2025\\2026 Intuit Bookkeeping Exam Realistic Questions And
Answers Grade A+.
What is the Purpose of a balance sheet
To determine the financial health of an organization at a point in time.
Financial elements on the income statement:
Expenses, Revenue
Financial elements on the balance sheet:
Assets, Capital, and Liabilities
Accounts that increase with debit
Cash, equipment, assets, expenses, and dividends
Accounts that increase with credit
Contra-Asset : Accumulated Depreciation, Account Payable, common stock, equity,
revenue and liability
Lou has a landscaping company. He received a $10,000 payment for a landscaping
job that he completed for the Rose family. How would you record this transaction?
Debit $10,000 to Cash; Credit $10,000 to Service Revenue - Landscaping
3 multiple choice options
Definition of a debit in double-entry accounting
An increase in assets/expenses and a decrease in liabilities/owner's equity and
revenue.
General Ledger
The debits and credits posted to the company's line of credit during the last 6
months
Transaction Journal
The debits and credits recorded for a rental equipment expense
income statement (profit and loss statement)
Report of all revenue and expenses for the month
Is the ending balance for the inventory on Balance Sheet?
Yes, Ending balance for the inventory
Reasons for making adjusting journal entries (Choose 3)
a. To record expiration of prepaid insurance. b. To record depreciation. c. To
recognize unpaid salaries for the current period.
Economic Entity Assumption
The business is a separate entity, so the activities of a business must be kept
separate from any other financial activities of its business owners.
Reliability Assumption
Makes mandatory for companies to record only accounting transactions that can be
verified through invoices, billing statements and bank statements.
Full Disclosure Principle
All information that is relative to the business and is important to a lender or
investor has to be provided in financial statements or in the notes of the
statements.
Conservatism Assumption
When bookkeepers are uncertain and need to determine how to report an item, this
guides them to choose the option that shows less income or asset benefit.
, Going Concern Assumption
Refers to a business that is now stable enough to operate and meet its obligations
for the foreseeable future.
Monetary Unit Assumption
Refers to one monetary unit being used throughout all of the accounting activities.
Consistency Principle
Refers to when a business adopts a specific accounting method that it will enter all
similar items in the exact same way in the future.
Materiality Principle
Refers to an accounting standard that can be ignored if the impact has such a small
effect on the financial statements that it would not be misleading.
On February 28, ABC Company received an invoice for $1,200 for running social
media ads in February. The invoice will be paid in March. Assuming ABC Company
uses the accrual method of accounting, which is correct for February?
Expenses are increased by $1,200.
Which of the following accounts is not considered a long term asset?
Inventory
Difference between current assets and long-term assets
Current assets are expected to be converted to cash within one year, while Long-
term assets are expected to extend beyond a year from the reporting date.
Normal (natural) Debit balance account types
Asset and Expense
Normal (natural) Credit balance account types
Liabilities, Equity, and Revenue
What is the Maximum amount of time that a business owner should wait to correct
inventory errors?
Annually
A business owner of a specialty foods store does a full review of the inventory on
hand and discovers items that have perished. What is the accounting journal entry
that should be made to adjust the books?
Credit to the Inventory Asset Account and a Debit to the Obsolete Inventory
Expense.
It is the end of the month, and you are reviewing your company's Trial Balance
Report. As part of your review, you notice that Depreciation Expense has a credit
balance. Is this noteworthy?
Depreciation Expense does not normally have a credit balance, so additional review
is needed.
You are recording the month-end depreciation expense entry for a factory building.
For each account, Accumulated Depreciation, Depreciation Expense, Building, and
Cash, select whether you should Debit the account, Credit the account, or make No
Change to the account.
Credit - Accumulated Depreciation, Debit - Depreciation Expense
No Change - Building and Cash
You are the bookkeeper for a small coffee shop. At the end of the day, you receive
the cash register sales report to record in the company's accounting software.
What is an appropriate accounting transaction?
