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