Intuit Bookkeeping Basics: Accounting Cycle (Part 1) Assessment Exam | Latest Verified Questions and Detailed Answers

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Intuit Bookkeeping Basics: Accounting Cycle (Part 1)
Assessment Exam | Latest Verified Questions and
Detailed Answers

OVERVIEW DESCRIPTION:
This Comprehensive set of multiple choice questions is designed for the Intuit
Bookkeeping Basics: Accounting Cycle (Part 1) Assessment, a foundational exam that
evaluates core bookkeeping knowledge and the flow of financial data through a
business. The questions cover the accounting equation, double-entry principles, debits
and credits, normal account balances, journalizing and posting transactions, the chart of
accounts, unadjusted, adjusted, and post-closing trial balances, adjusting and closing
entries, financial statement preparation, bookkeeping ethics, and related QuickBooks-
style recording tasks. It is intended to test practical understanding of how transactions
move from source documents to the general ledger and ultimately into accurate
financial reports.

QUESTION 1

What is the fundamental accounting equation?


A) Assets = Liabilities + Equity
B) Assets = Revenue – Expenses

C) Equity = Assets + Liabilities
D) Liabilities = Assets + Equity


CORRECT ANSWER: A

EXPERT RATIONALE: The accounting equation states that everything a business

owns (assets) is financed by either creditors (liabilities) or owners (equity). This
equation must remain in balance after every transaction.

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QUESTION 2


In double-entry bookkeeping, every transaction must affect at least how many
accounts?


A) One
B) Two

C) Three
D) Four


CORRECT ANSWER: B

EXPERT RATIONALE: Double-entry accounting requires that each transaction affects

at least two accounts with total debits equaling total credits. This self-checking
mechanism keeps the accounting equation in balance.




QUESTION 3


A debit increases which types of accounts?

A) Liabilities and revenue

B) Equity and revenue
C) Assets and expenses

D) Liabilities and equity

CORRECT ANSWER: C


EXPERT RATIONALE: Debits increase dividends/draws, expenses, and assets (DEA).
Credits increase liabilities, equity, and revenue (LER).

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QUESTION 4


A credit increases which types of accounts?

A) Assets and expenses

B) Liabilities, equity, and revenue
C) Assets and liabilities

D) Expenses and revenue

CORRECT ANSWER: B


EXPERT RATIONALE: Credits increase liabilities, equity, and revenue. This is the
opposite of debit behavior, which increases assets, expenses, and draws.




QUESTION 5


What is the first step in the accounting cycle?

A) Post to the general ledger
B) Prepare an unadjusted trial balance
C) Analyze and record transactions

D) Prepare adjusting entries

CORRECT ANSWER: C


EXPERT RATIONALE: The accounting cycle begins with analyzing and recording
business transactions. Without this initial step, no subsequent accounting activities

can occur.

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QUESTION 6


After analyzing a transaction, where is it first recorded?

A) General ledger

B) Journal
C) Trial balance

D) Financial statements

CORRECT ANSWER: B


EXPERT RATIONALE: Transactions are first recorded in the journal in chronological
order. This creates a complete record before posting to the ledger.




QUESTION 7


What is the process of transferring journal entries to the general ledger called?

A) Journalizing
B) Posting
C) Adjusting

D) Closing

CORRECT ANSWER: B


EXPERT RATIONALE: Posting is the process of reorganizing journal entries and
grouping them by account in the general ledger. This creates a permanent record of

each account's activity.