AIPB Certification Exam Questions With
Correct Answers
Trial |balance |- |CORRECT |ANSWER✔✔-an |ordered |listing |of |all |ledger |accounts |and |their |
balances.
Accrued |expenses |- |CORRECT |ANSWER✔✔-1. |Expenses |that |have |been |incurred, |but |not |yet |
paid |for. |To |put |it |another |way, |an |accrued |expense |is |paid |after |being |recorded |on |the |books.
|
2. |Every |adjusting |entry |for |accrued |expenses |debits |an |expense |account, |increasing |expenses |
on |the |income |statement |and |reducing |net |income, |and |credits |a |payable |account, |increasing |
liabilities |on |the |balance |sheet.
3. |Failure |to |record |an |accrued |expense |will: |
Liabilities |will |be |understated |on |the |balance |sheet; |Expenses |will |be |understated |on |the |
income |statement; |and, |as |a |result, |Net |income |will |be |overstated |on |the |income |statement.
Cash |Basis |Accounting |- |CORRECT |ANSWER✔✔-Generally, |payments |received |(checks, |cash, |
credit |card, |etc.) |are |income, |and |payments |made |are |expenses. |Cash |basis |businesses |can |
almost |produce |an |income |statement |from |their |checkbook, |presenting |total |payments |from |
customers |as |revenue |and |total |disbursements |as |expenses.
Accrual |Basis |Accounting |- |CORRECT |ANSWER✔✔-This |is |the |method |required |by |generally |
accepted |accounting |principles |(GAAP). |GAAP |prohibits |recording |an |incoming |payment |as |
revenue |unless |you |have |earned |it. |But |if |you |have |earned |the |revenue, |you |must |recognize |it
|(record |the |revenue |on |your |books) |even |if |you |have |not |received |a |single |dollar |of |payment.
ACCRUED |REVENUE |- |CORRECT |ANSWER✔✔-1. |Uncollected |revenue, |that |is, |revenue |earned |
but |not |yet |received. |To |put |it |another |way, |receipt |of |cash |takes |place |after |the |revenue |is |
earned |and |recorded |on |the |books. |
, 2. |Every |adjusting |entry |for |accrued |revenue |debits |a |receivable |account, |increasing |assets |on |
the |balance |sheet, |and |credits |a |revenue |account, |increasing |revenue |and |net |income |on |that |
period's |income |statement.
3. |Failure |to |record |accrued |revenue |will:
Assets |will |be |understated |on |the |balance |sheet;
Revenues |will |be |understated |on |the |income |statement |; |and, |as |a |result, |Net |income |will |be |
understated |on |the |income |statement.
Unearned |revenue |(deferred |revenue) |- |CORRECT |ANSWER✔✔-The |receipt |of |payment |for |
services |not |yet |performed. |There |are |two |ways |to |record: |1) |to |debit |Cash |and |credit |a |
liability |account |named |Unearned |Revenue, |Revenue |Collected |In |Advance, |Revenue |Received |
In |Advance, |etc.; |The |adjusting |entry |at |the |end |of |the |period |simply |transfers |the |amount |
earned |(recognized) |from |the |balance |sheet |(Unearned |Revenue) |account |to |the |income |
statement |(Revenue) |account. |2) |The |second |way |to |record |revenue |collected |in |advance |is |to |
debit |Cash |and |credit |Revenue. |The |adjusting |entry |recorded |at |the |end |of |the |period |reduces
|the |balance |in |the |Revenue |account |to |the |amount |actually |earned |for |the |period. |The |
unearned |portion |is |transferred |to |Unearned |Revenue
Prepaid |(or |deferred) |expenses |- |CORRECT |ANSWER✔✔-expense |paid |before |the |expense |is |
incurred |(that |is, |before |the |goods |are |used |or |the |service |is |performed). |There |are |two |ways |
to |record: |1) |To |debit |an |asset |account |known |as |a |prepaid |expense |account |and |to |credit |
Cash. |The |adjusting |entry |at |the |end |of |the |period |simply |transfers |the |amount |of |the |expense
|that |has |been |recognized |(used |up) |from |the |asset |account |to |the |expense |account. |2) |The |
second |way |to |record |the |advance |payment |of |an |expense |is |to |debit |the |appropriate |expense
|account |and |credit |Cash. |The |adjusting |entry |recorded |at |the |end |of |the |period |reduces |the |
balance |in |the |expense |account |to |the |amount |of |the |expense |incurred |during |the |period. |The
|unused |portion |is |transferred |to |a |prepaid |account.
Depreciable |base |- |CORRECT |ANSWER✔✔-The |original |cost |less |the |residual |value |of |a |
depreciable |asset.
