Intuit Bookkeeping Certification Exam Study
Guide Questions with Verified Correct Answers
Distributions Vs. Dividends
-> Distributions = Money paid to owners from S corporations, LLCs, or Partnerships
-> Dividends = Money paid to shareholders from C corporations
What are the steps of the accounting cycle ?
1) Analyze and record transactions.
2) Post transactions to ledger
3) Prepare an unadjusted trial balance
4) Prepare adjusted entries at the end of the period
5) Prepare adjusted trial balance
6) Prepare financial statements
If a customer pays at the time of sale, you record it as a
Sales Receipt
If a customer does NOT PAY at the time of sale, you must enter it as an
Invoice
When a customer pays an invoice, you go to...
"Receive Payment" to record that the payment has been made.
After you record a Sales Receipt or Receive Payment, you follow up by making a...
Bank Deposit.
-> Sales Receipt or Receive Payment shows that you've received money from the customer.
-> Bank Deposit means you're putting that money into your bank account.
,Step 4 of the Accounting Cycle: Preparing Adjusting Entries includes:
1) Deferrals
2) Accruals
3) Missing Transactions
4) Tax Adjustments
Deferral
Delaying the recognition of a transaction to a future period
-> It's waiting to recognize that income or expense until the right time (like when the
insurance coverage starts)
Reliability assumption
Only transactions that can be proven should be recorded in accounting practices.
-> Businesses must be able to prove transactions through such things as receipts, billing
statements, invoices, and bank statements.
Full Disclosure Principle
All info that is relative to the business and is important to a lender or investor has to be
disclosed in financial statements or in the notes of the statements.
Conservatism Assumption
When choosing between two solutions, one that will be least likely to overstate assets and
income should be selected.
Materiality Principle
An amount can be ignored if its effect on the financial statements is small and not misleading.
Consistency principle
, Once you adopt an accounting principle or method, continue to follow it consistently in
future accounting periods so that the results reporting from period to period are comparable.
Monetary Unit Assumption
One currency is used throughout all accounting activities. In the US the dollar is the currency
used in accounting. When this currency is used, inflation is not a consideration in recording
finances.
-> That is, even if prices rise due to inflation, accounting records do not automatically adjust
for those changes in value.
-> Inflation does not affect how transactions are recorded.
Going Concern Assumption
Refers to a business that is stable enough to operate and meet its obligations for the future.
Cash-basis Account Method
Revenue is recognized when payment is received and expenses are recognized when paid out.
Accrual Method of Accounting
Revenues are reported when they are earned and expenses are reported when they are
incurred.
Hybrid Accounting
A combo of cash-basis and accrual methods
What are the 4 types of accounting adjustments:
- Deferrals
- Accruals
Guide Questions with Verified Correct Answers
Distributions Vs. Dividends
-> Distributions = Money paid to owners from S corporations, LLCs, or Partnerships
-> Dividends = Money paid to shareholders from C corporations
What are the steps of the accounting cycle ?
1) Analyze and record transactions.
2) Post transactions to ledger
3) Prepare an unadjusted trial balance
4) Prepare adjusted entries at the end of the period
5) Prepare adjusted trial balance
6) Prepare financial statements
If a customer pays at the time of sale, you record it as a
Sales Receipt
If a customer does NOT PAY at the time of sale, you must enter it as an
Invoice
When a customer pays an invoice, you go to...
"Receive Payment" to record that the payment has been made.
After you record a Sales Receipt or Receive Payment, you follow up by making a...
Bank Deposit.
-> Sales Receipt or Receive Payment shows that you've received money from the customer.
-> Bank Deposit means you're putting that money into your bank account.
,Step 4 of the Accounting Cycle: Preparing Adjusting Entries includes:
1) Deferrals
2) Accruals
3) Missing Transactions
4) Tax Adjustments
Deferral
Delaying the recognition of a transaction to a future period
-> It's waiting to recognize that income or expense until the right time (like when the
insurance coverage starts)
Reliability assumption
Only transactions that can be proven should be recorded in accounting practices.
-> Businesses must be able to prove transactions through such things as receipts, billing
statements, invoices, and bank statements.
Full Disclosure Principle
All info that is relative to the business and is important to a lender or investor has to be
disclosed in financial statements or in the notes of the statements.
Conservatism Assumption
When choosing between two solutions, one that will be least likely to overstate assets and
income should be selected.
Materiality Principle
An amount can be ignored if its effect on the financial statements is small and not misleading.
Consistency principle
, Once you adopt an accounting principle or method, continue to follow it consistently in
future accounting periods so that the results reporting from period to period are comparable.
Monetary Unit Assumption
One currency is used throughout all accounting activities. In the US the dollar is the currency
used in accounting. When this currency is used, inflation is not a consideration in recording
finances.
-> That is, even if prices rise due to inflation, accounting records do not automatically adjust
for those changes in value.
-> Inflation does not affect how transactions are recorded.
Going Concern Assumption
Refers to a business that is stable enough to operate and meet its obligations for the future.
Cash-basis Account Method
Revenue is recognized when payment is received and expenses are recognized when paid out.
Accrual Method of Accounting
Revenues are reported when they are earned and expenses are reported when they are
incurred.
Hybrid Accounting
A combo of cash-basis and accrual methods
What are the 4 types of accounting adjustments:
- Deferrals
- Accruals
