Intuit Academy Bookkeeping Professional
Certificate: Bookkeeping Basics Exam Questions
and Correct Answers
1: What is the fundamental accounting equation?
A. Assets = Liabilities + Owner's Equity
B. Assets + Liabilities = Owner's Equity
C. Assets = Liabilities – Owner's Equity
D. Liabilities = Assets + Owner's Equity
CORRECT ANSWER: A. Assets = Liabilities + Owner's Equity
Rationale: The accounting equation (Assets = Liabilities + Owner's Equity) is the foundation of double-entry
bookkeeping. It must always remain in balance, reflecting that all assets are financed by either creditors
(liabilities) or owners (equity).
2: In double-entry bookkeeping, every transaction affects:
A. Only one account
B. At least two accounts
C. Only revenue and expense accounts
D. Only balance sheet accounts
CORRECT ANSWER: B. At least two accounts
Rationale: Double-entry bookkeeping requires that every transaction be recorded in at least two accounts with
equal debits and credits, ensuring the accounting equation remains balanced.
3: Which of the following is a normal debit balance account?
A. Accounts Payable
B. Common Stock
C. Office Supplies
D. Service Revenue
CORRECT ANSWER: C. Office Supplies
Rationale: Asset accounts (like Office Supplies) normally have debit balances. Liabilities (Accounts Payable),
equity (Common Stock), and revenue (Service Revenue) normally have credit balances.
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,4: When a business receives cash from a customer for services performed, which accounts are affected?
A. Debit Cash, Credit Accounts Receivable
B. Debit Cash, Credit Service Revenue
C. Debit Service Revenue, Credit Cash
D. Debit Accounts Receivable, Credit Cash
CORRECT ANSWER: B. Debit Cash, Credit Service Revenue
Rationale: Receiving cash for services increases assets (Cash, debit) and increases revenue (Service Revenue,
credit). This reflects earned revenue collected immediately.
5: What is the purpose of a chart of accounts?
A. To list all employees in the company
B. To organize and categorize all accounts used in the accounting system
C. To track inventory quantities only
D. To calculate tax liabilities
CORRECT ANSWER: B. To organize and categorize all accounts used in the accounting system
Rationale: The chart of accounts is a structured listing of all accounts (assets, liabilities, equity, revenue,
expenses) used to record transactions, enabling consistent reporting and financial statement preparation.
6: Which financial statement reports a company's financial position at a specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Owner's Equity
CORRECT ANSWER: C. Balance Sheet
Rationale: The Balance Sheet reports assets, liabilities, and owner's equity at a specific date, showing the
company's financial position. The Income Statement covers a period of time.
7: What does "GAAP" stand for?
A. Generally Accepted Accounting Principles
B. General Accounting and Auditing Procedures
C. Governmental Accounting and Audit Protocol
D. Global Accounting Assessment Program
CORRECT ANSWER: A. Generally Accepted Accounting Principles
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,Rationale: GAAP (Generally Accepted Accounting Principles) is the standard framework of accounting rules,
standards, and procedures used in the United States for financial reporting.
8: When recording a purchase of office equipment on credit, which accounts are debited and credited?
A. Debit Office Equipment, Credit Cash
B. Debit Office Equipment, Credit Accounts Payable
C. Debit Accounts Payable, Credit Office Equipment
D. Debit Cash, Credit Office Equipment
CORRECT ANSWER: B. Debit Office Equipment, Credit Accounts Payable
Rationale: Purchasing equipment on credit increases assets (Office Equipment, debit) and increases liabilities
(Accounts Payable, credit), reflecting the obligation to pay later.
9: Which of the following is a current asset?
A. Building
B. Equipment
C. Accounts Receivable
D. Land
CORRECT ANSWER: C. Accounts Receivable
Rationale: Current assets are expected to be converted to cash or used within one year. Accounts Receivable
represents money owed by customers, typically collected within 30-90 days. Buildings, equipment, and land
are long-term assets.
10: What is the normal balance for a liability account?
A. Debit
B. Credit
C. Either debit or credit
D. Zero
CORRECT ANSWER: B. Credit
Rationale: Liability accounts (e.g., Accounts Payable, Loans Payable) normally have credit balances, reflecting
obligations owed to creditors.
11: Which account type increases with a credit entry?
A. Asset
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, B. Expense
C. Dividend
D. Revenue
CORRECT ANSWER: D. Revenue
Rationale: Revenue accounts increase with credits (and decrease with debits). Assets and expenses increase
with debits; dividends (a contra-equity account) increase with debits.
12: What is the purpose of a trial balance?
A. To prepare tax returns
B. To verify that total debits equal total credits in the ledger
C. To calculate net income
D. To reconcile bank statements
CORRECT ANSWER: B. To verify that total debits equal total credits in the ledger
Rationale: A trial balance lists all ledger account balances to verify that total debits equal total credits, helping
detect recording errors before financial statements are prepared.
13: Which financial statement shows revenues and expenses over a period of time?
A. Balance Sheet
B. Income Statement
C. Statement of Cash Flows
D. Statement of Retained Earnings
CORRECT ANSWER: B. Income Statement
Rationale: The Income Statement (Profit & Loss) reports revenues, expenses, and net income/loss for a specific
period (e.g., month, quarter, year).
14: When an owner invests cash into the business, which accounts are affected?
A. Debit Cash, Credit Revenue
B. Debit Cash, Credit Owner's Capital
C. Debit Owner's Capital, Credit Cash
D. Debit Revenue, Credit Cash
CORRECT ANSWER: B. Debit Cash, Credit Owner's Capital
Rationale: Owner investments increase assets (Cash, debit) and increase equity (Owner's Capital, credit),
reflecting the owner's claim on business assets.
