Answer the following statements true (T) or false (F)

Question

1. Assets are either financed through liabilities or equity.
2. The accrual accounting method registers revenues billed when the actual cash is received; and registers expenses as incurred (accrued) but not necessarily as they are paid.
3. The balance sheet allows venture owners to assess how healthy the business is at a point in time.
4. Assets are defined as the tangible property that the venture owns and has accounting value.
5. Current assets represent the most liquid assets of a venture, meaning they can more easily be turned into cash.

Answer 1

1.True – Assets = Liabilities + Shareholders’ equity
2.False – The accrual accounting method registers revenues billed but not necessarily when the actual cash is received; similarly, this method registers expenses as incurred (accrued) but not necessarily as they are paid.
3.True – The balance sheet records what the company has in the form of assets, debt, and equity at the end of a month, fiscal quarter, or year. It is a “snapshot” of the firm’s financial status at an instant in time.
4.False – Assets represent the tangible and intangible property that the venture owns and has accounting value. It is important to note that assets can be both physical assets and intangible assets.
5.True – by definition