AIPB CERTIFICATION QUESTIONS AND
ANSWERS
Trial bbalance b- bcorrect banswer✔✔an bordered blisting bof ball bledger baccounts band
btheir bbalances.
Accrued bexpenses b- bcorrect banswer✔✔1. bExpenses bthat bhave bbeen bincurred, bbut
bnot byet bpaid bfor. bTo bput bit banother bway, ban baccrued bexpense bis bpaid bafter bbeing
brecorded bon bthe bbooks. b
2. bEvery badjusting bentry bfor baccrued bexpenses bdebits ban bexpense baccount,
bincreasing bexpenses bon bthe bincome bstatement band breducing bnet bincome, band
bcredits ba bpayable baccount, bincreasing bliabilities bon bthe bbalance bsheet.
3. bFailure bto brecord ban baccrued bexpense bwill: b
Liabilities bwill bbe bunderstated bon bthe bbalance bsheet; bExpenses bwill bbe bunderstated
bon bthe bincome bstatement; band, bas ba bresult, bNet bincome bwill bbe boverstated bon
bthe bincome bstatement.
Cash bBasis bAccounting b- bcorrect banswer✔✔Generally, bpayments breceived b(checks,
bcash, bcredit bcard, betc.) bare bincome, band bpayments bmade bare bexpenses. bCash
bbasis bbusinesses bcan balmost bproduce ban bincome bstatement bfrom btheir
bcheckbook, bpresenting btotal bpayments bfrom bcustomers bas brevenue band btotal
bdisbursements bas bexpenses.
Accrual bBasis bAccounting b- bcorrect banswer✔✔This bis bthe bmethod brequired bby
bgenerally baccepted baccounting bprinciples b(GAAP). bGAAP bprohibits brecording ban
bincoming bpayment bas brevenue bunless byou bhave bearned bit. bBut bif byou bhave
bearned bthe brevenue, byou bmust brecognize bit b(record bthe brevenue bon byour bbooks)
beven bif byou bhave bnot breceived ba bsingle bdollar bof bpayment.
ACCRUED bREVENUE b- bcorrect banswer✔✔1. bUncollected brevenue, bthat bis,
brevenue bearned bbut bnot byet breceived. bTo bput bit banother bway, breceipt bof bcash
btakes bplace bafter bthe brevenue bis bearned band brecorded bon bthe bbooks. b
2. bEvery badjusting bentry bfor baccrued brevenue bdebits ba breceivable baccount,
bincreasing bassets bon bthe bbalance bsheet, band bcredits ba brevenue baccount,
bincreasing brevenue band bnet bincome bon bthat bperiod's bincome bstatement.
3. bFailure bto brecord baccrued brevenue bwill:
Assets bwill bbe bunderstated bon bthe bbalance bsheet;
, Revenues bwill bbe bunderstated bon bthe bincome bstatement b; band, bas ba bresult, bNet
bincome bwill bbe bunderstated bon bthe bincome bstatement.
Unearned brevenue b(deferred brevenue) b- bcorrect banswer✔✔The breceipt bof bpayment
bfor bservices bnot byet bperformed. bThere bare btwo bways bto brecord: b1) bto bdebit bCash
band bcredit ba bliability baccount bnamed bUnearned bRevenue, bRevenue bCollected bIn
bAdvance, bRevenue bReceived bIn bAdvance, betc.; bThe badjusting bentry bat bthe bend bof
bthe bperiod bsimply btransfers bthe bamount bearned b(recognized) bfrom bthe bbalance
bsheet b(Unearned bRevenue) baccount bto bthe bincome bstatement b(Revenue) baccount.
