MHA 706 MODULE 2 QUIZ 2 AND
CORRECT ANSWERS NEWLY
UPDATED SURE PASS!!
1. What does the balance sheet contain information about? - CORRECT ANSWERS-The
assets, liabilities, and equity of a business, showing its financial position at a specific
point in time.
2. What is the basic accounting equation represented in the balance sheet? - CORRECT
ANSWERS-Assets = Liabilities + Equity
3. How is equity expressed in relation to assets and liabilities? - CORRECT ANSWERS-Equity
= Assets - Liabilities, indicating that equity is the residual value after liabilities are
subtracted from assets.
4. What are the two main sections of a balance sheet? - CORRECT ANSWERS-Assets on the
left side and Liabilities and Equity on the right side.
5. What are current assets? - CORRECT ANSWERS-Assets expected to be converted to cash
within one year, including cash, cash equivalents, short-term investments, net patient
accounts receivable, and inventories.
6. What are long-term investments? - CORRECT ANSWERS-Investments in securities with
maturities greater than one year, often used more by not-for-profit businesses.
7. What is net property and equipment? - CORRECT ANSWERS-Real assets (fixed assets)
such as land, buildings, and equipment, reported at net value after accounting for
depreciation.
, 8. What is the purpose of current liabilities? - CORRECT ANSWERS-Obligations that must
be paid within one year, including notes payable, accounts payable, and accrued
expenses.
9. What is net working capital (NWC)? - CORRECT ANSWERS-A measure of liquidity
calculated as Current Assets minus Current Liabilities.
10. What are notes payable? - CORRECT ANSWERS-Short-term debt obligations, typically
bank loans, with maturities of less than one year.
11. What is accounts payable? - CORRECT ANSWERS-Liabilities arising from purchasing
goods on credit, where payment is due to vendors.
12. What are accrued expenses? - CORRECT ANSWERS-Obligations for payments that have
been incurred but not yet paid, such as salaries, taxes, and interest.
13. What is the significance of cash equivalents? - CORRECT ANSWERS-Investments that are
cash-like with maturities of three months or less, providing liquidity.
14. Why do businesses hold short-term investments? - CORRECT ANSWERS-To maintain
liquidity while earning a return on excess cash.
15. What does the term 'liabilities' refer to? - CORRECT ANSWERS-Claims against a
business's assets that represent fixed financial obligations.
16. What is the difference between current and long-term liabilities? - CORRECT ANSWERS-
Current liabilities are due within one year, while long-term liabilities extend beyond one
year.
CORRECT ANSWERS NEWLY
UPDATED SURE PASS!!
1. What does the balance sheet contain information about? - CORRECT ANSWERS-The
assets, liabilities, and equity of a business, showing its financial position at a specific
point in time.
2. What is the basic accounting equation represented in the balance sheet? - CORRECT
ANSWERS-Assets = Liabilities + Equity
3. How is equity expressed in relation to assets and liabilities? - CORRECT ANSWERS-Equity
= Assets - Liabilities, indicating that equity is the residual value after liabilities are
subtracted from assets.
4. What are the two main sections of a balance sheet? - CORRECT ANSWERS-Assets on the
left side and Liabilities and Equity on the right side.
5. What are current assets? - CORRECT ANSWERS-Assets expected to be converted to cash
within one year, including cash, cash equivalents, short-term investments, net patient
accounts receivable, and inventories.
6. What are long-term investments? - CORRECT ANSWERS-Investments in securities with
maturities greater than one year, often used more by not-for-profit businesses.
7. What is net property and equipment? - CORRECT ANSWERS-Real assets (fixed assets)
such as land, buildings, and equipment, reported at net value after accounting for
depreciation.
, 8. What is the purpose of current liabilities? - CORRECT ANSWERS-Obligations that must
be paid within one year, including notes payable, accounts payable, and accrued
expenses.
9. What is net working capital (NWC)? - CORRECT ANSWERS-A measure of liquidity
calculated as Current Assets minus Current Liabilities.
10. What are notes payable? - CORRECT ANSWERS-Short-term debt obligations, typically
bank loans, with maturities of less than one year.
11. What is accounts payable? - CORRECT ANSWERS-Liabilities arising from purchasing
goods on credit, where payment is due to vendors.
12. What are accrued expenses? - CORRECT ANSWERS-Obligations for payments that have
been incurred but not yet paid, such as salaries, taxes, and interest.
13. What is the significance of cash equivalents? - CORRECT ANSWERS-Investments that are
cash-like with maturities of three months or less, providing liquidity.
14. Why do businesses hold short-term investments? - CORRECT ANSWERS-To maintain
liquidity while earning a return on excess cash.
15. What does the term 'liabilities' refer to? - CORRECT ANSWERS-Claims against a
business's assets that represent fixed financial obligations.
16. What is the difference between current and long-term liabilities? - CORRECT ANSWERS-
Current liabilities are due within one year, while long-term liabilities extend beyond one
year.
