1. In a Chart of Accounts, which account would be classified as a
"contra-asset"?
A. Accounts Payable
B. Accumulated Depreciation
C. Inventory
D. Accounts Receivable
Answer: B) Accumulated Depreciation
Rationale: Accumulated Depreciation is a contra-asset account because
it offsets the value of the related asset (e.g., equipment or buildings) on
the balance sheet.
2. How would "Prepaid Insurance" be classified in the Chart of
Accounts?
A. Asset
B. Liability
C. Expense
D. Revenue
Answer: A) Asset
Rationale: Prepaid Insurance is classified as an asset because it
represents a future benefit (i.e., coverage) that the company has paid for
in advance.
,3. "Sales Revenue" would be categorized under which of the following
in the Chart of Accounts?
A. Asset
B. Liability
C. Equity
D. Revenue
Answer: D) Revenue
Rationale: Sales Revenue is categorized as a revenue account in the
Chart of Accounts because it represents income earned from the sale of
goods or services.
4. How is the "Allowance for Doubtful Accounts" classified in the Chart
of Accounts?
A. Asset
B. Liability
C. Contra-asset
D. Equity
Answer: C) Contra-asset
Rationale: Allowance for Doubtful Accounts is a contra-asset account
that reduces the value of Accounts Receivable to reflect expected bad
debts.
, 5. Which of the following accounts is considered an "operating"
account in the Chart of Accounts?
A. Capital Stock
B. Rent Expense
C. Bonds Payable
D. Interest Income
Answer: B) Rent Expense
Rationale: Rent Expense is considered an operating account because it
is part of the costs incurred during the normal course of business
operations.
6. How is a “Bank Loan” classified in the Chart of Accounts?
A. Liability
B. Asset
C. Equity
D. Revenue
Answer: A) Liability
Rationale: A bank loan is classified as a liability because it represents
money the company owes to a bank.
7. Which of the following is typically NOT included in the Chart of
Accounts?
A. Revenue accounts
"contra-asset"?
A. Accounts Payable
B. Accumulated Depreciation
C. Inventory
D. Accounts Receivable
Answer: B) Accumulated Depreciation
Rationale: Accumulated Depreciation is a contra-asset account because
it offsets the value of the related asset (e.g., equipment or buildings) on
the balance sheet.
2. How would "Prepaid Insurance" be classified in the Chart of
Accounts?
A. Asset
B. Liability
C. Expense
D. Revenue
Answer: A) Asset
Rationale: Prepaid Insurance is classified as an asset because it
represents a future benefit (i.e., coverage) that the company has paid for
in advance.
,3. "Sales Revenue" would be categorized under which of the following
in the Chart of Accounts?
A. Asset
B. Liability
C. Equity
D. Revenue
Answer: D) Revenue
Rationale: Sales Revenue is categorized as a revenue account in the
Chart of Accounts because it represents income earned from the sale of
goods or services.
4. How is the "Allowance for Doubtful Accounts" classified in the Chart
of Accounts?
A. Asset
B. Liability
C. Contra-asset
D. Equity
Answer: C) Contra-asset
Rationale: Allowance for Doubtful Accounts is a contra-asset account
that reduces the value of Accounts Receivable to reflect expected bad
debts.
, 5. Which of the following accounts is considered an "operating"
account in the Chart of Accounts?
A. Capital Stock
B. Rent Expense
C. Bonds Payable
D. Interest Income
Answer: B) Rent Expense
Rationale: Rent Expense is considered an operating account because it
is part of the costs incurred during the normal course of business
operations.
6. How is a “Bank Loan” classified in the Chart of Accounts?
A. Liability
B. Asset
C. Equity
D. Revenue
Answer: A) Liability
Rationale: A bank loan is classified as a liability because it represents
money the company owes to a bank.
7. Which of the following is typically NOT included in the Chart of
Accounts?
A. Revenue accounts