Depreciable |asset |(operational |asset) |- |CORRECT |ANSWER✔✔-Depreciable |assets |must |meet |
the |following |conditions:
Correct Answers
Trial |balance |- |CORRECT |ANSWER✔✔-an |ordered |listing |of |all |ledger |accounts |and |their |
balances.
Accrued |expenses |- |CORRECT |ANSWER✔✔-1. |Expenses |that |have |been |incurred, |but |not |yet |
paid |for. |To |put |it |another |way, |an |accrued |expense |is |paid |after |being |recorded |on |the |books.
|
2. |Every |adjusting |entry |for |accrued |expenses |debits |an |expense |account, |increasing |expenses |
on |the |income |statement |and |reducing |net |income, |and |credits |a |payable |account, |increasing |
liabilities |on |the |balance |sheet.
3. |Failure |to |record |an |accrued |expense |will: |
Liabilities |will |be |understated |on |the |balance |sheet; |Expenses |will |be |understated |on |the |
income |statement; |and, |as |a |result, |Net |income |will |be |overstated |on |the |income |statement.
Cash |Basis |Accounting |- |CORRECT |ANSWER✔✔-Generally, |payments |received |(checks, |cash, |
credit |card, |etc.) |are |income, |and |payments |made |are |expenses. |Cash |basis |businesses |can |
almost |produce |an |income |statement |from |their |checkbook, |presenting |total |payments |from |
customers |as |revenue |and |total |disbursements |as |expenses.
Accrual |Basis |Accounting |- |CORRECT |ANSWER✔✔-This |is |the |method |required |by |generally |
accepted |accounting |principles |(GAAP). |GAAP |prohibits |recording |an |incoming |payment |as |
revenue |unless |you |have |earned |it. |But |if |you |have |earned |the |revenue, |you |must |recognize |it
|(record |the |revenue |on |your |books) |even |if |you |have |not |received |a |single |dollar |of |payment.
ACCRUED |REVENUE |- |CORRECT |ANSWER✔✔-1. |Uncollected |revenue, |that |is, |revenue |earned |
but |not |yet |received. |To |put |it |another |way, |receipt |of |cash |takes |place |after |the |revenue |is |
earned |and |recorded |on |the |books. |
, 2. |Every |adjusting |entry |for |accrued |revenue |debits |a |receivable |account, |increasing |assets |on |
the |balance |sheet, |and |credits |a |revenue |account, |increasing |revenue |and |net |income |on |that |
period's |income |statement.
3. |Failure |to |record |accrued |revenue |will:
Assets |will |be |understated |on |the |balance |sheet;
Revenues |will |be |understated |on |the |income |statement |; |and, |as |a |result, |Net |income |will |be |
understated |on |the |income |statement.
Unearned |revenue |(deferred |revenue) |- |CORRECT |ANSWER✔✔-The |receipt |of |payment |for |
services |not |yet |performed. |There |are |two |ways |to |record: |1) |to |debit |Cash |and |credit |a |
liability |account |named |Unearned |Revenue, |Revenue |Collected |In |Advance, |Revenue |Received |
In |Advance, |etc.; |The |adjusting |entry |at |the |end |of |the |period |simply |transfers |the |amount |
earned |(recognized) |from |the |balance |sheet |(Unearned |Revenue) |account |to |the |income |
statement |(Revenue) |account. |2) |The |second |way |to |record |revenue |collected |in |advance |is |to |
debit |Cash |and |credit |Revenue. |The |adjusting |entry |recorded |at |the |end |of |the |period |reduces
|the |balance |in |the |Revenue |account |to |the |amount |actually |earned |for |the |period. |The |
unearned |portion |is |transferred |to |Unearned |Revenue
Prepaid |(or |deferred) |expenses |- |CORRECT |ANSWER✔✔-expense |paid |before |the |expense |is |
incurred |(that |is, |before |the |goods |are |used |or |the |service |is |performed). |There |are |two |ways |
to |record: |1) |To |debit |an |asset |account |known |as |a |prepaid |expense |account |and |to |credit |
Cash. |The |adjusting |entry |at |the |end |of |the |period |simply |transfers |the |amount |of |the |expense
|that |has |been |recognized |(used |up) |from |the |asset |account |to |the |expense |account. |2) |The |
second |way |to |record |the |advance |payment |of |an |expense |is |to |debit |the |appropriate |expense
|account |and |credit |Cash. |The |adjusting |entry |recorded |at |the |end |of |the |period |reduces |the |
balance |in |the |expense |account |to |the |amount |of |the |expense |incurred |during |the |period. |The
|unused |portion |is |transferred |to |a |prepaid |account.
Depreciable |base |- |CORRECT |ANSWER✔✔-The |original |cost |less |the |residual |value |of |a |
depreciable |asset.
Depreciable |asset |(operational |asset) |- |CORRECT |ANSWER✔✔-Depreciable |assets |must |meet |
the |following |conditions:
