Classification Of Accounts - Fun City, USA
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Chapter 1
Directions: Classify each account by selecting the correct answer for each item.
Questions and Answers
- 1.
Accounts Receivable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
Accounts Receivable is classified as an asset on the balance sheet. This is because it represents the amount of money owed to a company by its customers for goods or services that have been provided on credit. As an asset, it has a monetary value and is expected to generate future economic benefits for the company. It is typically listed under the current assets section, as it is expected to be collected within a year.Rate this question:
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- 2.
Notes Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
The given correct answer is liability because notes payable refers to the amount of money that a company owes to its creditors. It is a form of debt that the company has taken on, and therefore it represents an obligation or liability for the company to repay the borrowed funds. This is reflected on the company's balance sheet as a liability, as it is an amount that the company owes to external parties.Rate this question:
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- 3.
Land
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
Land is classified as an asset in accounting. Assets are resources owned by a company that have economic value and can be used to generate future benefits. Land is considered a long-term asset as it is expected to provide benefits over a long period of time. It is recorded on the balance sheet under the asset section and its value is reported at its historical cost.Rate this question:
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- 4.
Nintendo Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
The term "Nintendo Payable" suggests that it refers to a debt or obligation that Nintendo owes to someone else. Liabilities are debts or obligations of a company that arise from past transactions or events, and they require the company to transfer economic benefits in the future. Therefore, it is reasonable to classify "Nintendo Payable" as a liability.Rate this question:
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- 5.
Prepaid Insurance
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
Prepaid insurance is considered an asset because it represents a payment made in advance for insurance coverage that will be utilized in the future. As an asset, prepaid insurance holds economic value and can be utilized or converted into cash if necessary. It is recorded on the balance sheet under the asset section, reflecting the amount of insurance coverage that has been paid for but not yet used.Rate this question:
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- 6.
Accounts Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
Liability refers to an obligation or debt that a company owes to external parties. In the context of accounts payable, it represents the amount of money owed by a company to its suppliers or vendors for goods or services received but not yet paid for. Therefore, accounts payable is classified as a liability on the company's balance sheet. It is important for businesses to accurately track and manage their accounts payable to ensure timely payments and maintain good relationships with their suppliers.Rate this question:
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- 7.
Office Furniture
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
Office furniture is considered as an asset because it is a valuable resource owned by the company that has the potential to generate future economic benefits. As an asset, it is recorded on the balance sheet and its value is typically depreciated over time to reflect its decreasing worth.Rate this question:
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- 8.
Office Supplies
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
Office supplies are considered as assets because they are tangible resources owned by the company that have future economic value. These supplies are used in the day-to-day operations of the business and are expected to provide benefits and generate revenue in the future. As assets, office supplies are recorded on the balance sheet and their value is reported as a current asset.Rate this question:
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- 9.
Galaga Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
The term "Galaga Payable" suggests that it is a debt or obligation that the company owes to someone or some entity. In accounting, liabilities represent the company's obligations or debts that need to be settled in the future. Therefore, Galaga Payable is classified as a liability.Rate this question:
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- 10.
Billy Rob, Capital
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
C. Owner's EquityExplanation
The given answer, "Owner's Equity," is correct because it represents the residual interest in the assets of an entity after deducting liabilities. It represents the owner's claim on the assets of the business and is calculated by subtracting total liabilities from total assets. In this case, Billy Rob's owner's equity would represent his ownership stake in the capital of the business.Rate this question:
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- 11.
Building
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
The given list consists of different categories related to finance and accounting. "Asset" is the correct answer because it represents something that is owned by an individual or organization and has economic value. It is typically listed on a balance sheet and can include items such as cash, property, or investments.Rate this question:
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- 12.
Mortgage Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
Mortgage Payable is a type of loan that a company takes out to finance the purchase of property or real estate. Since it represents a debt that the company owes to a lender, it is classified as a liability on the company's balance sheet.Rate this question:
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- 13.
Cash
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
Cash is classified as an asset because it represents a valuable resource that a company possesses. As an asset, cash holds economic value and can be used to generate future economic benefits for the company. It is considered a current asset as it is expected to be converted into cash within a year. Cash is recorded on the balance sheet under the asset section, reflecting the company's available funds that can be used to meet its financial obligations or invest in business operations. Therefore, option 4, Owner's Equity, is not the correct answer as cash is not categorized under this classification.Rate this question:
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- 14.
Software Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
Owner's Equity represents the ownership interest in a company and is not applicable to software payable. Asset refers to resources owned by a company, but software payable is a liability as it represents an amount owed to a creditor for the purchase of software. Therefore, the correct answer is liability.Rate this question:
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- 15.
Pool Tables
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
Pool tables are considered as assets because they have value and can be owned by a business or an individual. Assets are resources that have economic value and are expected to provide future benefits. Therefore, pool tables can be classified as assets on a balance sheet.Rate this question:
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- 16.
Video Machines
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
In accounting, assets refer to resources or properties owned by a company that have economic value and can be used to generate future benefits. Video machines can be considered as assets because they are owned by the company and have value that can be utilized for generating revenue or providing services. Therefore, the correct answer is asset.Rate this question:
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- 17.
Equipment
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
The term "Asset" refers to any resource or item of value that is owned by a person or a company. It can be tangible, such as property or equipment, or intangible, such as patents or copyrights. In the given list, "Equipment" is a specific type of asset, as it represents a physical item that is owned by the entity. Therefore, the correct answer is "Asset".Rate this question:
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- 18.
Harcastle Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
The term "Harcastle Payable" suggests that it is a liability. Payables are amounts owed by a company to its creditors or suppliers, indicating a liability. Therefore, Harcastle Payable would be categorized under liabilities on the balance sheet.Rate this question:
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- 19.
Missile Command Payable
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
B. LiabilityExplanation
Liability refers to an obligation or debt that a company owes to external parties. It represents the company's responsibility to repay a financial obligation in the future. In the context of the given question, Missile Command Payable would be categorized as a liability because it represents the company's obligation to pay for the missiles it has received. This liability is owed to the supplier or manufacturer of the missiles.Rate this question:
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- 20.
Testing Equipment
- A.
Asset
- B.
Liability
- C.
Owner's Equity
- D.
Answer option 4
Correct Answer
A. AssetExplanation
The given answer option 4, "Asset," is the correct answer because testing equipment is considered as an asset. Assets are resources owned by a company that have monetary value and can be used to generate future economic benefits. Testing equipment is a valuable resource that a company owns and can use in its operations to test and ensure the quality of its products or services. Therefore, it falls under the category of assets on a company's balance sheet.Rate this question:
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Current Version
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Nov 10, 2023Quiz Edited by
ProProfs Editorial Team -
Aug 24, 2013Quiz Created by
Gumelaurel
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