Multiple Choice: Reporting Financial Assets Select the correct answer for each of the following:

Which of the following would not be considered a financial asset?

a. Certificate of deposit.

b. Investment in marketable securities.

c. Accounts receivable.

d. Investment in equipment.
In general, financial assets:

a. Are nearly always valued at the amount paid to acquire them.

b. Can be readily converted into cash.

c. Include all current assets except for prepaid insurance.

d. Represent a tangible asset that will be used in producing goods and services in the next accounting period.
The cash balance reported in the balance sheet normally will not include:

a. Small amounts of cash (petty cash) kept on hand in the office.

b. Checks received from customers and deposited in the bank.

c. Money orders.

d. Temporary investments due in one year.
Knowledge of financial assets is important in determining if a company:

a. Has the ability to pay existing liabilities.

b. Has the ability to issue additional debt.

c. Has too much stock outstanding.

d. Has been profitable during the last accounting period.