Balance Sheet Quiz

What is the primary purpose of a balance sheet?

• To show the company’s revenues and expenses over a period

• To report the company’s financial position at a specific point in time

• To summarize the cash inflows and outflows

• To detail the company’s retained earnings

Which of the following is classified as a current asset?

• Equipment

• Inventory

• Goodwill

• Buildings

Which section of the balance sheet includes accounts payable?

• Current assets

• Non-current liabilities

• Current liabilities

• Shareholders' equity

Which of the following is an example of a non-current (long-term) asset?

• Accounts receivable

• Prepaid expenses

• Equipment

• Inventory

Which of the following is considered a current liability?

• Notes payable (due in 2 years)

• Long-term debt

• Wages payable

• Retained earnings

Which equation represents the balance sheet equation?

• Assets + Liabilities = Equity

• Assets = Liabilities + Equity

• Assets - Liabilities = Equity

• Assets + Equity = Liabilities

Where would you classify retained earnings on the balance sheet?

• Current liabilities

• Non-current assets

• Shareholders’ equity

• Current assets

Which of the following best describes 'shareholders’ equity'?

• The portion of assets financed by creditors

• The total value of assets

• The owners' residual interest in the company after liabilities are paid

• The company's cash reserves

What is the correct classification for 'prepaid expenses' on the balance sheet?

• Current liabilities

• Non-current liabilities

• Current assets

• Non-current assets

Which of the following is most likely to be considered a long-term liability?

• Accounts payable

• Interest payable

• Bonds payable

• Deferred revenue