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Certificate: Bookkeeping Basics Exam Questions
and Correct Answers
1: What is the fundamental accounting equation?
A. Assets = Liabilities + Owner's Equity
B. Assets + Liabilities = Owner's Equity
C. Assets = Liabilities – Owner's Equity
D. Liabilities = Assets + Owner's Equity
CORRECT ANSWER: A. Assets = Liabilities + Owner's Equity
Rationale: The accounting equation (Assets = Liabilities + Owner's Equity) is the foundation of double-entry
bookkeeping. It must always remain in balance, reflecting that all assets are financed by either creditors
(liabilities) or owners (equity).
2: In double-entry bookkeeping, every transaction affects:
A. Only one account
B. At least two accounts
C. Only revenue and expense accounts
D. Only balance sheet accounts
CORRECT ANSWER: B. At least two accounts
Rationale: Double-entry bookkeeping requires that every transaction be recorded in at least two accounts with
equal debits and credits, ensuring the accounting equation remains balanced.
3: Which of the following is a normal debit balance account?
A. Accounts Payable
B. Common Stock
C. Office Supplies
D. Service Revenue
CORRECT ANSWER: C. Office Supplies
Rationale: Asset accounts (like Office Supplies) normally have debit balances. Liabilities (Accounts Payable),
equity (Common Stock), and revenue (Service Revenue) normally have credit balances.
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,4: When a business receives cash from a customer for services performed, which accounts are affected?
A. Debit Cash, Credit Accounts Receivable
B. Debit Cash, Credit Service Revenue
C. Debit Service Revenue, Credit Cash
D. Debit Accounts Receivable, Credit Cash
CORRECT ANSWER: B. Debit Cash, Credit Service Revenue
Rationale: Receiving cash for services increases assets (Cash, debit) and increases revenue (Service Revenue,
credit). This reflects earned revenue collected immediately.
5: What is the purpose of a chart of accounts?
A. To list all employees in the company
B. To organize and categorize all accounts used in the accounting system
C. To track inventory quantities only
D. To calculate tax liabilities
CORRECT ANSWER: B. To organize and categorize all accounts used in the accounting system
Rationale: The chart of accounts is a structured listing of all accounts (assets, liabilities, equity, revenue,
expenses) used to record transactions, enabling consistent reporting and financial statement preparation.
6: Which financial statement reports a company's financial position at a specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Owner's Equity
CORRECT ANSWER: C. Balance Sheet
Rationale: The Balance Sheet reports assets, liabilities, and owner's equity at a specific date, showing the
company's financial position. The Income Statement covers a period of time.
7: What does "GAAP" stand for?
A. Generally Accepted Accounting Principles
B. General Accounting and Auditing Procedures
C. Governmental Accounting and Audit Protocol
D. Global Accounting Assessment Program
CORRECT ANSWER: A. Generally Accepted Accounting Principles
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,Rationale: GAAP (Generally Accepted Accounting Principles) is the standard framework of accounting rules,
standards, and procedures used in the United States for financial reporting.
8: When recording a purchase of office equipment on credit, which accounts are debited and credited?
A. Debit Office Equipment, Credit Cash
B. Debit Office Equipment, Credit Accounts Payable
C. Debit Accounts Payable, Credit Office Equipment
D. Debit Cash, Credit Office Equipment
CORRECT ANSWER: B. Debit Office Equipment, Credit Accounts Payable
Rationale: Purchasing equipment on credit increases assets (Office Equipment, debit) and increases liabilities
(Accounts Payable, credit), reflecting the obligation to pay later.
9: Which of the following is a current asset?
A. Building
B. Equipment
C. Accounts Receivable
D. Land
CORRECT ANSWER: C. Accounts Receivable
Rationale: Current assets are expected to be converted to cash or used within one year. Accounts Receivable
represents money owed by customers, typically collected within 30-90 days. Buildings, equipment, and land
are long-term assets.
10: What is the normal balance for a liability account?
A. Debit
B. Credit
C. Either debit or credit
D. Zero
CORRECT ANSWER: B. Credit
Rationale: Liability accounts (e.g., Accounts Payable, Loans Payable) normally have credit balances, reflecting
obligations owed to creditors.
11: Which account type increases with a credit entry?
A. Asset
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, B. Expense
C. Dividend
D. Revenue
CORRECT ANSWER: D. Revenue
Rationale: Revenue accounts increase with credits (and decrease with debits). Assets and expenses increase
with debits; dividends (a contra-equity account) increase with debits.
12: What is the purpose of a trial balance?
A. To prepare tax returns
B. To verify that total debits equal total credits in the ledger
C. To calculate net income
D. To reconcile bank statements
CORRECT ANSWER: B. To verify that total debits equal total credits in the ledger
Rationale: A trial balance lists all ledger account balances to verify that total debits equal total credits, helping
detect recording errors before financial statements are prepared.
13: Which financial statement shows revenues and expenses over a period of time?
A. Balance Sheet
B. Income Statement
C. Statement of Cash Flows
D. Statement of Retained Earnings
CORRECT ANSWER: B. Income Statement
Rationale: The Income Statement (Profit & Loss) reports revenues, expenses, and net income/loss for a specific
period (e.g., month, quarter, year).
14: When an owner invests cash into the business, which accounts are affected?
A. Debit Cash, Credit Revenue
B. Debit Cash, Credit Owner's Capital
C. Debit Owner's Capital, Credit Cash
D. Debit Revenue, Credit Cash
CORRECT ANSWER: B. Debit Cash, Credit Owner's Capital
Rationale: Owner investments increase assets (Cash, debit) and increase equity (Owner's Capital, credit),
reflecting the owner's claim on business assets.
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