BOOKKEEPING COMPREHENSIVE STUDY
GUIDE 2026 FULLY SOLVED QUESTION SET
◉The accounting cycle. Answer: The accounting cycle is a reliable
process to make sure financial statements are accurate and
consistent. It begins with analyzing the accounting events of a
business and ends with producing financial reports for a given
period. By using this process, you'll make sure you stay organized
and don't miss any important details.
◉Accounting Cycle: Step 1 - Collect and analyze transactions.
Answer: Gather all financial transactions and supporting documents
(e.g., invoices, receipts). Analyze these transactions to determine
their impact on the accounting equation.
◉Accounting Cycle: Step 2 - Record and post transactions. Answer:
Record the analyzed transactions in the journal using double-entry
bookkeeping and post them to the appropriate accounts in the
ledger.
◉Accounting Cycle: Step 3 - Prepare unadjusted trial balance.
Answer: List all account balances from the ledger to ensure debits
equal credits. This helps verify the accuracy of recorded transactions
before adjustments.
,◉Accounting Cycle: Step 4 - Prepare adjusting entries. Answer:
Make adjustments to account for accruals, deferrals, depreciation,
and other items that may not have been recorded yet to reflect the
true financial position.
◉Accounting Cycle: Step 5 - Prepare adjusted trial balance. Answer:
Create a new trial balance after adjustments to confirm that debits
still equal credits, ensuring the accounts are ready for financial
statement preparation.
◉Accounting Cycle: Step 6 - Prepare financial statements. Answer:
Use the adjusted trial balance to prepare the income statement,
balance sheet, and cash flow statement, summarizing the financial
performance and position of the business.
◉Unadjusted Trial Balance. Answer: An unadjusted trial balance is
the first draft of a company's ledger. It lists all accounts and their
balances before any adjustments are made at the end of a period.
This trial balance is essential because it shows whether the total
debits equal the total credits, signaling that the books are balanced.
◉Depreciation. Answer: Spreads out the cost of an item over its
useful life to reflect its gradual wear and tear or usage.
,◉Accrual Entries. Answer: Records future payments or expenses in
the current period to ensure they are matched with the revenues
they generate.
◉4 Types of Financial Statements. Answer: Income Statement:
Shows the company's profitability over a specific period.
Balance Sheet: Displays the company's assets, liabilities, and equity
at a specific point in time.
Statement of Equity: Reflects changes in owners' equity over a
period.
Statement of Cash Flows: Tracks the company's cash inflows and
outflows during a period.
◉Chart of Accounts. Answer: A list of all the accounts and sub-
accounts used to categorize transactions.
◉General Ledger. Answer: A record of all financial transactions that
occur during the life of a business. It includes all accounts necessary
for preparing financial statements.
, ◉Unadjusted Trial Balance. Answer: A statement listing the titles
and balances of all ledger accounts at a given date before adjusting
entries are made.
◉Adjusting Entries. Answer: New entries created to record
depreciation, accruals, or other adjustments, typically provided by a
CPA or accountant.
◉Adjusted Trial Balance. Answer: A listing of the ending balances in
all accounts after adjusting entries have been prepared.
◉When creating financial statements for your client, always use the:
Explain: Adjusted trial balance. Answer: Always use the adjusted
trial balance. The unadjusted trial balance shows the totals for the
ledger accounts before any adjustments are made. It is therefore not
suitable for creating financial documents.
◉A client asks you to provide a financial statement that shows their
profits for the past quarter. Which financial statement should you
prepare?
Explain: Income Statement. Answer: The income statement shows
the net profits for a business during a given reporting period.
GUIDE 2026 FULLY SOLVED QUESTION SET
◉The accounting cycle. Answer: The accounting cycle is a reliable
process to make sure financial statements are accurate and
consistent. It begins with analyzing the accounting events of a
business and ends with producing financial reports for a given
period. By using this process, you'll make sure you stay organized
and don't miss any important details.
◉Accounting Cycle: Step 1 - Collect and analyze transactions.
Answer: Gather all financial transactions and supporting documents
(e.g., invoices, receipts). Analyze these transactions to determine
their impact on the accounting equation.
◉Accounting Cycle: Step 2 - Record and post transactions. Answer:
Record the analyzed transactions in the journal using double-entry
bookkeeping and post them to the appropriate accounts in the
ledger.
◉Accounting Cycle: Step 3 - Prepare unadjusted trial balance.
Answer: List all account balances from the ledger to ensure debits
equal credits. This helps verify the accuracy of recorded transactions
before adjustments.
,◉Accounting Cycle: Step 4 - Prepare adjusting entries. Answer:
Make adjustments to account for accruals, deferrals, depreciation,
and other items that may not have been recorded yet to reflect the
true financial position.
◉Accounting Cycle: Step 5 - Prepare adjusted trial balance. Answer:
Create a new trial balance after adjustments to confirm that debits
still equal credits, ensuring the accounts are ready for financial
statement preparation.
◉Accounting Cycle: Step 6 - Prepare financial statements. Answer:
Use the adjusted trial balance to prepare the income statement,
balance sheet, and cash flow statement, summarizing the financial
performance and position of the business.
◉Unadjusted Trial Balance. Answer: An unadjusted trial balance is
the first draft of a company's ledger. It lists all accounts and their
balances before any adjustments are made at the end of a period.
This trial balance is essential because it shows whether the total
debits equal the total credits, signaling that the books are balanced.
◉Depreciation. Answer: Spreads out the cost of an item over its
useful life to reflect its gradual wear and tear or usage.
,◉Accrual Entries. Answer: Records future payments or expenses in
the current period to ensure they are matched with the revenues
they generate.
◉4 Types of Financial Statements. Answer: Income Statement:
Shows the company's profitability over a specific period.
Balance Sheet: Displays the company's assets, liabilities, and equity
at a specific point in time.
Statement of Equity: Reflects changes in owners' equity over a
period.
Statement of Cash Flows: Tracks the company's cash inflows and
outflows during a period.
◉Chart of Accounts. Answer: A list of all the accounts and sub-
accounts used to categorize transactions.
◉General Ledger. Answer: A record of all financial transactions that
occur during the life of a business. It includes all accounts necessary
for preparing financial statements.
, ◉Unadjusted Trial Balance. Answer: A statement listing the titles
and balances of all ledger accounts at a given date before adjusting
entries are made.
◉Adjusting Entries. Answer: New entries created to record
depreciation, accruals, or other adjustments, typically provided by a
CPA or accountant.
◉Adjusted Trial Balance. Answer: A listing of the ending balances in
all accounts after adjusting entries have been prepared.
◉When creating financial statements for your client, always use the:
Explain: Adjusted trial balance. Answer: Always use the adjusted
trial balance. The unadjusted trial balance shows the totals for the
ledger accounts before any adjustments are made. It is therefore not
suitable for creating financial documents.
◉A client asks you to provide a financial statement that shows their
profits for the past quarter. Which financial statement should you
prepare?
Explain: Income Statement. Answer: The income statement shows
the net profits for a business during a given reporting period.
