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

12. Liabilities have a normal ________________ balance.

  • Debit
  • Credit

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

16. Assets have a normal _________ balance.

  • Credit
  • Debit

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

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