3.a. What are the main sections on a balance sheet?

a. Assets, liabilities, income

b. Assets, liabilities, equity

c. Assets, liabilities, expenses

d. Assets, gains, revenue

3.b. Which of the following is true?

a. Accounts receivable are found in the current asset section of a balance sheet.

b. Accounts receivable increase by credits.

c. Accounts receivable are generated when a customer makes payments.

d. Accounts receivable become more valuable over time.

3.c. A company that uses the cash basis of accounting will:

a. Record revenue when it is collected.

b. Record revenue when it is earned.

c. Record revenue at the same time as accounts receivable.

d. Record bad debt expense on the income statement.

3.d. Which of the following account types increase by debits in double-entry accounting?

a. Assets, Expenses, Losses

b. Assets, Revenue, Gains

c. Expenses, Liabilities, Losses

d. Gains, Expenses, Liabilities

3.e. What would the journal entry be for a company that takes out a five-year, $100,000 business loan?

a. Debit $100,000 non-current asset, Credit $100,000 non-current liabilities

b. Debit $100,000 current asset, Credit $100,000 non-current liabilities

c. Debit $100,000 non-current liabilities, Credit $100,000 non-current assets

d. Debit $100,000 current liabilities, Credit $100,000 current assets

3.f. After making a sale of $3,000, where $1,200 is paid in cash and $1,800 is sold on credit, how would a company go about updating its balance sheet?

a. $1,800 debit in accounts receivable; $3,000 credit in retained earnings; $1,200 debit in cash

b. $3,000 debit in retained earnings; $1,200 credit in cash; $1,800 credit in accounts receivable

c. $1,800 debit in accounts payable; $1,200 debit in cash; $3,000 credit in retained earnings

d. $1,200 credit in cash; $1,800 credit in accounts payable; $3,000 debit in retained earnings

3.g. What is the minimum number of accounts that accounting entries can have?

a. One

b. Four

c. Five

d. Two

3.h. Which of these statements about accrual accounting is true?

a. Revenue is recorded only when payments are received, while expenses are recognized when they're incurred.

b. All revenue from prepayments should be recognized when the payment is received, while expenses accrue over the life of the obligation.

c. If the business has provided the goods or services and can reasonably expect to receive cash, it can recognize the revenue in that period.

d. The matching principle dictates that expenses should be recognized when they are incurred, regardless of when revenue is recognized.

3.i. In a journal entry, a debit decreases which of the following accounts?

a. Cash

b. Accounts Payable

c. Supplies expense

d. Both a and c

3.j. Which is not classified as a current asset?

a. Cash

b. Product inventory

c. Liquid Assets

d. Prepaid Liabilities

e. Property