Balance Sheet accounts

DIRECTION:
Put a check mark on the letter of your choice.

1. Identify liability item/s:

✔ (a) Bank Loan (c) Office Equipment
(b) Office Supplies (d) Dividends

2. Which among the following do not qualify as assets?

✔ (a) Office expense (c) Inventories
(b) Cash (d) Office supplies

3. Financial statements do not include the following:

(a) Balance Sheet ✔ (c) Projected Budget
(b) Profit and loss (d) Cash Flow Statement

4. What are the accounts affected by 'Received payment for goods supplied'?
(a) Assets (no effect) = Liabilities (increase) + Equity (decrease)
✔ (b) Assets (increase) = Liabilities (no effect) + Equity (increases)
(c) Assets (no effect) = Liabilities (no effect) + Equity (no effect)
(d) Assets (decrease) = Liabilities (no effect) + Equity (decreases)

5. Asset is the sum of liabilities and _________.

(a) revenues - expenses
(b) capital - dividends
(c) capital - drawings
✔ (d) capital + revenues - expenses - dividends - drawings

6. Cash, inventories, buildings, machines, etc., are examples of:

(a) capital items
✔ (b) asset items
(c) revenue items
(d) expense items

7. Another name for the balance sheet is

(a) Statement of Operations
(b) Statement of Financial Position
(c) Statement of Financial Performance
✔ (d) None of the above

8. Which of the following is a category or element of the balance sheet?

(a.) Expenses ✔ (c.) Liabilities
(b.)Gains (d.) Losses
9. What is the normal balance for stockholders' equity and owner's equity accounts?
(a.) Debit ✔ (b.) Credit

10. What is the normal balance for contra asset accounts?

(a.) Debit ✔ (b.) Credit

11. When an owner draws P5,000 from a sole proprietorship or when a corporation declares
and pays a P5,000 dividend, the asset Cash decreases by P5,000. What is the other effect
on the balance sheet?
✔ (a) Owner’s/Stockholder’s Equity Decreases
(b) Accounts payable account decreases
(c) Owner’s gain decreases
(d) None

12. ABC Co. incurs cleanup expense of P500 on December 30. The supplier's invoice states
that the P500 is due by January 10 and ABC will pay the invoice on January 9. ABC
follows the accrual basis of accounting and its accounting year ends on December 31.
What is the effect of the cleanup service on the December balance sheet of ABC?
✔ (a) Assets Decreased (c.) Liabilities increased
(b) Gains (d.) Losses

13. Unearned Revenues is what type of account?

(a.) Asset ✔ (c.) Liability
(b.)Stockholder’s Equity (d.) Losses

14. Assets are usually reported on the balance sheet at which amount?
(a.) Cost ✔ (c.) Current Market value
(b.)Expected Selling Price (d.) either a or b

15. Which is increased when a company takes out a loan?

✔ (a) Assets and Liabilities
(b) Liabilities and Shareholder's equity
(c) Shareholder's equity and Liabilities
(d) Assets and Shareholder's equity
✔ For each of the following items, identify whether the item is considered current or
noncurrent, and explain why.

Item Current or Noncurrent?

Cash Current - includes cash on hand as well as current
Inventory Current - are classified as Merchandise inventory for
merchandising business
Machines Noncurrent – tangible assets
Trademarks Noncurrent – intangible assets
Accounts Payable Current - represents a company's obligation to pay off a short-
term debt to its creditors or suppliers
Wages Payable Current - obligations due to employees
Owner, Capital Noncurrent - the owner’s capital account is only used for sole
proprietorships
Accounts Receivable Current - represents financial asset arising from a contractual
right to receive cash
Copyright Noncurrent – intangible assets
Vans Noncurrent – tangible assets