Current Assets divided by _____.
Ans. The formula for the current ratio is current assets divided by current liabilities.
Q4. _____ is an example of current assets.
Ans. Marketable securities are easily convertible into cash accordingly they are current assets.
Q5. Current assets are held for _____ purpose.
Ans. Current assets are for trading purpose as they are meant to be sold or further used to make a profit.
Q6. Current assets are also known as _____.
Ans. Current assets are referred to as short-term assets.
Q7. If Current Assets = 0, Working Capital = _____.
Ans. Current Assets – Current Liabilities = Working Capital, so when current assets are zero, working capital = current liabilities.
Q8. Receivables = 7,000, Cash = 5,000 & Machinery = 1,000, Current Assets = _____.
Ans. In this numerical, Current Assets = Receivables + Cash = 7,000 + 5,000 = 12,000.
Q9. _____ are current assets.
Ans. Debtors are receivable within 1 year therefore it is a current asset.
Q10. _____ = Current Assets – Current Liabilities.
Ans. Working Capital = Current Assets – Current Liabilities.
Q11. Which of the following is not an example of current assets?
Ans. Equipment is a fixed asset and not a current asset.
Q12. Current Assets are shown in _____.
Ans. Current assets are shown on the asset side of a balance sheet.
Q13. Prepaid expense is an example of current assets.
Ans. The given statement is True. Prepaid expenses are treated as current assets because the benefits to be received are consumed within 1 year (same accounting period).
Q14. Current Assets are depreciated by straight line method.
Ans. The given statement is False. Depreciation is charged on fixed assets and not on current assets.
Q15. Current assets are expected to be sold or used within _____month(s).
Ans. Current assets are short-lived, which means they are used or sold within an accounting period,i.e.,12 months.