Part 1 Practice Test for Intuit Bookkeeping Professional Certificate Questions
and Correct Answers
1. What event would most likely cause an auditor to issue a negative ongoing
concern opinion for a company? ANSWER the company has a high debt to equity ratio and it
facing liquidity problems
2. what is the main purpose of the adjusting process in accounting ANSWER to
correct error and misstatements in final statements that can result from inaccurate records or faulty
assumptions.
to record transactions that have not been entered in the accounting records during the accounting period
to record changes of a business that occur as a result of time or business activity
3. which statements are true about the balance sheet ANSWER it displays what the
business owns and what the business owes as of a single day.
it should be monitored on a regular basis since it's integral to maintaining the health of the business
it is used to track all assets, liabilities, and equity of a business
it is final statement that reports assets, liabilities, and equity for specific time
4. asset ANSWER a resource with economic value that a business owns or controls
5. you're a bookkeeper for a small law firm that provides legal services to clients
on a monthly retainer basis. you use accrual accounting to record the final
transactions of the firm in june, you billed 10 clients for a total of $20,000, but
only 8 of them paid you by june 30th the other 2 clients paid $2,000 each on july
10. you also incurred $5,000 in expenses for rent, utilities, and supplies in june,
which you paid june 30. now would you report your revenue and expenses for
june under the matching principle? ANSWER revenue = $20,000
expenses = $5,000
6. bookkeeper notices there is increase in Accounts Payable (liability account)
from recording a utility bill. what is impact on accounting equation? ANSWER
decrease owners equity
7. business bought a new printer with cash for $1,000 on 1/10. useful life = 5
years. residual value $100. uses straight line method to calculate depreciation.
-business has received $50 coupon to buy books.
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and Correct Answers
1. What event would most likely cause an auditor to issue a negative ongoing
concern opinion for a company? ANSWER the company has a high debt to equity ratio and it
facing liquidity problems
2. what is the main purpose of the adjusting process in accounting ANSWER to
correct error and misstatements in final statements that can result from inaccurate records or faulty
assumptions.
to record transactions that have not been entered in the accounting records during the accounting period
to record changes of a business that occur as a result of time or business activity
3. which statements are true about the balance sheet ANSWER it displays what the
business owns and what the business owes as of a single day.
it should be monitored on a regular basis since it's integral to maintaining the health of the business
it is used to track all assets, liabilities, and equity of a business
it is final statement that reports assets, liabilities, and equity for specific time
4. asset ANSWER a resource with economic value that a business owns or controls
5. you're a bookkeeper for a small law firm that provides legal services to clients
on a monthly retainer basis. you use accrual accounting to record the final
transactions of the firm in june, you billed 10 clients for a total of $20,000, but
only 8 of them paid you by june 30th the other 2 clients paid $2,000 each on july
10. you also incurred $5,000 in expenses for rent, utilities, and supplies in june,
which you paid june 30. now would you report your revenue and expenses for
june under the matching principle? ANSWER revenue = $20,000
expenses = $5,000
6. bookkeeper notices there is increase in Accounts Payable (liability account)
from recording a utility bill. what is impact on accounting equation? ANSWER
decrease owners equity
7. business bought a new printer with cash for $1,000 on 1/10. useful life = 5
years. residual value $100. uses straight line method to calculate depreciation.
-business has received $50 coupon to buy books.
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