Intuit Bookkeeping Exam Questions With
Complete Solutions.
1. What is the Purpose of a balance sheet: To determine the financial health of an organization at
a point in time.
2. Financial elements on the income statement:: Expenses, Revenue
3. Financial elements on the balance sheet:: Assets, Capital, and Liabilities
4. Accounts that increase with debit: Cash, equipment, assets, expenses, and dividends
5. Accounts that increase with credit: Contra-Asset : Accumulated Depreciation, Account
Payable, common stock, equity, revenue and liability
6. Lou has a landscaping company. He received a $10,000 payment for a land-
scaping 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
7. Definition of a debit in double-entry accounting: An increase in assets/expenses
and a decrease in liabilities/owner's equity and revenue.
8. General Ledger: The debits and credits posted to the company's line of credit during the last 6 months
9. Transaction Journal: The debits and credits recorded for a rental equipment expense
,10. income statement (profit and loss statement): Report of all revenue and
expenses for the month
11. Is the ending balance for the inventory on Balance Sheet?: Yes, Ending
balance for the inventory
12. 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.
13. 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.
14. Reliability Assumption: Makes mandatory for companies to record only accounting transactions
that can be verified through invoices, billing statements and bank statements.
15. 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.
16. 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.
17. Going Concern Assumption: Refers to a business that is now stable enough to operate and
meet its obligations for the foreseeable future.
,18. Monetary Unit Assumption: Refers to one monetary unit being used throughout all of the
accounting activities.
19. 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.
20. 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.
21. 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.
22. Which of the following accounts is not considered a long term asset?:
Inventory
23. 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.
24. Normal (natural) Debit balance account types: Asset and Expense
25. Normal (natural) Credit balance account types: Liabilities, Equity, and Revenue
Complete Solutions.
1. What is the Purpose of a balance sheet: To determine the financial health of an organization at
a point in time.
2. Financial elements on the income statement:: Expenses, Revenue
3. Financial elements on the balance sheet:: Assets, Capital, and Liabilities
4. Accounts that increase with debit: Cash, equipment, assets, expenses, and dividends
5. Accounts that increase with credit: Contra-Asset : Accumulated Depreciation, Account
Payable, common stock, equity, revenue and liability
6. Lou has a landscaping company. He received a $10,000 payment for a land-
scaping 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
7. Definition of a debit in double-entry accounting: An increase in assets/expenses
and a decrease in liabilities/owner's equity and revenue.
8. General Ledger: The debits and credits posted to the company's line of credit during the last 6 months
9. Transaction Journal: The debits and credits recorded for a rental equipment expense
,10. income statement (profit and loss statement): Report of all revenue and
expenses for the month
11. Is the ending balance for the inventory on Balance Sheet?: Yes, Ending
balance for the inventory
12. 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.
13. 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.
14. Reliability Assumption: Makes mandatory for companies to record only accounting transactions
that can be verified through invoices, billing statements and bank statements.
15. 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.
16. 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.
17. Going Concern Assumption: Refers to a business that is now stable enough to operate and
meet its obligations for the foreseeable future.
,18. Monetary Unit Assumption: Refers to one monetary unit being used throughout all of the
accounting activities.
19. 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.
20. 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.
21. 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.
22. Which of the following accounts is not considered a long term asset?:
Inventory
23. 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.
24. Normal (natural) Debit balance account types: Asset and Expense
25. Normal (natural) Credit balance account types: Liabilities, Equity, and Revenue
