Chapter 4 | Questions 4.3, 4.6, 4.9 (p. 139); | Problems 4.2, 4.4, 4.5 (pp. 140-141) |

4.3 * a.What are assets? Assets are items that either possess or create economic benefit for an organization. * b.What are the three major categories of assets? Current assets, long-term investments and net property and equipment.

4.6 * a.What is the difference between liabilities and equity? Liability is a fixed financial obligation of a business while equity is the book value of the ownership position in a business. * b.What makes a liability a current liability? Current liabilities appear on the company's balance sheet and include short term debt, accounts payable, accrued liabilities and other debts. * c.Give some examples of current liabilities. Some examples of current liability would be short term loans or income tax owed to the government within a year. * d.What is the difference between long-term debt and notes payable?
The main difference between long term debt and notes payable is the amount of time available for repayment.

4.9’ * a.What is the statement of cash flows, and how does it differ from the income statement? The cash flow reflects more of an at-a-glance income statement that shows a snapshot of money spent and received. The income statement on the other hand shows a more in depth picture of money in and out by also describing money gain or loss through things like depreciation. * b.What are the three major sections of the statement of cash flows? Operating, Investing, and Financing Activities make up the three major sections of a cash flow statement. * c.What is the bottom line of the statement of cash flows, and how important is it? The “bottom line” of the statement of cash flows is the net increase (decrease) in cash. This amount is useful in verifying the accuracy of the statement, but its