Module 1 Multiple Choice

Question 1

What is a fixed asset?

Answer 1

A long-term tangible property or equipment a company uses to operate its business.

Fixed assets include buildings, computer equipment, software, furniture, land, machinery, and vehicles.

Question 2

What types of items are included in fixed assets?

Answer 2

• Buildings
• Computer equipment
• Software
• Furniture
• Land
• Machinery
• Vehicles

These items are used by a company over the long term to help generate income.

Question 3

What is the common term used for fixed assets on a balance sheet?

Answer 3

Property, plant, and equipment (PP&E)

Fixed assets are listed under this category on a company’s balance sheet.

Question 4

True or False: Fixed assets are subject to depreciation.

Answer 4

True

Depreciation accounts for the loss in value of fixed assets over time due to wear and tear.

Question 5

Fill in the blank: Fixed assets are commonly referred to as _______.

Answer 5

[property, plant, and equipment]

This term summarizes the types of long-term assets a company utilizes.

Question 6

What is the purpose of depreciating fixed assets?

Answer 6

To account for the loss in value over time.

Depreciation reflects the wear and tear of the asset as it is used in business operations.

Question 7

What is the significance of fixed assets for a company?

Answer 7

They help generate income over the long term.

Fixed assets are essential for the operation and revenue generation of a business.