Balance Sheet

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If you have difficulty answering the following questions, learn more about this topic by reading our Balance Sheet Explanation.

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              Mary 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 2006 for ABC to perform services for Jay in February 2007. 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 2006 accounting entry prepared by ABC (and what type of account is it)?
Accounts Receivable (liability)              Prepaid Services (asset)              Service Revenues (revenue)              Unearned Revenues (liability)

11.	ABC Co. performed services for Client Kay in December 2006 and billed Kay $4,000 with terms of net 30 days. ABC follows the accrual basis of accounting. In January 2007 received the $4,000 from Kay. In January 2007 ABC will debit Cash, since cash was received. What account should ABC credit in the January 2007 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 2006. 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              Increase 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, 2006. The supplier's invoice states that the $500 is due by January 10, 2007 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 15, 2006 ABC Co. hired Juanita Perez to begin working on January 2, 2007 at a monthly salary of $4,000. ABC's balance sheet of December 31, 2006 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.	An acceptable heading for the balance sheet is: ABC Corporation Balance Sheet For the Year Ended December 31, 2006	True	False