11. True or False: Current Liabilities are only amounts we owe to suppliers (of merchandise or services) bought on credit.
- True
- False
Liabilities and Equity in Accounting Assessment
13. An account with a balance other than what is expected or normal may indicate a(n) __________.
- Deferred Tax
- Embezzlement
- Error
- Deferred Revenue
14. Dale wants to take out a mortgage to purchase a commercial space to expand his business: “Tailor Swift - Quick Alterations and Embroidery Services”. He has found a property, prepared his business proposal, and is going to meet with the bank. He has been working out of his home for years and already has a good client base, lots of equipment, and inventory valued at $50,000 to get his business off the ground in a formal space.
If granted a $100,000 mortgage, how would the accounting equation look to keep his books balanced?
- $100k increase in liabilities + $0 no change in equity = $100k increase in assets
- $100k decrease in liabilities + $50k increase in equity = $50K in assets
- $100k no change in assets + $50k in equity = $150k increase in liabilities
- $100k decrease in liabilities – $0 no change in equity = $100k increase in assets
15. True or False: Bonds Payable are long-term debt securities issued by a company that promises to pay back the principal at some specified point in the future.
- False
- True
17. Suzanne owns a clothing store in a small beach town called ‘Sunny Side Threads’. She wants to expand her brand’s influence by using a van she can hang clothes and accessories in for traveling to events along the coast during summer.
If Suzanne were to purchase a $45,000 van with a bank loan, paying $12,000 down, at 6.99% over 72 months, where would the loan itself go on the balance sheet?
- Equity, under investments
- Liabilities, under short-term
- Liabilities, under long-term
- Assets, under PP&E
18. Continuing from question 6, where would Suzanne’s payments due in the current year (or the next 12 months) be recorded on the balance sheet?
- Current Liabilities
- Current Assets
- Long-term Liabilities
- Long-term Assets
Shuffle Q/A 2
19. The following are non-current liabilities except:
- Deferred Revenue
- Notes Payable
- Deferred Income taxes
- Bonds Payable
20. Tosin has a customer who has already paid him to come pressure wash their house next month. Tosin would record this payment as a _______?
- Non-Current Liability
- Current Liability