Bookkeeping & Quickbooks Exam

What is the accounting equation?

• Assets = Liabilities + Equity
• Assets = Liabilities - Equity
• Assets + Liabilities = Equity
• Assets - Liabilities = Equity

What is a journal entry?

• A record of a transaction in the accounting system
• A record of a payment made to a customer
• A record of a purchase made from a supplier
• A record of an asset that has been sold

What is a ledger?

• A book containing all the accounts used by a company
• False
• True

What is the difference between a debit and a credit?

• Debits increase assets and expenses, Credits increase liabilities and revenues
• Debits increase liabilities and expenses, Credits increase assets and revenues
• Debits increase assets and revenues, Credits increase liabilities and expenses
• Debits increase liabilities and revenues, Credits increase assets and expenses

What is the purpose of a trial balance?

• To ensure that debits equal credits in the general ledger
• To ensure that assets equal liabilities plus equity in the balance sheet
• To ensure that revenues equal expenses in the income statement
• To ensure that cash inflows equal cash outflows in the statement of cash flows

What is a chart of accounts?

• A list of all the accounts used by a company
• A list of all the transactions made by a company
• A list of all the customers and suppliers of a company
• A list of all the employees of a company

What is a balance sheet?

• A financial statement that shows a company's assets, liabilities, and equity at a specific point in time
• A financial statement that shows a company's revenues and expenses over a period of time
• A financial statement that shows a company's cash inflows and outflows over a period of time
• A financial statement that shows a company's retained earnings over a period of time

What is the difference between cash basis and accrual basis accounting?

• Accrual basis recognizes revenue when earned and expenses when incurred, Cash basis recognizes revenue when received and expenses when paid
• Accrual basis recognizes revenue when paid and expenses when incurred, Cash basis recognizes revenue when earned and expenses when paid
• Accrual basis recognizes revenue when earned and expenses when paid, Cash basis recognizes revenue when earned and expenses when incurred
• Accrual basis recognizes revenue when paid and expenses when paid, Cash basis recognizes revenue when earned and expenses when incurred

What is a cash account?

• An account that tracks a company's cash transactions
• False
• True

What is a credit memo?

• A document that reduces the amount owed by a customer
• A document that increases the amount owed by a customer
• A document that reduces the amount owed to a supplier
• A document that increases the amount owed to a supplier