b2) bThe bsecond bway bto brecord brevenue bcollected bin badvance bis bto bdebit bCash
band bcredit bRevenue. bThe badjusting bentry brecorded bat bthe bend bof bthe bperiod
breduces bthe bbalance bin bthe bRevenue baccount bto bthe bamount bactually bearned bfor
bthe bperiod. bThe bunearned bportion bis btransferred bto bUnearned bRevenue
Prepaid b(or bdeferred) bexpenses b- bcorrect banswer✔✔expense bpaid bbefore bthe
bexpense bis bincurred b(that bis, bbefore bthe bgoods bare bused bor bthe bservice bis
bperformed). bThere bare btwo bways bto brecord: b1) bTo bdebit ban basset baccount bknown
bas ba bprepaid bexpense baccount band bto bcredit bCash. bThe badjusting bentry bat bthe
bend bof bthe bperiod bsimply btransfers bthe bamount bof bthe bexpense bthat bhas bbeen
brecognized b(used bup) bfrom bthe basset baccount bto bthe bexpense baccount. b2) bThe
bsecond bway bto brecord bthe badvance bpayment bof ban bexpense bis bto bdebit bthe
bappropriate bexpense baccount band bcredit bCash. bThe badjusting bentry brecorded bat
bthe bend bof bthe bperiod breduces bthe bbalance bin bthe bexpense baccount bto bthe
bamount bof bthe bexpense bincurred bduring bthe bperiod. bThe bunused bportion bis
btransferred bto ba bprepaid baccount.
Depreciable bbase b- bcorrect banswer✔✔The boriginal bcost bless bthe bresidual bvalue bof
ba bdepreciable basset.
Depreciable basset b(operational basset) b- bcorrect banswer✔✔Depreciable bassets bmust
bmeet bthe bfollowing bconditions:
1. bThe basset bmust bbe btangible bproperty, bsuch bas ba bbuilding, bequipment bor
bfurniture b(land bis bnot bdepreciable); b
2. bThe basset bcannot bbe bheld bfor bresale b(such bas binventory) bor bfor binvestment
bpurposes b(such bas bcommon bstock); b
3. bThe basset bmust bhave ba buseful blife bof bmore bthan b1 byear bwhen bacquired.
To brecord bdepreciation bexpense, bdebit bDepreciation bExpense b(an bincome
bstatement baccount) band bcredit bAccumulated bDepreciation b(a bcontra-asset baccount
bfor bcorresponding basset baccounts).
Bad bdebt bexpense b- bcorrect banswer✔✔An bestimate bof bthe bportion bof bcredit bsales
b(or baccounts breceivable) bthat bthe bcompany bdoes bnot bexpect bto bcollect. bTo brecord
bbad bdebt bexpense, bdebit bbad bdebt bexpense b(an bincome bstatement baccount) band
bcredit bAllowance bfor bDoubtful bAccounts b(a bcontra-asset baccount bfor bAccounts
bReceivable)
ANSWERS
Trial bbalance b- bcorrect banswer✔✔an bordered blisting bof ball bledger baccounts band
btheir bbalances.
Accrued bexpenses b- bcorrect banswer✔✔1. bExpenses bthat bhave bbeen bincurred, bbut
bnot byet bpaid bfor. bTo bput bit banother bway, ban baccrued bexpense bis bpaid bafter bbeing
brecorded bon bthe bbooks. b
2. bEvery badjusting bentry bfor baccrued bexpenses bdebits ban bexpense baccount,
bincreasing bexpenses bon bthe bincome bstatement band breducing bnet bincome, band
bcredits ba bpayable baccount, bincreasing bliabilities bon bthe bbalance bsheet.
3. bFailure bto brecord ban baccrued bexpense bwill: b
Liabilities bwill bbe bunderstated bon bthe bbalance bsheet; bExpenses bwill bbe bunderstated
bon bthe bincome bstatement; band, bas ba bresult, bNet bincome bwill bbe boverstated bon
bthe bincome bstatement.
Cash bBasis bAccounting b- bcorrect banswer✔✔Generally, bpayments breceived b(checks,
bcash, bcredit bcard, betc.) bare bincome, band bpayments bmade bare bexpenses. bCash
bbasis bbusinesses bcan balmost bproduce ban bincome bstatement bfrom btheir
bcheckbook, bpresenting btotal bpayments bfrom bcustomers bas brevenue band btotal
bdisbursements bas bexpenses.
Accrual bBasis bAccounting b- bcorrect banswer✔✔This bis bthe bmethod brequired bby
bgenerally baccepted baccounting bprinciples b(GAAP). bGAAP bprohibits brecording ban
bincoming bpayment bas brevenue bunless byou bhave bearned bit. bBut bif byou bhave
bearned bthe brevenue, byou bmust brecognize bit b(record bthe brevenue bon byour bbooks)
beven bif byou bhave bnot breceived ba bsingle bdollar bof bpayment.
