Book 1 - Chapter 2

2-5, continued

Bussiness item	It is …		Missing quality
	an asset	not an asset	Future benefits	Owned as a result of a past event
d. The legal right to collect $500 that customers owe the business
e. The new airport to be built next year, five miles from your business
f. A 12-year-old computer that is no longer functional
g. An expensive French impressionist painting purchased to hang in the lobby of your office
h. A building that your company rents from Multnomah Company
i. A prepaid $700 fire insurance policy
j. The business owner’s master’s degree
Note: this is not something owned by the business
k. The computer that your business rents and uses to produce marketing brochures
l. A promise by a good customer to buy $10,000 of merchandise from your business			?
Note: not a past event; certain legal details aside, your company has nothing but a promise
m. The $5,000 increase in value of the French painting your business bought six years ago.			?
Note: any “increase” in value is only an estimate, so future benefits are not really measurable
n. A mission statement explaining company goals that managers prepared
o. The employees of a business
p. A budgeted amount to buy office equipment
q. Money that your business owes to vendors
Note: This is DEBT, which is the claim of someone else on the business assets! Were you fooled? Don’t worry, we discuss more about debts and assets in the next learning goal.

Learning Goal 2, continued

SOLUTIONS

Section I - What Is a Business?

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Worthy & James Publishing is a provider of basic accounting books covering fundamental accounting principles, business accounting, and business math. Topics in financial accounting and business accounting covered include the balance sheet, the income statement, financial ratios, and bank reconciliation.