1. How is “Dividends Declared” classified in the Chart of Accounts?
A. Liability
B. Expense
C. Asset
D. Equity
Answer: A) Liability
Rationale: Dividends Declared is a liability account because it
represents the amount the company owes to shareholders.
2. What is the classification for "Accounts Payable" in the Chart of
Accounts?
A. Asset
B. Liability
C. Equity
D. Revenue
Answer: B) Liability
Rationale: Accounts Payable is classified as a liability because it
represents amounts the company owes to its creditors.
3. What is the classification of "Common Stock" in the Chart of
Accounts?
,A. Liability
B. Asset
C. Equity
D. Revenue
Answer: C) Equity
Rationale: Common Stock is classified as equity because it represents
the ownership interest in a company.
4. Which of the following account types will increase with a debit?
A. Liability
B. Equity
C. Asset
D. Revenue
Answer: C) Asset
Rationale: Assets increase with a debit entry, while liabilities and equity
typically increase with a credit entry.
5. Which of the following accounts is classified as a "current liability"?
A. Bonds Payable
B. Long-term Lease Obligation
C. Accounts Payable
D. Common Stock
, Answer: C) Accounts Payable
Rationale: Accounts Payable is classified as a current liability because it
represents amounts the company owes to vendors and is expected to be
paid within one year.
6. What is an example of a current asset in the Chart of Accounts?
A. Equipment
B. Accounts Payable
C. Inventory
D. Bonds Payable
Answer: C) Inventory
Rationale: Inventory is a current asset because it is expected to be
converted into cash or used within one year.
7. Which of the following is an example of a “non-operating income”
account in the Chart of Accounts?
A. Service Revenue
B. Rent Income
C. Sales Revenue
D. Cost of Goods Sold
Answer: B) Rent Income
A. Liability
B. Expense
C. Asset
D. Equity
Answer: A) Liability
Rationale: Dividends Declared is a liability account because it
represents the amount the company owes to shareholders.
2. What is the classification for "Accounts Payable" in the Chart of
Accounts?
A. Asset
B. Liability
C. Equity
D. Revenue
Answer: B) Liability
Rationale: Accounts Payable is classified as a liability because it
represents amounts the company owes to its creditors.
3. What is the classification of "Common Stock" in the Chart of
Accounts?
,A. Liability
B. Asset
C. Equity
D. Revenue
Answer: C) Equity
Rationale: Common Stock is classified as equity because it represents
the ownership interest in a company.
4. Which of the following account types will increase with a debit?
A. Liability
B. Equity
C. Asset
D. Revenue
Answer: C) Asset
Rationale: Assets increase with a debit entry, while liabilities and equity
typically increase with a credit entry.
5. Which of the following accounts is classified as a "current liability"?
A. Bonds Payable
B. Long-term Lease Obligation
C. Accounts Payable
D. Common Stock
, Answer: C) Accounts Payable
Rationale: Accounts Payable is classified as a current liability because it
represents amounts the company owes to vendors and is expected to be
paid within one year.
6. What is an example of a current asset in the Chart of Accounts?
A. Equipment
B. Accounts Payable
C. Inventory
D. Bonds Payable
Answer: C) Inventory
Rationale: Inventory is a current asset because it is expected to be
converted into cash or used within one year.
7. Which of the following is an example of a “non-operating income”
account in the Chart of Accounts?
A. Service Revenue
B. Rent Income
C. Sales Revenue
D. Cost of Goods Sold
Answer: B) Rent Income
