Classification Of Accounts Quiz! Test

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| By Arshad.b.jumah

Arshad.b.jumah

Community Contributor

Quizzes Created: 3 | Total Attempts: 880

Questions: 15 | Attempts: 233 | Updated: Mar 21, 2023

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Questions and Answers

1.

Cash in hand
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
A. Asset

Explanation
Physical cash is something that the business owns

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2.

Cash at bank
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
A. Asset

Explanation
Money kept in the bank account is owned by the business.

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3.

Trade receivable
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
A. Asset

Explanation
Owings by customers to the business. Business will receive $ from customers in future.

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4.

Salaries
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
E. Expense

Explanation
Payments (of $) to be made to workers in the business.

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5.

Equipment
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
A. Asset

Explanation
Owned by business for long-term use.

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6.

Motor Vehicles
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
A. Asset

Explanation
Owned by business for long-term use.

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7.

Interest income
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
C. Income

Explanation
Earnings calculated as a percentage of money kept in the bank.

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8.

Inventory
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
A. Asset

Explanation
Goods bought for resale by the business.

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9.

Stationery
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
E. Expense

Explanation
As the value of stationery is low, it is classified as an expense instead. [Materiality concept]

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10.

Rent
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
E. Expense

Explanation
Recurring payments for renting (using) a place.

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11.

Trade payables
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
B. Liability

Explanation
Owings by the business to the supplier. Business will pay supplier in future.

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12.

Sales revenue
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
C. Income

Explanation
Selling price of the goods sold to customers.

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13.

Cost of sales
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
E. Expense

Explanation
Cost price of the goods sold. Recorded only when the business sells the goods.

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14.

Discounts received
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
C. Income

Explanation
Given by credit supplier (creditor/trade payables) to business to encourage early payment of cash. Given at the point of payment.

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15.

Discounts allowed
- A.
  
  Asset
- B.
  
  Liability
- C.
  
  Income
- D.
  
  Capital
- E.
  
  Expense
- F.
  
  Drawing
Correct Answer
E. Expense

Explanation
Given to credit customer (debtor/trade receivables) by business to encourage early payment of cash. Given at the point of payment.

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