# Quiz 20 – Current Assets – (Answers)

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• Name – Quiz 20 – Current Assets – (Answers)
• Topic – Current Assets

##### 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.

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