Chapter 3, Problem 7PSA

To determine

Current assets:

Current assets are a type of asset, which can change into cash and cash equivalent within a reasonable timeframe of one year.

Long-term investments:

Any investment that company makes with a view of keeping it for more than one year is called Long-term investments.

Plant Assets:

Any assets whose useful life is more than one year and which is use to facilitate the production process is called plant assets.

Intangible assets:

Intangible assets do not have any form, they cannot be seen and they cannot be touch but yet they have value. For example: Patent and Goodwill.

Current Liabilities:

Any liability which needs to be paid within one year is called current liability.

Long-term liabilities:

Any liability which is not due to be paid within one year is called long- term liability.

Equity:

The Company needs finance to run the business. Equity is one of the methods through which company raise the capital.

To identify: Correct letter against each balance sheet item.