1. Which asset category typically includes cash
   and cash equivalents?
   a) Current assets
   b) Fixed assets
   c) Intangible assets
   d) Long-term investments
   2. What is the primary purpose of managing
   cash effectively within a business?
   a) To maximize the company's borrowing
   capacity.
   b) To minimize the risk of theft and fraud.
   c) To ensure there are enough funds to cover
   day-to-day operations.
   d) To invest excess cash in long-term assets.
   3. What does the term "liquidity" of an asset
   refer to?
   a) Its ability to be easily converted into cash
   without loss
   b) Its long-term value appreciation potential
   c) Its ability to generate revenue
   d) Its legal ownership rights
   4. How do accounts receivable contribute to a
   company's cash flow?
   a) By providing a source of financing for long-
   term investments.
   b) By representing revenue that has been
   earned but not yet received in cash.
   c) By reducing the need for inventory financing.
   d) By increasing the company's liquidity.
   5. Why is it important for companies to track
   office supplies as assets?
   a) Office supplies are considered fixed assets
   and contribute to the company's net worth.
   b) Office supplies represent a significant portion
   of a company's working capital.
   c) Office supplies are used for administrative
   purposes and directly impact operational
   efficiency.
   d) Tracking office supplies helps companies
   avoid unnecessary expenses.
   6. Why is it important for companies to
   maintain accurate inventory records?
   a) To minimize taxes on inventory holdings.
   b) To accurately report financial statements and
   comply with regulations.
   c) To inflate the perceived value of the company
   to investors.
   d) To avoid penalties from regulatory
   authorities.
   7. What is the purpose of depreciating assets?
   a) To increase their value
   b) To reduce their carrying value over time
   c) To sell them at a higher price
   d) To classify them as intangible assets