Grade 11 Accounting Review Trivia Quiz

Accounts receivable is not a liability because it represents the money that a company is owed by its customers for goods or services already provided. It is considered an asset on the company's balance sheet, as it represents future cash inflows. In contrast, a mortgage on a building, a bank loan on a truck, and accounts payable are all examples of liabilities, as they represent obligations or debts that the company owes to others.

The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It includes three main components: assets, liabilities, and owner's equity. These components represent what the company owns, owes, and the owner's investment in the business, respectively. Expenses, on the other hand, are not included in the balance sheet. Expenses are recorded in the income statement, which shows the company's revenues, expenses, and net income or loss over a period of time. Therefore, expenses are not a feature of the balance sheet.

The Trial Balance is a listing of account balances in a ledger to see if debits equal credits. It is used to ensure the accuracy of the recorded financial transactions and the overall balance of the accounts. By comparing the total debits and credits, any discrepancies or errors can be identified and corrected before preparing the financial statements. It is not another name for a balance sheet, a statement showing profit for the fiscal year, or a check on the bank account balance.

Liquidity refers to the ease and speed at which an asset can be converted into cash without incurring significant losses. When assets are listed on a balance sheet in the order of their liquidity, it means that the assets that can be easily and quickly converted into cash are listed first, followed by those that may take more time or effort to convert. This ordering helps in assessing the availability of cash and the ability of a company to meet its short-term obligations.

The correct answer is "a financial statement that summarizes the items of revenue and expense, and shows, the net income or net loss of a business for a given period of time." This answer accurately describes an income statement, which is a financial statement that provides a summary of a business's revenues, expenses, and net income or net loss over a specific period. It is used to assess the profitability and financial performance of a business. The other options listed in the question do not accurately describe an income statement.

The correct answer is assets = liabilities + owners equity. This equation represents the fundamental accounting equation, which states that the total assets of a company are equal to the sum of its liabilities and owner's equity. This equation is the foundation of double-entry bookkeeping and helps to ensure that the accounting equation remains in balance.

When a payment is made to creditors, it reduces the assets of the company because cash is going out. At the same time, the liabilities decrease because the company is paying off its debts. This means that both sides of the accounting equation are affected in the same direction - assets decrease and liabilities decrease. There is no impact on ownership interest in this scenario.

A credit entry in the accounts would decrease an asset because it represents a decrease in the value of an asset. It would also increase a liability because it represents an increase in the amount owed by the company. Additionally, it would increase the capital account because it represents an increase in the owner's equity or investment in the business. Therefore, all of the options mentioned (a, b, and c) are correct.

When an item of plant and equipment is purchased for cash, it means that the company is using its own resources to acquire the asset. As a result, there is no change in the total assets of the company because the cash used to make the purchase is simply converted into the plant and equipment. Similarly, there is no change in equity because the company is not taking on any new liabilities or issuing any new shares. Therefore, both assets and equity remain unchanged in this transaction.