Recognize Assets, Liabilities, Exp, Equity and Income Quiz

Which of the following is considered a current asset?

• Land

• Inventory

• Equipment

• Building

Which type of liability is typically due within one year?

• Long-term debt

• Current liabilities

• Deferred tax liabilities

• Contingent liabilities

Which of the following is an example of an operating expense?

• Interest expense

• Depreciation expense

• Cost of goods sold

• Rent expense

Which component of equity represents the initial investment made by shareholders?

• Retained earnings

• Share capital

• Treasury shares

• Dividends

Which financial statement shows the relationship between assets, liabilities, and equity?

• Income statement

• Statement of cash flows

• Balance sheet

• Statement of changes in equity

Which of the following is a non-current asset?

• Cash

• Accounts receivable

• Machinery

• Prepaid expenses

Which of the following is classified as a long-term liability?

• Accounts payable

• Bank overdraft

• Bonds payable

• Accrued expenses

What is the primary purpose of recording expenses in accounting?

• To increase assets

• To decrease liabilities

• To measure profitability

• To increase equity

Which of the following is not a component of equity?

• Retained earnings

• Share capital

• Accounts payable

• Treasury shares

How are the income statement and balance sheet related?

• The income statement shows the financial position at a point in time, while the balance sheet shows performance over a period.

• The income statement shows performance over a period, while the balance sheet shows the financial position at a point in time.

• Both show performance over a period.

• Both show the financial position at a point in time.