The Basic Accounting Test: Multiple-Choice Quiz

Please note that all fields followed by an asterisk must be filled in.

1. Which of the following items would not fall under the definition of an asset?*

	a) Land
	b) Machinery
	c) Cash
	d) Owner’s equity
	e) Debtors

2. Which one of the following items would fall under the definition of a liability?*

	a) Cash
	b) Debtors
	c) Owner’s equity
	d) Tax owed
	e) None of the above

3. Which of the following statements are false?*

	a) A liability is a debt for your business.
	b) Debtors are a debt for your business.
	c) The accounting equation shows how much of your assets belong to the owner, and how much ‘belong’ to people outside the business.
	d) If you cannot work out a value for an item that will bring you future benefits, then you cannot keep this as an asset in your records.
	e) None of the above

4. A business has the following items in it:
- Land $1,000,000
- Machinery $20,000
- Cash $10,000
- Debt $0
- Owner’s equity ______?

What is the value of the owner’s equity?*

	a) $1,000,000
	b) $1,020,000
	c) $1,010,000
	d) $1,030,000
	e) None of the above.

5. A business has the following items in it:
- Land $1,000,000
- Machinery $20,000
- Cash $10,000
- Loan $500,000
- Owner’s equity ______?

What is the value of the owner’s equity?*

	a) $500,000
	b) $1,000,000
	c) $530,000
	d) $1,030,000
	e) None of the above.

6. A business has the following items in it:
- Owners equity $600,000
- Total liabilities $1,400,000
- Assets ______?

What is the value of the assets in this business?*

	a) $600,000
	b) $800,000
	c) $1,400,000
	d) $2,000,000
	e) None of the above.

7. A business has the following items in it:
- Land $1,500,000
- Machinery $80,000
- Cash $20,000
- Owners equity $900,000
- Loan $500,000
- Creditors ______?

What is the value of the creditors?*

	a) $200,000
	b) $700,000
	c) $800,000
	d) $1,100,000
	e) None of the above.

8. A business has the following items in it:
- Land ______?
- Vehicles $600,000
- Debtors $120,000
- Cash $30,000
- Owners equity $1,000,000
- Loan $500,000
- Creditors $50,000

What is the value of the land?*

	a) $1,000,000
	b) $1,550,000
	c) $800,000
	d) $750,000
	e) None of the above.

9. Which of the following statements are true?*

	a) A business whose liabilities are greater than its assets has a bad financial position.
	b) A business whose liabilities are greater than its owner’s equity has a bad financial position.
	c) A business whose assets are greater than its owner’s equity has a bad financial position.
	d) a) and b)
	e) All the above