AIPB Certification Exam Questions with Correct Verified Answers, Already Passed! (Complete & Accurate)

AIPB Certification Exam Questions with Correct Verified Answers, Already Passed! (Complete & Accurate) 1. Chart of Accounts - ANS Generally, Asset Accounts 100-199; Liability Accounts: 200-299; Owner's Equity Accounts: 300-399; Revenue Accounts: 400-499; Expense Accounts: 500-599 2. Steps to prepare financial statements - ANS 1. Prepare the unadjusted trial balance from the general ledger accounts. 2. Enter the adjustments (these are the adjusting entries learned earlier). 3. Combine the unadjusted trial balance with the adjustments to prepare the adjusted trial balance. 4. Extend the amounts from the adjusted trial balance to the appropriate financial statement columns. 3. Accounting Errors - ANS Incorrect recording and reporting of facts about the business that existed at the time an event or transaction was recorded. 4. Types of accounting errors - ANS 1) Omission (failing to record an event), such as not recording a return of merchandise. 2) Accrual or deferral error, such as accruing or deferring the wrong amount or failing to make the accrual or deferral. 3) Classification error, such as debiting a rent payment to Insurance Expense instead of to Rent Expense. 4) Arithmetic mistake, such as an incorrect total on an inventory tally sheet. 5) Use of an incorrect accounting principle, such as expensing an equipment purchase instead of capitalizing it. 6) Use of an improper estimate, such as using an allowance for doubtful accounts estimate of 2% of sales when it should be 4% of sales. 7) Transposition (reversal of two digits in a number), such as recording $83 as $38. 8) Slide (the decimal point has been put in the wrong place), such as recording $250 as $25 or as $2,500. 9) Posting error, such as crediting Cash for a sale instead of debiting it. 5. Finding Accounting Errors - ANS 1) Monthly bank reconciliation. Most discrepancies between the end-of-month bank balance and Cash account balance are caused by differences in timing. Items recorded in Cash but not on the bank statement include deposits in transit (deposits sent in at the end of the month after the bank has prepared the monthly statement) and checks outstanding (payments made by the company that have not cleared the bank). Items on the bank statement but not recorded in Cash, such as interest earned on the checking account balance, bank fees and NSF (not sufficient funds) checks. 2) Preparation of the trial balance: total ledger account debits equal total ledger account credits. 3) Review of periodic adjustments to the accounts. 4) Routine internal audits. The accounting department makes periodic reviews to assure the reliability of accounting procedures, data and information. 5) Year-end financial audit. This is performed by external auditors (auditors chosen "at arm's length") who examine the data reported on the financial statements and require corrections of any accounting errors to assure that the financial statements are fairly presented. 6. By chance. 6. Preventing Accounting Errors - ANS 1) Double-entry bookkeeping: ensure debits equal credits. 2) Internal controls: assure the reliability of accounting information through procedures such as bank reconciliations and preparation of trial balances. 7. Purposes of Bank Reconciliation - ANS 1. to review information needed to bring company accounting records up to date at the end of the month or other period; 2. to verify that the ledger Cash account balance at the end of the month or other period is accurate and to correct any errors; 3. to verify that the checking account balance at the end of the month or other period is accurate and to alert the bank of any errors. 8. Receipts and disbursements recorded on the company books but not recorded on the most recent bank statement include: - ANS 1) Deposits in transit. These are deposits made by mail or in a night deposit lock box not yet recorded on the bank statement used in the reconciliation. 2) Undeposited cash. Many businesses record receipts