Asset, Liability, Income, or Expense?

Question 1

Is ‘Cash in Bank’ an asset, liability, income, or expense?

Answer 1

Asset

Question 2

Are ‘Sales’ an asset, liability, income, or expense?

Answer 2

Income

Question 3

Are ‘Organizational Startup Costs’ an asset, liability, income, or expense?

Answer 3

Expense

Question 4

Are ‘Accounts Receivable’ an asset, liability, income, or expense?

Answer 4

Asset

Question 5

Is ‘Rent Received’ an asset, liability, income, or expense?

Answer 5

Income

Question 6

Is ‘Rent Paid’ an asset, liability, income, or expense?

Answer 6

Expense

Question 7

Are ‘Freight Charges’ an asset, liability, income, or expense?

Answer 7

Expense

Question 8

Is ‘Amortization’ an asset, liability, income, or expense?

Answer 8

Expense

Question 9

Is a ‘Note Receivable’ an asset, liability, income, or expense?

Answer 9

Asset

Question 10

Are ‘Office Supplies Used’ an asset, liability, income, or expense?

Answer 10

Expense

Question 11

Is ‘Accrued Interest’ an asset, liability, income, or expense?

Answer 11

Accrued Interest can be classified as either a Liability or Income, depending on the context:

• Liability: If the accrued interest is interest payable, meaning it is interest that the company owes but has not yet paid, it is a liability.
• Income: If the accrued interest is interest receivable, meaning it is interest that the company has earned but has not yet received, it is classified as income.

Based on the phrasing of “Accrued Interest” without further context, it typically refers to interest payable, making it a liability.

Question 12

Is ‘Transportation Equipment’ an asset, liability, income, or expense?

Answer 12

Asset

Question 13

Is ‘Accrued State Income Tax’ an asset, liability, income, or expense?

Answer 13

Liability

Question 14

Is a ‘Prepaid Expense’ an asset, liability, income, or expense?

Answer 14

Asset

Question 15

Is ‘Accounting and Legal’ an asset, liability, income, or expense?

Answer 15

Expense

Question 16

Are ‘Gross Wages’ an asset, liability, income, or expense?

Answer 16

Expense

Question 17

Are ‘Utilities’ an asset, liability, income, or expense?

Answer 17

Expense

Question 18

Are ‘Commissions Received’ an asset, liability, income, or expense?

Answer 18

Income

Question 19

Is ‘Accumulated Depreciation’ an asset, liability, income, or expense?

Answer 19

Accumulated Depreciation is classified as a Contra-Asset (a type of Asset).

In accounting, accumulated depreciation represents the total amount of depreciation expense that has been recorded against a fixed asset over time. It reduces the value of the related asset on the balance sheet. While it’s technically a “contra-asset” account (which decreases the asset’s book value), it is still shown in the asset section of the balance sheet, just as a negative balance.