COLORADO ACCOUNTANT EXAM QUESTIONS AND
CORRECT ANSWERS (VERIFIED ANSWERS) Q&A
2026 |INSTANT DOWNLOAD PDF
1. Accounting Principles
Which principle requires expenses to be recorded in the same
period as the revenues they help generate?
A. Cost principle
B. Matching principle
C. Full disclosure principle
D. Monetary unit assumption
Rationale: The matching principle aligns expenses with related
revenues for accurate profit reporting.
Correct Answer: B
2. Financial Statements
Which financial statement shows 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 retained earnings
,Rationale: The balance sheet presents assets, liabilities, and
equity at a snapshot in time.
Correct Answer: C
3. Accounting Equation
What is the correct accounting equation?
A. Assets = Liabilities + Revenue
B. Assets = Liabilities + Equity
C. Assets = Expenses + Equity
D. Liabilities = Assets + Equity
Rationale: The fundamental accounting equation balances what
a company owns and owes.
Correct Answer: B
4. Revenue Recognition
Revenue is generally recognized when:
A. Cash is received
B. Goods are ordered
C. It is earned and realizable
D. Expenses are paid
Rationale: Revenue is recognized when earned, not necessarily
when cash is received.
Correct Answer: C
,5. Depreciation
Which method results in higher expenses in early years of an
asset’s life?
A. Straight-line
B. Units of production
C. Double-declining balance
D. Sum-of-the-years-digits only in last year
Rationale: Accelerated methods like double-declining balance
allocate more expense early.
Correct Answer: C
6. Trial Balance
The primary purpose of a trial balance is to:
A. Determine net income
B. Detect mathematical errors in ledger accounts
C. Prepare financial statements directly
D. Record transactions
Rationale: A trial balance ensures debits equal credits.
Correct Answer: B
7. Assets Classification
Which of the following is a current asset?
A. Land
B. Machinery
, C. Accounts receivable
D. Goodwill
Rationale: Accounts receivable is expected to be collected
within one year.
Correct Answer: C
8. Liabilities
Which is an example of a current liability?
A. Mortgage payable (10 years)
B. Bonds payable
C. Accounts payable
D. Retained earnings
Rationale: Accounts payable is due within one year.
Correct Answer: C
9. Equity
Retained earnings represent:
A. Owner contributions
B. Net income minus dividends
C. Total liabilities
D. Total assets minus liabilities and revenue
Rationale: Retained earnings accumulate profits not distributed
as dividends.
Correct Answer: B
CORRECT ANSWERS (VERIFIED ANSWERS) Q&A
2026 |INSTANT DOWNLOAD PDF
1. Accounting Principles
Which principle requires expenses to be recorded in the same
period as the revenues they help generate?
A. Cost principle
B. Matching principle
C. Full disclosure principle
D. Monetary unit assumption
Rationale: The matching principle aligns expenses with related
revenues for accurate profit reporting.
Correct Answer: B
2. Financial Statements
Which financial statement shows 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 retained earnings
,Rationale: The balance sheet presents assets, liabilities, and
equity at a snapshot in time.
Correct Answer: C
3. Accounting Equation
What is the correct accounting equation?
A. Assets = Liabilities + Revenue
B. Assets = Liabilities + Equity
C. Assets = Expenses + Equity
D. Liabilities = Assets + Equity
Rationale: The fundamental accounting equation balances what
a company owns and owes.
Correct Answer: B
4. Revenue Recognition
Revenue is generally recognized when:
A. Cash is received
B. Goods are ordered
C. It is earned and realizable
D. Expenses are paid
Rationale: Revenue is recognized when earned, not necessarily
when cash is received.
Correct Answer: C
,5. Depreciation
Which method results in higher expenses in early years of an
asset’s life?
A. Straight-line
B. Units of production
C. Double-declining balance
D. Sum-of-the-years-digits only in last year
Rationale: Accelerated methods like double-declining balance
allocate more expense early.
Correct Answer: C
6. Trial Balance
The primary purpose of a trial balance is to:
A. Determine net income
B. Detect mathematical errors in ledger accounts
C. Prepare financial statements directly
D. Record transactions
Rationale: A trial balance ensures debits equal credits.
Correct Answer: B
7. Assets Classification
Which of the following is a current asset?
A. Land
B. Machinery
, C. Accounts receivable
D. Goodwill
Rationale: Accounts receivable is expected to be collected
within one year.
Correct Answer: C
8. Liabilities
Which is an example of a current liability?
A. Mortgage payable (10 years)
B. Bonds payable
C. Accounts payable
D. Retained earnings
Rationale: Accounts payable is due within one year.
Correct Answer: C
9. Equity
Retained earnings represent:
A. Owner contributions
B. Net income minus dividends
C. Total liabilities
D. Total assets minus liabilities and revenue
Rationale: Retained earnings accumulate profits not distributed
as dividends.
Correct Answer: B
