Multiple Choice
A business associate is a person or entity that performs which of the following functions on behalf of a business?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Checkable deposits are included in which of the following types of accounting classifications?
A
Financial accounting as part of current assets
B
Managerial accounting as a fixed asset
C
Tax accounting as a long-term liability
D
Cost accounting as inventory
Verified step by step guidance1
Understand the nature of checkable deposits: These are funds held in bank accounts that can be accessed on demand, typically through checks or electronic transfers. They are highly liquid and are considered part of a company's cash resources.
Review the classification of current assets in financial accounting: Current assets are resources expected to be converted into cash, sold, or consumed within one year or the operating cycle. Checkable deposits fall under this category due to their liquidity.
Analyze why checkable deposits do not fit other classifications: Fixed assets in managerial accounting refer to long-term tangible assets like machinery or buildings. Long-term liabilities in tax accounting are obligations due after one year, and inventory in cost accounting refers to goods held for sale or production. Checkable deposits do not align with these definitions.
Confirm the correct classification: In financial accounting, checkable deposits are part of current assets because they are readily available for use in operations or to meet short-term obligations.
Conclude that the correct answer is 'Financial accounting as part of current assets,' based on the liquidity and accessibility of checkable deposits.
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