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Intermediate Accounting related question - IllegallySane - 2010-04-17
I got this take-home quiz, and I got all but this one problem. I'm confused about where I misclassified which account. Here's the question:
Bob's Corp's trial balance reflected the following account balances at Dec. 31, 2004:
Accounts Receivable (net): 19,000
Trading Securities: 6,000
Accumulated Depreciation on equipment and furniture: 15,000
Cash: 11,000
Inventory: 30,000
Equipment: 25,000
Patent: 4,000
Prepaid Expenses: 2,000
Land Held for future business site: 18,000
In Bob's Dec. 31, 2004 balance sheet, the current assets total is:
a. 85,000
b. 77,000
c. 72,000
d. 68,000
I know that depreciation, equipment, and patent is not a current asset. According to Google, Trading Securities is under debt/equity, so it shouldn't be a current asset. Land held for future business site sounds like property, which makes it a non current asset account.
This is what I added then:
Accounts Receivable (net): 19,000
Cash: 11,000
Inventory: 30,000
Prepaid Expenses: 2,000
19,000 + 11,000 + 30,000 + 2,000 = $62,000
This matches none of the answers. Did I misclassified an account? Did Google lie to me and trading securities is actually a current asset?
Intermediate Accounting related question - Takebacker - 2010-04-17
The question seems vague, imo. Trading Securities should probably be counted as a current asset, since the question fails to mention whether or not said securities are to be paid to HIM or someone else. Since nothing else makes sense and trading securities is vague...seems like the best option.
Besides, "security", to me, implies that the money is an asset rather than a debt.
Disclaimer: I am not an accountant.
Intermediate Accounting related question - IllegallySane - 2010-04-17
Takebacker Wrote:The question seems vague, imo. Trading Securities should probably be counted as a current asset, since the question fails to mention whether or not said securities are to be paid to HIM or someone else. Since nothing else makes sense and trading securities is vague...seems like the best option.
Besides, "security", to me, implies that the money is an asset rather than a debt.
Disclaimer: I am not an accountant.
It's fine. I was confused by my quick google search on what trading securities is classified as, and I didn't remember my professor covering trade security classification. Thanks man! This gives me a valid answer of $68,000. Take-home quiz is now complete.
