A balance sheet is a financial statement that records a firm’s liabilities, assets, and shareholders’ equity at a particular time. It is a basis for evaluating rates of return and its capital structure.
The financial statements such as a statement of cash flows and the income statement along with balance sheet are used to prepare and analyse the financial status of a company.
Given below are important MCQs on Balance Sheet to analyse your understanding of the topic. The answers are also given for your reference.
Balance Sheet MCQs
1. On balance sheet, accruals, notes payable, and account payable are listed under which category?
A) Current Liabilities
B) Accumulated Liabilities
C) Noncurrent Liabilities
D) Accrued Liabilities
Answer: A
2. Inventories, cash and equivalents, and accounts receivables are listed as
A) Earnings on Income Statement
B) Payments on Income Statement
C) Assets on the Balance Sheet
D) Liabilities on the Balance Sheet
Answer: C
3. Which of the following is not a current asset
A) Supplies
B) Land
C) Accounts Receivable
D) Prepaid Insurance
Answer: B
4. In the situation of bankruptcy, a stock which is recorded above common stock and below debt account is
A) Preferred Stock
B) Debt Liabilities
C) Common Liabilities
D) Hybrid Stock
Answer: A
5. A firm buys products but does not pay to suppliers instantly. This is recorded as
A) Account Receivable
B) Account Payable
C) Accumulated Liabilities
D) Current Liabilities
Answer: B
6. In a balance sheet, the total of common stock and retained earnings are denoted as
A) Common Equity
B) Due Equity
C) Preferred Equity
D) Common Perpetuity
Answer: A
7. The process of recording inventory that gives a lower cost of a commodity sold in an income statement is denoted as
A) First Out Receivable
B) Last in First Out
C) Last Out Receivable
D) First in First Out
Answer: D
8. Financial securities which can be changed into cash to their book value price are categorised as
A) Short-term Investments
B) Inventories
C) Long-term Investments
D) Cash Equivalents
Answer: D
9. Earnings that have a cumulative amount and are not paid to the stockholder as a dividend is known as
A) Common Earnings
B) Preferred Earnings
C) Non-paid Earnings
D) Retained Earnings
Answer: D
10. Information that is used by investors for expecting future earnings is recorded in
A) Annual Report
B) Five Years Report
C) Exchange Report
D) Stock Report
Answer: A
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