PAYROLL FUNDAMENTALS 1 EXAM STUDY
GUIDE 2026 TEST PAPER QUESTIONS AND
SOLUTIONS GRADED A+
◉ Owner's Equity has two components: Answer: Owner's Equity =
Contributed Capital + Retained Earnings
◉ Contributed Capital Answer: The amount of payments in cash or
assets that the owners have made to the company
◉ The accounting equation can be expanded to: Answer: Assets =
Liabilties + Contributed Capital + Retained Earnings
◉ The 5 different accounts of a typical for-profit organization Answer: -
asset accounts
- liability accounts
- revenue accounts
- expense accounts
- owners' equity accounts
,◉ Asset accounts Answer: Contains the value of items owned by the
organization
◉ Liability accounts Answer: Indicates the money that the organization
owes to its creditors
◉ Asset accounts include: Answer: - Cash
- Accounts receivable
- prepaid expenses
- inventory
◉ Liability accounts include Answer: - accounts payable
- salaries and wages payable
- vacation pay payable
◉ Revenue accounts Answer: Used to record the income earned by the
organization during the accounting cycle
◉ Expense accounts Answer: Costs incurred by an organization in the
process of earning revenue during a designated period of time
◉ Equity accounts Answer: Accounts that show the owners' or
shareholders' worth or interest in the organization
, ◉ Owners' equity is divided into: Answer: Contributed capital &
retained earnings
◉ General ledger accounts consists of the following five elements:
Answer: - account name
- opening balance
- reference
- debit and credit transactions
- closing balance
◉ Each journal entry must contain the following components: Answer: -
A journal entry reference or number
- the date of the transaction
- the debit and credit amounts to be applied to each account
- a total of the debit entries and of the credit entries
- a brief explanation of the transaction
◉ double-entry accounting Answer: Accounting system in which each
transaction affects at least two accounts and has at least one debit and
one credit
GUIDE 2026 TEST PAPER QUESTIONS AND
SOLUTIONS GRADED A+
◉ Owner's Equity has two components: Answer: Owner's Equity =
Contributed Capital + Retained Earnings
◉ Contributed Capital Answer: The amount of payments in cash or
assets that the owners have made to the company
◉ The accounting equation can be expanded to: Answer: Assets =
Liabilties + Contributed Capital + Retained Earnings
◉ The 5 different accounts of a typical for-profit organization Answer: -
asset accounts
- liability accounts
- revenue accounts
- expense accounts
- owners' equity accounts
,◉ Asset accounts Answer: Contains the value of items owned by the
organization
◉ Liability accounts Answer: Indicates the money that the organization
owes to its creditors
◉ Asset accounts include: Answer: - Cash
- Accounts receivable
- prepaid expenses
- inventory
◉ Liability accounts include Answer: - accounts payable
- salaries and wages payable
- vacation pay payable
◉ Revenue accounts Answer: Used to record the income earned by the
organization during the accounting cycle
◉ Expense accounts Answer: Costs incurred by an organization in the
process of earning revenue during a designated period of time
◉ Equity accounts Answer: Accounts that show the owners' or
shareholders' worth or interest in the organization
, ◉ Owners' equity is divided into: Answer: Contributed capital &
retained earnings
◉ General ledger accounts consists of the following five elements:
Answer: - account name
- opening balance
- reference
- debit and credit transactions
- closing balance
◉ Each journal entry must contain the following components: Answer: -
A journal entry reference or number
- the date of the transaction
- the debit and credit amounts to be applied to each account
- a total of the debit entries and of the credit entries
- a brief explanation of the transaction
◉ double-entry accounting Answer: Accounting system in which each
transaction affects at least two accounts and has at least one debit and
one credit
