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Basic Balance Sheet MCQ

1. What is the normal balance for liability accounts?

Debit

Credit

Answer

Correct Answer: Credit

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

Debit

Credit

Answer

Correct Answer: Credit

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

Debit

Credit

Answer

Correct Answer: Credit

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4. Which of the following is an asset account?

Accounts Payable

Prepaid Insurance

Unearned Revenue

Answer

Correct Answer: Prepaid Insurance

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5. The balance sheet heading will specify a

Period Of Time

Point In Time

Answer

Correct Answer: Point In Time

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

Trade payables

Share capital

Retained earnings

Investments in associates

Bank loan

Answer

Correct Answer: Bank loan

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7. 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

Correct Answer: Present revenues and expenses of an enterprise

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8. The accounting equation may not be expressed as:

Assets = Liabilities + Equity

Liabilities = Assets - Equity

Equity = Liabilities - Assets

Non-current assets + Current assets = Total liabilities + Equity

Non-current assets + Net current assets = Non-current liabilities + Equity

Answer

Correct Answer: Equity = Liabilities - Assets

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

Current Assets

Long-term Liabilities

Current Liabilities

Answer

Correct Answer: Long-term Liabilities

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10. Which of the following is the accounting equation?

L = A + SE

A = L + SE

A = L - SE

SE = A + L

Answer

Correct Answer: A = L + SE

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

True

False

Answer

Correct Answer: False

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12. The book value of a corporation is the total amount of stockholders' equity reported on the balance sheet.

True

False

Answer

Correct Answer: True

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