ALBERTA BOOKKEEPING
CERTIFICATION EXAM
QUESTIONS AND CORRECT
ANSWER(VERIFIED ANSWERS)
PLUS RATIONALE 2026
Q&A|INSTANT DOWNLOAD PDF
Examples of Liabilities - <<<<CORRECT ANSWERS>>>Accounts Payable
Notes Payable
Accrued Expenses
Long-term Debt
Equity - <<<<CORRECT ANSWERS>>>Owner's stake in the business (net worth)
Right side
Debit to decrease
Credit to increase
Examples of Equity - <<<<CORRECT ANSWERS>>>Common stock
Preferred stock
Retained earnings
Shareholder's equity
Dividends
Accounting Equation - <<<<CORRECT ANSWERS>>>Assets = Liabilities + Equity
Formula for Interest - <<<<CORRECT ANSWERS>>>= Principal x Interest Rate x Time
Liquidity - <<<<CORRECT ANSWERS>>>It indicates a business's capacity to pay
down its short-term liabilities
Ratio greater than 1 signifies a healthy financial position
Current Ratio (Liquidity) - <<<<CORRECT ANSWERS>>>= Current Assets / Current
Liabilities
Cash Ratio (Liquidity) - <<<<CORRECT ANSWERS>>>= Liquid Assets / Current
Liabilities
Efficiency - <<<<CORRECT ANSWERS>>>How effectively a business is doing
something over a given period of time
, Ratio greater than 1 signifies a healthy financial position
AP Turnover Ratio (Efficiency) - <<<<CORRECT ANSWERS>>>= Net Credit Purchase
/ Average AP
AR Turnover Ratio (Efficiency) - <<<<CORRECT ANSWERS>>>= Net Credit Sales /
Average AR
period? Solvency - <<<<CORRECT ANSWERS>>>This measures a business's ability
to pay a long-term debt
An equity ratio below 1.0 will be seen as relatively safe
Debt to Equity Ratio (Solvency) - <<<<CORRECT ANSWERS>>>= Total Liabilities
(debt) / Total Equity
Debt to Asset Ratio (Solvency) - <<<<CORRECT ANSWERS>>>= Total Liabilities /
Total Assets
Dollar Amount Analysis - <<<<CORRECT ANSWERS>>>Involves comparing actual
dollar values of statement items over time
Percentage Analysis - <<<<CORRECT ANSWERS>>>Calculates the percentage
change between two periods, helping you understand the growth or decline rate
Percent of Change - <<<<CORRECT ANSWERS>>>= Value Recent Period - Value
Older Period / Value of Older Year x 100
Gross Profit Margin - <<<<CORRECT ANSWERS>>>= Sales Revenue - COGS / Sales
Revenue
COGS = Beginning Inventory + Purchases - Closing Inventory
Operating Profit Margin - <<<<CORRECT ANSWERS>>>= Operating Earnings (before
taxes) / Sales Revenue
Net Profit MArgin - <<<<CORRECT ANSWERS>>>= Net Profit / Sales Revenue
Cash Flow Coverage Ratio - <<<<CORRECT ANSWERS>>>Shows the amount of cash
available to pay interest on a business debt
= Cash Flow from Operations / Total Debt
Current Liability Coverage Ratio - <<<<CORRECT ANSWERS>>>Looks at the ability of
a business to pay its current obligations
= Net Cash from Operations / Average Current Liabilities
Cash Flow Margin Ratio - <<<<CORRECT ANSWERS>>>Indicates how well the
business converts sales to cash
CERTIFICATION EXAM
QUESTIONS AND CORRECT
ANSWER(VERIFIED ANSWERS)
PLUS RATIONALE 2026
Q&A|INSTANT DOWNLOAD PDF
Examples of Liabilities - <<<<CORRECT ANSWERS>>>Accounts Payable
Notes Payable
Accrued Expenses
Long-term Debt
Equity - <<<<CORRECT ANSWERS>>>Owner's stake in the business (net worth)
Right side
Debit to decrease
Credit to increase
Examples of Equity - <<<<CORRECT ANSWERS>>>Common stock
Preferred stock
Retained earnings
Shareholder's equity
Dividends
Accounting Equation - <<<<CORRECT ANSWERS>>>Assets = Liabilities + Equity
Formula for Interest - <<<<CORRECT ANSWERS>>>= Principal x Interest Rate x Time
Liquidity - <<<<CORRECT ANSWERS>>>It indicates a business's capacity to pay
down its short-term liabilities
Ratio greater than 1 signifies a healthy financial position
Current Ratio (Liquidity) - <<<<CORRECT ANSWERS>>>= Current Assets / Current
Liabilities
Cash Ratio (Liquidity) - <<<<CORRECT ANSWERS>>>= Liquid Assets / Current
Liabilities
Efficiency - <<<<CORRECT ANSWERS>>>How effectively a business is doing
something over a given period of time
, Ratio greater than 1 signifies a healthy financial position
AP Turnover Ratio (Efficiency) - <<<<CORRECT ANSWERS>>>= Net Credit Purchase
/ Average AP
AR Turnover Ratio (Efficiency) - <<<<CORRECT ANSWERS>>>= Net Credit Sales /
Average AR
period? Solvency - <<<<CORRECT ANSWERS>>>This measures a business's ability
to pay a long-term debt
An equity ratio below 1.0 will be seen as relatively safe
Debt to Equity Ratio (Solvency) - <<<<CORRECT ANSWERS>>>= Total Liabilities
(debt) / Total Equity
Debt to Asset Ratio (Solvency) - <<<<CORRECT ANSWERS>>>= Total Liabilities /
Total Assets
Dollar Amount Analysis - <<<<CORRECT ANSWERS>>>Involves comparing actual
dollar values of statement items over time
Percentage Analysis - <<<<CORRECT ANSWERS>>>Calculates the percentage
change between two periods, helping you understand the growth or decline rate
Percent of Change - <<<<CORRECT ANSWERS>>>= Value Recent Period - Value
Older Period / Value of Older Year x 100
Gross Profit Margin - <<<<CORRECT ANSWERS>>>= Sales Revenue - COGS / Sales
Revenue
COGS = Beginning Inventory + Purchases - Closing Inventory
Operating Profit Margin - <<<<CORRECT ANSWERS>>>= Operating Earnings (before
taxes) / Sales Revenue
Net Profit MArgin - <<<<CORRECT ANSWERS>>>= Net Profit / Sales Revenue
Cash Flow Coverage Ratio - <<<<CORRECT ANSWERS>>>Shows the amount of cash
available to pay interest on a business debt
= Cash Flow from Operations / Total Debt
Current Liability Coverage Ratio - <<<<CORRECT ANSWERS>>>Looks at the ability of
a business to pay its current obligations
= Net Cash from Operations / Average Current Liabilities
Cash Flow Margin Ratio - <<<<CORRECT ANSWERS>>>Indicates how well the
business converts sales to cash
