Question

1. The Balance Sheet provides information about _____________, ____________ and ______________.
2. Cash paid this is owed to an individual reduces a _____________ account.
3. Supplies purchases increase a _____________ account and reduces a ____________ account.
4. Complete the following table:

Account	Debit	Credit
	Increase	Decrease
	Increase	Decrease
	Decrease	Increase
	Decrease	Increase
	Decrease	Increase

5. Which of the following is not a Liability?

1. Money owed to bank
2. Cash borrowed from a friend
3. Money borrowed from bank to buy building
4. Money paid to purchase stock investments

6. Finish the equation: _______________ - ________________= Net Income.
7. Which of the following statements is false?
   1. When assets decrease, it is a credit.
   2. When liabilities decrease, it is a debit.
   3. When expenses increase it is a credit.
   4. When revenues decrease, it is a debit

8. Which of the following statements is true?

1. When you receive a loan from the bank, you increase an asset account.
2. When you pay cash to buy supplies, you increase a liability account.
3. When you purchase investments, you increase a revenue account.
4. When you pay back the loan from the bank, you increase a liability account.

9. Identify the following accounts as an Asset, Liability, Revenue or Expense

1. Salaries Payable
2. Fees earned from providing tax services
3. Advertising Bill
4. Long-term debt
5. Accrued Revenue
6. Prepaid Rent
7. Land
8. Supplies used during the month
1. Notes Receivable
10. Inventory
11. Cash
50. Vehicles
1000. Cash paid for a bill that is not yet due
14. Payment received from customer
15. Fees paid to bank

10. Which of the following is not a current asset?
    1. Cash
    2. Accounts payable
    3. Inventory
    4. Property, plant, and equipment
11. What is the entry on the balance sheet when a company borrows a bank loan of $1,000?
    1. $1,000 credit in current liabilities; $1,000 debit in current assets
    2. $1,000 credit in current liabilities; $1,000 debit in non-current assets
    3. $1,000 credit in non-current liabilities; $1,000 debit in current assets
    4. $1,000 credit in non-current liabilities; $1,000 debit in non-current assets
12. What happens to the balance sheet when a company makes sales of $500, of which $300 is paid in cash and $200 is sold on credit?
    1. $300 debit in cash; $200 debit in accounts receivable
    2. $300 credit in cash; $200 credit in accounts receivable
    3. $300 debit in cash; $200 debit in accounts payable
    4. $300 credit in cash; $200 credit in accounts payable

13. What happens to the balance sheet when a company pays salaries of $5,000?
    1. $5,000 credit in cash; $5,000 debit in accounts payable

2. $5,000 credit in cash; $5,000 debit in equity

3. $5,000 debit in cash; $5,000 credit in equity

4. $5,000 credit in cash; $5,000 debit in accounts receivable

14. If at the end of the month, the liabilities total $18,000, and equity totals $32,000, then what must be the total of the assets?  

1. $14,000
2. $18,000  
3. $32,000  
4. $50,000  
5. None of the above

15. The total assets and total liabilities of a firm are reported on which of the following?  

1. Income statement  
2. Balance sheet  
3. Statement of cash flows  
4. Statement of owner's equity  
5. None of the above

Answer 1

1. The Balance Sheet provides information about _____________, ____________ and ______________. Ans: Assets, Liabilities and Equity
2. Cash paid this is owed to an individual reduces a _____________ account. Ans: Cash Account
3. Supplies purchases increase a _____________ account and reduces a ____________ account. Ans: Increases, stock of goods and Reduces Cash/ Bank Account
4. Complete the following table:

Account	Debit	Credit
Expenses	Increase	Decrease
Assets	Increase	Decrease
Incomes	Decrease	Increase
Liabilities	Decrease	Increase
Equity	Decrease	Increase

5. Which of the following is not a Liability?

1. Money owed to bank
2. Cash borrowed from a friend
3. Money borrowed from bank to buy building
4. Money paid to purchase stock investments

Ans: 4 (In option 4, payment is made for purchase, that means it is paid out of available funds and it is not a liability)

6. Finish the equation: _______________ - ________________= Net Income.

Ans: Gross Income - Expenses = Net Income

1. 7. Which of the following statements is false?
   1. When assets decrease, it is a credit.
   2. When liabilities decrease, it is a debit.
   3. When expenses increase it is a credit.
   4. When revenues decrease, it is a debit

Ans: 3 (Expenses are Debit items, so for expenses increase is a debit and decrease is a credit)

8. Which of the following statements is true?

1. When you receive a loan from the bank, you increase an asset account.
2. When you pay cash to buy supplies, you increase a liability account.
3. When you purchase investments, you increase a revenue account.
4. When you pay back the loan from the bank, you increase a liability account.

Ans: 1 (Cash asset is increased when a loan is received from the bank)

9. Identify the following accounts as an Asset, Liability, Revenue or Expense

1. Salaries Payable - Liability
2. Fees earned from providing tax services - Revenue
3. Advertising Bill - Expense
4. Long-term debt - Liability
5. Accrued Revenue - Asset
6. Prepaid Rent - Asset
7. Land - Asset
8. Supplies used during the month - Expense
1. Notes Receivable - Asset
10. Inventory - Asset
11. Cash - Asset
50. Vehicles - Asset
1000. Cash paid for a bill that is not yet due - Asset
14. Payment received from customer - Revenue
15. Fees paid to bank - Expense

10. Which of the following is not a current asset?
    1. Cash
    2. Accounts payable
    3. Inventory
    4. Property, plant, and equipment

Ans: 4. Property, Plant and Equipment (It is a Fixed asset, more over accounts payable is a liability and not a asset at all

10. 11. What is the entry on the balance sheet when a company borrows a bank loan of $1,000?
    1. $1,000 credit in current liabilities; $1,000 debit in current assets
    2. $1,000 credit in current liabilities; $1,000 debit in non-current assets
    3. $1,000 credit in non-current liabilities; $1,000 debit in current assets
    4. $1,000 credit in non-current liabilities; $1,000 debit in non-current assets

Ans:3. Debit Cash account which is current assets and credit loan account which is non-current liabilities

10. 12. What happens to the balance sheet when a company makes sales of $500, of which $300 is paid in cash and $200 is sold on credit?
    1. $300 debit in cash; $200 debit in accounts receivable
    2. $300 credit in cash; $200 credit in accounts receivable
    3. $300 debit in cash; $200 debit in accounts payable
    4. $300 credit in cash; $200 credit in accounts payable

Ans: 1 (for cash sales debit the cash account and for credit sales debit the accounts receivable)

13. What happens to the balance sheet when a company pays salaries of $5,000?
    1. $5,000 credit in cash; $5,000 debit in accounts payable

2. $5,000 credit in cash; $5,000 debit in equity

3. $5,000 debit in cash; $5,000 credit in equity

4. $5,000 credit in cash; $5,000 debit in accounts receivable

Ans: 2. (when salaries are paid it reduces cash account which is credit in cash and also reduces profit which is debit in equity)

14. If at the end of the month, the liabilities total $18,000, and equity totals $32,000, then what must be the total of the assets?  

1. $14,000
2. $18,000  
3. $32,000  
4. $50,000  
5. None of the above

Ans: 4 $50,000 (assets = liabilities + Equity)

15. The total assets and total liabilities of a firm are reported on which of the following?  

1. Income statement  
2. Balance sheet  
3. Statement of cash flows  
4. Statement of owner's equity  
5. None of the above

Ans: 2. Balance Sheet (statement of assets and liabilities is called Balance Sheet)