Balance Sheet

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If you have any difficulty answering the questions, learn more about this topic by reading our mini-lectures covering introductory to Balance Sheet or it might be useful to check out multimedia courses "Preparing A Balance Sheet" presented by CIT Small Business Lending.

1.	Another name for the balance sheet is
Statement of Operations Statement of Financial Position

2.	The balance sheet heading will specify a
Period of time Point in time

3.	Which of the following is a category or element of the balance sheet?
Expenses Gains Liabilities Losses

4.	Which of the following is an asset account?
Accounts Payable Prepaid Insurance Unearned Revenue

5.	Which of the following is a contra account?
Accumulated Depreciation John Smith, Capital

6.	What is the normal balance for an asset account?	Debit	Credit
7.	What is the normal balance for liability accounts?	Debit	Credit
8.	What is the normal balance for stockholders' equity and owner's equity accounts?	Debit	Credit
9.	What is the normal balance for contra asset accounts?	Debit	Credit

10.	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)

11.	ABC Co. performed services for Client Kay in December and billed Kay $4,000 with terms of net 30 days. ABC follows the accrual basis of accounting. In January ABC received the $4,000 from Kay. In January ABC will debit Cash, since cash was received. What account should ABC credit in the January entry?
Accounts Receivable Service Revenue Owner's Equity

12.	ABC Co. follows the accrual basis of accounting and performs a service on account (on credit) in December. The service was billed at the agreed upon amount of $3,500. ABC Co. debited Accounts Receivable for $3,500 and credited Service Revenue for $3,500. The effect of this entry on the balance sheet of ABC is to increase assets by $3,500 and to
Decrease assets by $3,500 crease owner's (stockholders') equity by $3,500

13.	Which of the following would not be a current asset?
Accounts Receivable Land Prepaid Insurance Supplies

14.	Which of the following would normally be a current liability?
Note Payable due in two years Unearned Revenue

15.	When an owner draws $5,000 from a sole proprietorship or when a corporation declares and pays a $5,000 dividend, the asset Cash decreases by $5,000. What is the other effect on the balance sheet?
Owner's/stockholders' equity decreases None

16.	ABC Co. incurs cleanup expense of $500 on December 30. The supplier's invoice states that the $500 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?
Assets decreased Liabilities increased No effect on owner's equity

17.	Deferred credits will appear on the balance sheet with the
Assets Liabilities Owner's/Stockholders' Equity

18.	Notes Payable could not appear as a line on the balance sheet in which classification?
Current Assets Current Liabilities Long-term Liabilities

19.	On December 1, ABC Co. hired Juanita Perez to begin working on January 2 at a monthly salary of $4,000. ABC's balance sheet of December 31 will show a liability of
$4,000 $48,000 No Liability

20.	ABC Co. has current assets of $50,000 and total assets of $150,000. ABC has current liabilities of $30,000 and total liabilities of $80,000. What is the amount of ABC's owner's equity?
$20,000 $30,000 $70,000 $120,000

21.	The amount reported on the balance sheet for Property, Plant and Equipment is the company's estimate of the fair market value as of the balance sheet date.	True	False
22.	The total amount reported for stockholders' equity is the approximate fair value or net worth of the corporation as of the balance sheet date.	True	False
23.	The book value of a corporation is the total amount of stockholders' equity reported on the balance sheet.	True	False
24.	The third line of the balance sheet at the end of the year should begin with "For the Year Ended".	True	False

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