ACCRUED bREVENUE b- bcorrect banswer✔✔1. bUncollected brevenue, bthat bis,
brevenue bearned bbut bnot byet breceived. bTo bput bit banother bway, breceipt bof bcash
btakes bplace bafter bthe brevenue bis bearned band brecorded bon bthe bbooks. b
2. bEvery badjusting bentry bfor baccrued brevenue bdebits ba breceivable baccount,
bincreasing bassets bon bthe bbalance bsheet, band bcredits ba brevenue baccount,
bincreasing brevenue band bnet bincome bon bthat bperiod's bincome bstatement.
3. bFailure bto brecord baccrued brevenue bwill:
Assets bwill bbe bunderstated bon bthe bbalance bsheet;
, Revenues bwill bbe bunderstated bon bthe bincome bstatement b; band, bas ba bresult, bNet
bincome bwill bbe bunderstated bon bthe bincome bstatement.
Unearned brevenue b(deferred brevenue) b- bcorrect banswer✔✔The breceipt bof bpayment
bfor bservices bnot byet bperformed. bThere bare btwo bways bto brecord: b1) bto bdebit bCash
band bcredit ba bliability baccount bnamed bUnearned bRevenue, bRevenue bCollected bIn
bAdvance, bRevenue bReceived bIn bAdvance, betc.; bThe badjusting bentry bat bthe bend bof
bthe bperiod bsimply btransfers bthe bamount bearned b(recognized) bfrom bthe bbalance
bsheet b(Unearned bRevenue) baccount bto bthe bincome bstatement b(Revenue) baccount.
b2) bThe bsecond bway bto brecord brevenue bcollected bin badvance bis bto bdebit bCash
band bcredit bRevenue. bThe badjusting bentry brecorded bat bthe bend bof bthe bperiod
breduces bthe bbalance bin bthe bRevenue baccount bto bthe bamount bactually bearned bfor
bthe bperiod. bThe bunearned bportion bis btransferred bto bUnearned bRevenue
Prepaid b(or bdeferred) bexpenses b- bcorrect banswer✔✔expense bpaid bbefore bthe
bexpense bis bincurred b(that bis, bbefore bthe bgoods bare bused bor bthe bservice bis
bperformed). bThere bare btwo bways bto brecord: b1) bTo bdebit ban basset baccount bknown
bas ba bprepaid bexpense baccount band bto bcredit bCash. bThe badjusting bentry bat bthe
bend bof bthe bperiod bsimply btransfers bthe bamount bof bthe bexpense bthat bhas bbeen
brecognized b(used bup) bfrom bthe basset baccount bto bthe bexpense baccount. b2) bThe
bsecond bway bto brecord bthe badvance bpayment bof ban bexpense bis bto bdebit bthe
bappropriate bexpense baccount band bcredit bCash. bThe badjusting bentry brecorded bat
bthe bend bof bthe bperiod breduces bthe bbalance bin bthe bexpense baccount bto bthe
bamount bof bthe bexpense bincurred bduring bthe bperiod. bThe bunused bportion bis
btransferred bto ba bprepaid baccount.
Depreciable bbase b- bcorrect banswer✔✔The boriginal bcost bless bthe bresidual bvalue bof
ba bdepreciable basset.
Depreciable basset b(operational basset) b- bcorrect banswer✔✔Depreciable bassets bmust
bmeet bthe bfollowing bconditions:
1. bThe basset bmust bbe btangible bproperty, bsuch bas ba bbuilding, bequipment bor
bfurniture b(land bis bnot bdepreciable); b
2. bThe basset bcannot bbe bheld bfor bresale b(such bas binventory) bor bfor binvestment
bpurposes b(such bas bcommon bstock); b
3. bThe basset bmust bhave ba buseful blife bof bmore bthan b1 byear bwhen bacquired.
To brecord bdepreciation bexpense, bdebit bDepreciation bExpense b(an bincome
bstatement baccount) band bcredit bAccumulated bDepreciation b(a bcontra-asset baccount
bfor bcorresponding basset baccounts).
Bad bdebt bexpense b- bcorrect banswer✔✔An bestimate bof bthe bportion bof bcredit bsales
b(or baccounts breceivable) bthat bthe bcompany bdoes bnot bexpect bto bcollect. bTo brecord
bbad bdebt bexpense, bdebit bbad bdebt bexpense b(an bincome bstatement baccount) band
bcredit bAllowance bfor bDoubtful bAccounts b(a bcontra-asset baccount bfor bAccounts
bReceivable)
