NOCTI Accounting Foundations Practice Test

When labeling accounts, the 200s are used for which type of accounts?

Asset accounts Liability accounts OE accounts Revenue accounts

Correct Answer:

Liability accounts

Explanation:

Numbers used in a chart of accounts are grouped by type, and the 200s are designated for liability accounts. This setup helps you recognize the nature of each account at a glance and keeps posting organized. Liability accounts represent what the company owes to others, such as Accounts Payable, Notes Payable, and Accrued Liabilities. In this system, increases to liability accounts are recorded as credits and decreases as debits, which aligns with their typical behavior in financial records. So, the 200s are used for things the business owes—liabilities.

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