Intuit Bookkeeping Exam Questions and Correct Answers
1. What is the Purpose of a balance sheet ANSWER To determine the financial health of an
organization at a point in time.
2. Financial elements on the income statement ANSWER ANSWER Expenses,
Revenue
3. Financial elements on the balance sheet ANSWER ANSWER Assets, Capital, and
Liabilities
4. Accounts that increase with debit ANSWER Cash, equipment, assets, expenses, and dividend
5. Accounts that increase with credit ANSWER Contra-Asset ANSWER 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? ANSWER Debit $10,000 to Cash; Credit $10,000 to Service Revenue - Landscaping
7. Definition of a debit in double-entry accounting ANSWER An increase in
assets/expenses and a decrease in liabilities/owner's equity and revenue.
8. General Ledger ANSWER The debits and credits posted to the company's line of credit during the last 6
months
9. Transaction Journal ANSWER The debits and credits recorded for a rental equipment expense
10. income statement (profit and loss statement) ANSWER Report of all revenue and
expenses for the month
11. Is the ending balance for the inventory on Balance Sheet? ANSWER Yes, Ending
balance for the inventory
12. Reasons for making adjusting journal entries (Choose 3) ANSWER a. To record
expiration of prepaid insurance. b. To record depreciation. c. To recognize unpaid salaries for the current
period.
13. Economic Entity Assumption ANSWER 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 ANSWER Makes mandatory for companies to record only accounting
transactions that can be verified through invoices, billing statements and bank statements.
15. Full Disclosure Principle ANSWER 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 ANSWER 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.
, Intuit Bookkeeping Exam Questions and Correct Answers
17. Going Concern Assumption ANSWER Refers to a business that is now stable enough to operate
and meet its obligations for the foreseeable future.
18. Monetary Unit Assumption ANSWER Refers to one monetary unit being used throughout all of the
accounting activities.
, Intuit Bookkeeping Exam Questions and Correct Answers
19. Consistency Principle ANSWER 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 ANSWER Refers to an accounting standard that can be ignored if the impact has
such a small ettect 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? ANSWER Expenses are increased by $1,200.
22. Which of the following accounts is not considered a long term asset?
ANSWER Inventory
23. Difference between current assets and long-term assets ANSWER 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 ANSWER Asset and Expense
25. Normal (natural) Credit balance account types ANSWER Liabilities, Equity, and
Revenue
26. What is the Maximum amount of time that a business owner should wait to
correct inventory errors? ANSWER Annually
27. A business owner of a specialty foods store does a full review of the inventory
on hand and discovers items that have perished. What is the accounting journal
entry that should be made to adjust the books? ANSWER Credit to the Inventory Asset
Account and a Debit to the Obsolete Inventory Expense.
28. It is the end of the month, and you are reviewing your company's Trial
Balance Report. As part of your review, you notice that Depreciation Expense
has a credit balance. Is this noteworthy? ANSWER Depreciation Expense does not normally
have a credit balance, so additional review is needed.
29. You are recording the month-end depreciation expense entry for a factory
building. For each account, Accumulated Depreciation, Depreciation Expense,
Building, and Cash, select whether you should Debit the account, Credit the
account, or make No Change to the account. ANSWER Credit - Accumulated
Depreciation, Debit - Depreciation Expense
No Change - Building and Cash
1. What is the Purpose of a balance sheet ANSWER To determine the financial health of an
organization at a point in time.
2. Financial elements on the income statement ANSWER ANSWER Expenses,
Revenue
3. Financial elements on the balance sheet ANSWER ANSWER Assets, Capital, and
Liabilities
4. Accounts that increase with debit ANSWER Cash, equipment, assets, expenses, and dividend
5. Accounts that increase with credit ANSWER Contra-Asset ANSWER 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? ANSWER Debit $10,000 to Cash; Credit $10,000 to Service Revenue - Landscaping
7. Definition of a debit in double-entry accounting ANSWER An increase in
assets/expenses and a decrease in liabilities/owner's equity and revenue.
8. General Ledger ANSWER The debits and credits posted to the company's line of credit during the last 6
months
9. Transaction Journal ANSWER The debits and credits recorded for a rental equipment expense
10. income statement (profit and loss statement) ANSWER Report of all revenue and
expenses for the month
11. Is the ending balance for the inventory on Balance Sheet? ANSWER Yes, Ending
balance for the inventory
12. Reasons for making adjusting journal entries (Choose 3) ANSWER a. To record
expiration of prepaid insurance. b. To record depreciation. c. To recognize unpaid salaries for the current
period.
13. Economic Entity Assumption ANSWER 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 ANSWER Makes mandatory for companies to record only accounting
transactions that can be verified through invoices, billing statements and bank statements.
15. Full Disclosure Principle ANSWER 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 ANSWER 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.
, Intuit Bookkeeping Exam Questions and Correct Answers
17. Going Concern Assumption ANSWER Refers to a business that is now stable enough to operate
and meet its obligations for the foreseeable future.
18. Monetary Unit Assumption ANSWER Refers to one monetary unit being used throughout all of the
accounting activities.
, Intuit Bookkeeping Exam Questions and Correct Answers
19. Consistency Principle ANSWER 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 ANSWER Refers to an accounting standard that can be ignored if the impact has
such a small ettect 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? ANSWER Expenses are increased by $1,200.
22. Which of the following accounts is not considered a long term asset?
ANSWER Inventory
23. Difference between current assets and long-term assets ANSWER 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 ANSWER Asset and Expense
25. Normal (natural) Credit balance account types ANSWER Liabilities, Equity, and
Revenue
26. What is the Maximum amount of time that a business owner should wait to
correct inventory errors? ANSWER Annually
27. A business owner of a specialty foods store does a full review of the inventory
on hand and discovers items that have perished. What is the accounting journal
entry that should be made to adjust the books? ANSWER Credit to the Inventory Asset
Account and a Debit to the Obsolete Inventory Expense.
28. It is the end of the month, and you are reviewing your company's Trial
Balance Report. As part of your review, you notice that Depreciation Expense
has a credit balance. Is this noteworthy? ANSWER Depreciation Expense does not normally
have a credit balance, so additional review is needed.
29. You are recording the month-end depreciation expense entry for a factory
building. For each account, Accumulated Depreciation, Depreciation Expense,
Building, and Cash, select whether you should Debit the account, Credit the
account, or make No Change to the account. ANSWER Credit - Accumulated
Depreciation, Debit - Depreciation Expense
No Change - Building and Cash
