Balance Sheet MCQs (Chapterwise Multiple Choice Questions)

What is the normal balance for contra asset accounts?

Debit

Credit

Answer & Explanation

Correct Answer: Credit

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What is the normal balance for stockholders' equity and owner's equity accounts?

Debit

Credit

Answer & Explanation

Correct Answer: Credit

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Client Jay pays ABC Co. $1,000 in December for ABC to perform services for Jay in 45 days. ABC uses the accrual basis of accounting. In December ABC will debit Cash for $1,000. What will be the other account involved in the December accounting entry prepared by ABC (and what type of account is it)?

Accounts Receivable (asset)

Prepaid Services (asset)

Service Revenues (revenue)

Unearned Revenues (liability)

Answer & Explanation

Correct Answer: Unearned Revenues (liability)

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The third line of the balance sheet at the end of the year should begin with "For the Year Ended".

True

False

Answer & Explanation

Correct Answer: False

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A balance sheet does not:

Report the assets and claims of an enterprise at a specified moment in time

Show the financial status of an enterprise

Present revenues and expenses of an enterprise

Have two counterbalancing sections

Answer & Explanation

Correct Answer: Present revenues and expenses of an enterprise

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The balance sheet heading will specify a

Period Of Time

Point In Time

Answer & Explanation

Correct Answer: Point In Time

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Notes Payable could not appear as a line on the balance sheet in which classification?

Current Assets

Long-term Liabilities

Current Liabilities

Answer & Explanation

Correct Answer: Long-term Liabilities

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Which of the following accounts is a non-current liability?

Trade payables

Share capital

Retained earnings

Investments in associates

Bank loan

Answer & Explanation

Correct Answer: Bank loan

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Which of the following is an asset account?

Accounts Payable

Prepaid Insurance

Unearned Revenue

Answer & Explanation

Correct Answer: Prepaid Insurance

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What is the normal balance for liability accounts?

Debit

Credit

Answer & Explanation

Correct Answer: Credit

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Balance Sheet Quick Quiz

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