AES Bookkeeping Questions and
Answers Graded A+
What is the difference between "fixed assets" and "current assets"?
✔✔ Fixed assets are long-term resources like buildings and machinery, while current assets are
short-term resources expected to be converted into cash within a year, such as inventory and
accounts receivable.
What is the purpose of an "accounting cycle"?
✔✔ The accounting cycle is a series of steps followed to ensure accurate financial reporting,
from recording transactions to preparing financial statements.
What is "inventory valuation" and why is it important?
✔✔ Inventory valuation determines the value of inventory on hand and affects cost of goods sold
and overall profitability, impacting financial statements.
What does "owner’s equity" represent in a business?
✔✔ Owner’s equity represents the owner’s claims on the business assets after liabilities have
been paid off, reflecting the net worth of the business.
1
, What is the role of "audit trails" in bookkeeping?
✔✔ Audit trails provide a chronological record of all financial transactions, allowing verification
and tracking of any discrepancies or errors.
What are "accrued expenses" and how are they recorded?
✔✔ Accrued expenses are costs that a business has incurred but not yet paid for by the end of an
accounting period, recorded as liabilities until paid.
How does "deferred revenue" impact financial reporting?
✔✔ Deferred revenue represents payments received in advance for services or products to be
delivered in the future, recorded as a liability until the revenue is earned.
What is "bank statement reconciliation"?
✔✔ Bank statement reconciliation involves matching the company's recorded transactions with
the bank's records to ensure accuracy and resolve discrepancies.
What is the significance of "retained earnings" in financial statements?
2
Answers Graded A+
What is the difference between "fixed assets" and "current assets"?
✔✔ Fixed assets are long-term resources like buildings and machinery, while current assets are
short-term resources expected to be converted into cash within a year, such as inventory and
accounts receivable.
What is the purpose of an "accounting cycle"?
✔✔ The accounting cycle is a series of steps followed to ensure accurate financial reporting,
from recording transactions to preparing financial statements.
What is "inventory valuation" and why is it important?
✔✔ Inventory valuation determines the value of inventory on hand and affects cost of goods sold
and overall profitability, impacting financial statements.
What does "owner’s equity" represent in a business?
✔✔ Owner’s equity represents the owner’s claims on the business assets after liabilities have
been paid off, reflecting the net worth of the business.
1
, What is the role of "audit trails" in bookkeeping?
✔✔ Audit trails provide a chronological record of all financial transactions, allowing verification
and tracking of any discrepancies or errors.
What are "accrued expenses" and how are they recorded?
✔✔ Accrued expenses are costs that a business has incurred but not yet paid for by the end of an
accounting period, recorded as liabilities until paid.
How does "deferred revenue" impact financial reporting?
✔✔ Deferred revenue represents payments received in advance for services or products to be
delivered in the future, recorded as a liability until the revenue is earned.
What is "bank statement reconciliation"?
✔✔ Bank statement reconciliation involves matching the company's recorded transactions with
the bank's records to ensure accuracy and resolve discrepancies.
What is the significance of "retained earnings" in financial statements?
2
