Balance Sheet
CPA Financial Accounting and Reporting (FAR) · Learn by Concept
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CPA Financial Accounting and Reporting (FAR) › Balance Sheet
Which of the following would be classified on the balance sheet as a current asset?
Office furniture
Accrued professional fees
Not receivable due in 18 months
Prepaid insurance
Explanation
Prepaid insurance is classified as a current asset because they are typically fully amortized within 1 year.
Of the following, which account would not be included in a balance sheet?
Operating expenses
Fixed assets
Cash
Note payable
Explanation
Operating expenses belong on the income statement rather than the balance sheet. Fixed assets and cash are assets on the balance sheet.
Company A reports the following account balances: Cash of \$12,000; accounts receivable of \$20,000; inventory of \$15,000; property, plant, and equipment of \$40,000; accumulated depreciation of \$24,000; accounts payable of \$5,000; accrued expenses of \$6,000; short term notes payable of \$7,000; long term notes of \$10,000, and capital stock of \$20,000. What were Company A's total liabilities?
\$28,000
\$52,000
\$48,000
\$72,000
Explanation
Liabilities listed include accrued expenses of $6K, accounts payable of $5K, short term notes payable of $7K, and long term notes of $10K, for a total of $28K in liabilities.
Florax Company begins Year 2 with \$8,000 in its machinery & equipment account and \$1,500 in related accumulated depreciation. During Year 2, Florax bought \$4,000 in additional equipment and recorded total depreciation expense for the year of \$800. What amount will Florax report as net machinery & equipment in its Year 2 balance sheet
\$14,300
\$9,700
\$12,000
\$12,000
Explanation
Florax began the year with \$6,500 in net machinery & equipment ($8K - \$1,500). \$6,500 plus $4K in purchases, minus \$800 in depreciation recorded equal engine net machinery & equipment of \$9,700.