Debit to Cash, Debit to Credit Card Payment Receivables, Credit to Sales Revenue
Answers Grade A+.
What is the Purpose of a balance sheet
To determine the financial health of an organization at a point in time.
Financial elements on the income statement:
Expenses, Revenue
Financial elements on the balance sheet:
Assets, Capital, and Liabilities
Accounts that increase with debit
Cash, equipment, assets, expenses, and dividends
Accounts that increase with credit
Contra-Asset : Accumulated Depreciation, Account Payable, common stock, equity,
revenue and liability
Lou has a landscaping company. He received a $10,000 payment for a landscaping
job that he completed for the Rose family. How would you record this transaction?
Debit $10,000 to Cash; Credit $10,000 to Service Revenue - Landscaping
3 multiple choice options
Definition of a debit in double-entry accounting
An increase in assets/expenses and a decrease in liabilities/owner's equity and
revenue.
General Ledger
The debits and credits posted to the company's line of credit during the last 6
months
Transaction Journal
The debits and credits recorded for a rental equipment expense
income statement (profit and loss statement)
Report of all revenue and expenses for the month
Is the ending balance for the inventory on Balance Sheet?
Yes, Ending balance for the inventory
Reasons for making adjusting journal entries (Choose 3)
a. To record expiration of prepaid insurance. b. To record depreciation. c. To
recognize unpaid salaries for the current period.
Economic Entity Assumption
The business is a separate entity, so the activities of a business must be kept
separate from any other financial activities of its business owners.
Reliability Assumption
Makes mandatory for companies to record only accounting transactions that can be
verified through invoices, billing statements and bank statements.
Full Disclosure Principle
All information that is relative to the business and is important to a lender or
investor has to be provided in financial statements or in the notes of the
statements.
Conservatism Assumption
When bookkeepers are uncertain and need to determine how to report an item, this
guides them to choose the option that shows less income or asset benefit.
, Going Concern Assumption
Refers to a business that is now stable enough to operate and meet its obligations
for the foreseeable future.
Monetary Unit Assumption
Refers to one monetary unit being used throughout all of the accounting activities.
Consistency Principle
Refers to when a business adopts a specific accounting method that it will enter all
similar items in the exact same way in the future.
Materiality Principle
Refers to an accounting standard that can be ignored if the impact has such a small
effect on the financial statements that it would not be misleading.
On February 28, ABC Company received an invoice for $1,200 for running social
media ads in February. The invoice will be paid in March. Assuming ABC Company
uses the accrual method of accounting, which is correct for February?
Expenses are increased by $1,200.
Which of the following accounts is not considered a long term asset?
Inventory
Difference between current assets and long-term assets
Current assets are expected to be converted to cash within one year, while Long-
term assets are expected to extend beyond a year from the reporting date.
Normal (natural) Debit balance account types
Asset and Expense
Normal (natural) Credit balance account types
Liabilities, Equity, and Revenue
What is the Maximum amount of time that a business owner should wait to correct
inventory errors?
Annually
A business owner of a specialty foods store does a full review of the inventory on
hand and discovers items that have perished. What is the accounting journal entry
that should be made to adjust the books?
Credit to the Inventory Asset Account and a Debit to the Obsolete Inventory
Expense.
It is the end of the month, and you are reviewing your company's Trial Balance
Report. As part of your review, you notice that Depreciation Expense has a credit
balance. Is this noteworthy?
Depreciation Expense does not normally have a credit balance, so additional review
is needed.
You are recording the month-end depreciation expense entry for a factory building.
For each account, Accumulated Depreciation, Depreciation Expense, Building, and
Cash, select whether you should Debit the account, Credit the account, or make No
Change to the account.
Credit - Accumulated Depreciation, Debit - Depreciation Expense
No Change - Building and Cash
You are the bookkeeper for a small coffee shop. At the end of the day, you receive
the cash register sales report to record in the company's accounting software.
What is an appropriate accounting transaction?
Debit to Cash, Debit to Credit Card Payment Receivables, Credit to Sales Revenue
