Intuit Bookkeeping Exam with correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers
What is the Purpose of a balance sheet ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
To determine the financial health of an organization at a point in
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
time.
||\\||\\
Financial elements on the income statement: ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Expenses, Revenue ||\\||\\
Financial elements on the balance sheet: ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Assets, Capital, and Liabilities ||\\||\\ ||\\||\\ ||\\||\\
Accounts that increase with debit ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Cash, equipment, assets, expenses, and dividends ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Accounts that increase with credit ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Contra-Asset : Accumulated Depreciation, Account Payable, ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
common stock, equity, revenue and liability ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Lou has a landscaping company. He received a $10,000 payment
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
for a landscaping job that he completed for the Rose family.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
How would you record this transaction?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
,Debit $10,000 to Cash; Credit $10,000 to Service Revenue -
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Landscaping
3 multiple choice options
||\\||\\ ||\\||\\ ||\\||\\
Definition of a debit in double-entry accounting ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
An increase in assets/expenses and a decrease in
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
liabilities/owner's equity and revenue. ||\\||\\ ||\\||\\ ||\\||\\
General Ledger ||\\||\\
The debits and credits posted to the company's line of credit
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
during the last 6 months ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Transaction Journal ||\\||\\
The debits and credits recorded for a rental equipment expense
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
income statement (profit and loss statement) ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Report of all revenue and expenses for the month ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Is the ending balance for the inventory on Balance Sheet?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Yes, Ending balance for the inventory
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Reasons for making adjusting journal entries (Choose 3) ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
a. To record expiration of prepaid insurance. b. To record
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
depreciation. c. To recognize unpaid salaries for the current ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
period.
Economic Entity Assumption ||\\||\\ ||\\||\\
,The business is a separate entity, so the activities of a business
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
must be kept separate from any other financial activities of its
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
business owners. ||\\||\\
Reliability Assumption ||\\||\\
Makes mandatory for companies to record only accounting ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
transactions that can be verified through invoices, billing ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
statements and bank statements. ||\\||\\ ||\\||\\ ||\\||\\
Full Disclosure Principle
||\\||\\ ||\\||\\
All information that is relative to the business and is important
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
to a lender or investor has to be provided in financial
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
statements or in the notes of the statements. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Conservatism Assumption ||\\||\\
When bookkeepers are uncertain and need to determine how
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
to report an item, this guides them to choose the option that
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
shows less income or asset benefit. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Going Concern Assumption ||\\||\\ ||\\||\\
Refers to a business that is now stable enough to operate and
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
meet its obligations for the foreseeable future.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Monetary Unit Assumption ||\\||\\ ||\\||\\
Refers to one monetary unit being used throughout all of the
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
accounting activities. ||\\||\\
Consistency Principle ||\\||\\
, Refers to when a business adopts a specific accounting method ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
that it will enter all similar items in the exact same way in the
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
future.
Materiality Principle ||\\||\\
Refers to an accounting standard that can be ignored if the ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
impact has such a small effect on the financial statements that it ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
would not be misleading.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
On February 28, ABC Company received an invoice for $1,200
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
for running social media ads in February. The invoice will be paid
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
in March. Assuming ABC Company uses the accrual method of
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
accounting, which is correct for February? ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Expenses are increased by $1,200. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Which of the following accounts is not considered a long term ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
asset?
Inventory
Difference between current assets and long-term assets ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Current assets are expected to be converted to cash within one ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
year, while Long-term assets are expected to extend beyond a
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
year from the reporting date. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Normal (natural) Debit balance account types ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Asset and Expense ||\\||\\ ||\\||\\
Normal (natural) Credit balance account types ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers
What is the Purpose of a balance sheet ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
To determine the financial health of an organization at a point in
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
time.
||\\||\\
Financial elements on the income statement: ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Expenses, Revenue ||\\||\\
Financial elements on the balance sheet: ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Assets, Capital, and Liabilities ||\\||\\ ||\\||\\ ||\\||\\
Accounts that increase with debit ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Cash, equipment, assets, expenses, and dividends ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Accounts that increase with credit ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Contra-Asset : Accumulated Depreciation, Account Payable, ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
common stock, equity, revenue and liability ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Lou has a landscaping company. He received a $10,000 payment
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
for a landscaping job that he completed for the Rose family.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
How would you record this transaction?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
,Debit $10,000 to Cash; Credit $10,000 to Service Revenue -
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Landscaping
3 multiple choice options
||\\||\\ ||\\||\\ ||\\||\\
Definition of a debit in double-entry accounting ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
An increase in assets/expenses and a decrease in
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
liabilities/owner's equity and revenue. ||\\||\\ ||\\||\\ ||\\||\\
General Ledger ||\\||\\
The debits and credits posted to the company's line of credit
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
during the last 6 months ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Transaction Journal ||\\||\\
The debits and credits recorded for a rental equipment expense
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
income statement (profit and loss statement) ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Report of all revenue and expenses for the month ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Is the ending balance for the inventory on Balance Sheet?
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Yes, Ending balance for the inventory
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Reasons for making adjusting journal entries (Choose 3) ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
a. To record expiration of prepaid insurance. b. To record
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
depreciation. c. To recognize unpaid salaries for the current ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
period.
Economic Entity Assumption ||\\||\\ ||\\||\\
,The business is a separate entity, so the activities of a business
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
must be kept separate from any other financial activities of its
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
business owners. ||\\||\\
Reliability Assumption ||\\||\\
Makes mandatory for companies to record only accounting ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
transactions that can be verified through invoices, billing ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
statements and bank statements. ||\\||\\ ||\\||\\ ||\\||\\
Full Disclosure Principle
||\\||\\ ||\\||\\
All information that is relative to the business and is important
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
to a lender or investor has to be provided in financial
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
statements or in the notes of the statements. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Conservatism Assumption ||\\||\\
When bookkeepers are uncertain and need to determine how
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
to report an item, this guides them to choose the option that
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
shows less income or asset benefit. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Going Concern Assumption ||\\||\\ ||\\||\\
Refers to a business that is now stable enough to operate and
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
meet its obligations for the foreseeable future.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Monetary Unit Assumption ||\\||\\ ||\\||\\
Refers to one monetary unit being used throughout all of the
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
accounting activities. ||\\||\\
Consistency Principle ||\\||\\
, Refers to when a business adopts a specific accounting method ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
that it will enter all similar items in the exact same way in the
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
future.
Materiality Principle ||\\||\\
Refers to an accounting standard that can be ignored if the ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
impact has such a small effect on the financial statements that it ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
would not be misleading.
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
On February 28, ABC Company received an invoice for $1,200
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
for running social media ads in February. The invoice will be paid
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
in March. Assuming ABC Company uses the accrual method of
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
accounting, which is correct for February? ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Expenses are increased by $1,200. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Which of the following accounts is not considered a long term ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
asset?
Inventory
Difference between current assets and long-term assets ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Current assets are expected to be converted to cash within one ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
year, while Long-term assets are expected to extend beyond a
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
year from the reporting date. ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Normal (natural) Debit balance account types ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Asset and Expense ||\\||\\ ||\\||\\
Normal (natural) Credit balance account types ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
