REALOE

Which of the following is an example of a revenue account?

• Accounts Payable

• Sales

• Wages / Salaries

• Inventory

Answer explanation

The correct answer is 'Sales' because it represents revenue generated from selling goods or services. Accounts Payable is a liability, Wages/Salaries are expenses, and Inventory is an asset.

Which account type includes "Electricity" and "Advertising"?

• Revenues

• Expenses

• Assets

• Liabilities

Answer explanation

The account type that includes "Electricity" and "Advertising" is "Expenses". Both items represent costs incurred by a business, which are categorized as expenses in accounting.

"Cash at Bank" falls under which account type?

• Revenues

• Liabilities

• Assets

• Owner’s Equity

Answer explanation

"Cash at Bank" is classified as an asset because it represents liquid funds available to the business. Assets are resources owned by a company, while revenues, liabilities, and owner's equity represent different financial categories.

Which of the following is considered an asset?

• Loan - ANZ Bank

• Rent Received

• Accounts Receivable

• Capital

Answer explanation

Accounts Receivable is considered an asset because it represents money owed to a business by its customers. In contrast, a loan is a liability, rent received is income, and capital refers to ownership equity.

"Accounts Payable" is categorized under which account type?

• Revenues

• Expenses

• Liabilities

• Owner’s Equity

Answer explanation

"Accounts Payable" represents money owed by a company to its creditors, making it a liability. Therefore, it is categorized under the account type "Liabilities."

Which account type would "Drawings" belong to?

• Revenues

• Expenses

• Assets

• Owner’s Equity

Answer explanation

"Drawings" represent withdrawals made by the owner from the business, reducing the owner's equity. Therefore, it belongs to the Owner’s Equity account type.

"Loan - Southern Credit Union" is an example of which account type?

• Revenues

• Liabilities

• Assets

• Expenses

Answer explanation

'Loan - Southern Credit Union' represents borrowed funds, which are obligations to repay. Therefore, it is classified as a liability, indicating a financial obligation rather than an asset or revenue.

Which of the following is an example of an expense account?

• Rent Received

• Fixtures and Fittings

• Cost of Goods Sold

• Capital

Answer explanation

Cost of Goods Sold is an expense account that represents the direct costs attributable to the production of goods sold by a company. The other options are not classified as expense accounts.

Which account type includes "Fixtures and Fittings" and "Vehicles"?

• Revenues

• Expenses

• Assets

• Liabilities

Answer explanation

"Fixtures and Fittings" and "Vehicles" are considered tangible items that a business owns, which fall under the category of Assets. Revenues, Expenses, and Liabilities do not include these physical items.

"Mortgage - ABC Bank" falls under which account type?

• Revenues

• Liabilities

• Assets

• Owner’s Equity

Answer explanation

A mortgage represents a loan taken out to buy property, making it a liability for the borrower. Therefore, "Mortgage - ABC Bank" falls under the account type of liabilities.