Question 1: Which of the following is not considered as a current asset in accounting?

a) Cash and cash equivalents
b) Accounts receivable
c) Inventory
d) Property, plant, and equipment

Answer: d) Property, plant, and equipment

Explanation:
Current assets are the assets that are expected to be converted into cash or used up within one year or the operating cycle of a business. They are reported on the balance sheet in the order of liquidity. Some examples of current assets include cash and cash equivalents, accounts receivable, and inventory.

Property, plant, and equipment, on the other hand, are long-term or non-current assets. They are tangible assets used in the production or operation of a business and are not expected to be converted into cash within a year. These assets include land, buildings, machinery, and equipment. They are reported on the balance sheet under the category of non-current assets or fixed assets.

Current assets are important for businesses as they represent the resources that can be readily used to meet short-term obligations and support ongoing operations. They are also used to assess the liquidity and financial health of a company.

In summary, property, plant, and equipment are not considered as current assets in accounting. They are categorized as non-current assets or fixed assets.

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Question 2: Which of the following is a characteristic of a sole proprietorship?

a) Limited liability
b) Ownership by multiple individuals
c) Separate legal entity
d) Unlimited liability

Answer: d) Unlimited liability

Explanation:
A sole proprietorship is a type of business structure where a single individual owns and operates the business. It is the simplest and most common form of business organization. In a sole proprietorship, the business and the owner are considered as one legal entity.

One characteristic of a sole proprietorship is unlimited liability. This means that the owner is personally liable for all the debts and obligations of the business. In case the business cannot meet its liabilities, the owner's personal assets can be used to satisfy the debts. This is in contrast to limited liability, where the owner's personal assets are protected and only the business assets are at risk in case of financial issues.

Ownership by multiple individuals is a characteristic of a partnership, where two or more individuals share the ownership and responsibilities of a business. A separate legal entity is a characteristic of corporations, where the business is considered as a distinct legal entity from its owners.

Unlimited liability in a sole proprietorship puts the owner at a higher risk, as they are personally responsible for the business's financial obligations. However, sole proprietorships also offer advantages such as simplicity in formation, flexibility in decision-making, and direct control over the business.

In summary, unlimited liability is a characteristic of a sole proprietorship, where the owner is personally liable for the business's debts and obligations.