California Certified Bookkeeper Exam
Practice Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. Which financial statement reports assets, liabilities, and equity at a
point in time?
Balance Sheet
The balance sheet presents the company’s financial position—assets,
liabilities, and equity—at a specific date.
2. Recording depreciation expense decreases the book value of
equipment and decreases:
Retained earnings
Depreciation expense reduces net income, which lowers retained
earnings in equity.
3. Under the cash basis of accounting, revenues are recorded when:
Cash is received
Cash‐basis recognizes revenue only when cash arrives, unlike accrual
when revenue is earned.
4. A debit to Accounts Receivable and a credit to Sales records:
A credit sale
, Debiting AR increases customer receivables; crediting Sales
recognizes revenue earned on account.
5. Which internal control separates duties of cash handling from
recording transactions?
Segregation of duties
Separating cash handling, recording, and reconciling reduces fraud
risk and error.
6. The allowance for doubtful accounts has a credit balance. A bad‐debt
write‐off will:
Decrease both Accounts Receivable and Allowance
Writing off removes a specific receivable and reduces the allowance
reserve accordingly.
7. How is accumulated depreciation classified on the balance sheet?
Contra‐asset
Accumulated depreciation offsets the gross asset value under the
asset section.
8. A bank reconciliation adjustment: book shows $300 deposit, bank
hasn’t yet. On reconciliation, you:
Add $300 to bank balance
Outstanding deposit increases bank’s ending balance to match
company’s book balance.
9. When closing temporary accounts, you debit Income Summary and
credit:
Revenues
To close revenue accounts into Income Summary, revenues are
credited out (zeroed) via a debit to Income Summary.
10. A company's fiscal year ends June 30. Supplies counted at
year-end show $1,200 unused; ledger shows $2,000. Adjustment:
, debit Supplies Expense $800, credit Supplies $800. What’s expense?
$800
Expense equals difference: $2,000 beginning balance minus $1,200
ending = $800 used.
11. For straight‐line depreciation, salvage value is:
Subtracted from cost before dividing by useful life
Depreciable base = cost less salvage, divided evenly across useful life.
12. The chart of accounts is:
A listing of all ledger account titles and numbers
It standardizes account names and numbering for consistent
recording.
13. Payroll liability for employee’s federal income taxes withheld is
classified as:
Current liability
It's due within the next payroll or reporting period—thus current.
14. Which document authorizes a disbursement of funds for
payment?
Check
A check instructs the bank to pay the payee, so it authorizes
disbursement.
15. A deposit in transit appears on reconciliation as:
Add to bank balance
Deposits in transit are recorded by company but not yet by bank—
add to bank side.
16. To record owner’s draw in a sole proprietorship ledger, you
debit Drawing and credit:
Cash (or Owner’s Equity)
Practice Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. Which financial statement reports assets, liabilities, and equity at a
point in time?
Balance Sheet
The balance sheet presents the company’s financial position—assets,
liabilities, and equity—at a specific date.
2. Recording depreciation expense decreases the book value of
equipment and decreases:
Retained earnings
Depreciation expense reduces net income, which lowers retained
earnings in equity.
3. Under the cash basis of accounting, revenues are recorded when:
Cash is received
Cash‐basis recognizes revenue only when cash arrives, unlike accrual
when revenue is earned.
4. A debit to Accounts Receivable and a credit to Sales records:
A credit sale
, Debiting AR increases customer receivables; crediting Sales
recognizes revenue earned on account.
5. Which internal control separates duties of cash handling from
recording transactions?
Segregation of duties
Separating cash handling, recording, and reconciling reduces fraud
risk and error.
6. The allowance for doubtful accounts has a credit balance. A bad‐debt
write‐off will:
Decrease both Accounts Receivable and Allowance
Writing off removes a specific receivable and reduces the allowance
reserve accordingly.
7. How is accumulated depreciation classified on the balance sheet?
Contra‐asset
Accumulated depreciation offsets the gross asset value under the
asset section.
8. A bank reconciliation adjustment: book shows $300 deposit, bank
hasn’t yet. On reconciliation, you:
Add $300 to bank balance
Outstanding deposit increases bank’s ending balance to match
company’s book balance.
9. When closing temporary accounts, you debit Income Summary and
credit:
Revenues
To close revenue accounts into Income Summary, revenues are
credited out (zeroed) via a debit to Income Summary.
10. A company's fiscal year ends June 30. Supplies counted at
year-end show $1,200 unused; ledger shows $2,000. Adjustment:
, debit Supplies Expense $800, credit Supplies $800. What’s expense?
$800
Expense equals difference: $2,000 beginning balance minus $1,200
ending = $800 used.
11. For straight‐line depreciation, salvage value is:
Subtracted from cost before dividing by useful life
Depreciable base = cost less salvage, divided evenly across useful life.
12. The chart of accounts is:
A listing of all ledger account titles and numbers
It standardizes account names and numbering for consistent
recording.
13. Payroll liability for employee’s federal income taxes withheld is
classified as:
Current liability
It's due within the next payroll or reporting period—thus current.
14. Which document authorizes a disbursement of funds for
payment?
Check
A check instructs the bank to pay the payee, so it authorizes
disbursement.
15. A deposit in transit appears on reconciliation as:
Add to bank balance
Deposits in transit are recorded by company but not yet by bank—
add to bank side.
16. To record owner’s draw in a sole proprietorship ledger, you
debit Drawing and credit:
Cash (or Owner’s Equity)
