Bookkeeping Ch 1-6 Questions and
Answers Already Passed
What is the primary purpose of bookkeeping?
✔✔ The primary purpose of bookkeeping is to systematically record and organize financial
transactions to provide accurate financial information.
What is an account in bookkeeping?
✔✔ An account is a record used to track financial transactions related to a specific asset,
liability, equity, revenue, or expense.
What is the difference between a debit and a credit?
✔✔ A debit increases assets and expenses while decreasing liabilities and equity, whereas a
credit decreases assets and expenses while increasing liabilities and equity.
What is a trial balance?
✔✔ A trial balance is a statement that lists all the accounts and their balances to ensure that total
debits equal total credits.
1
,What is the purpose of a general ledger?
✔✔ The purpose of a general ledger is to provide a complete record of all financial transactions
in each account.
How do you record a transaction involving a purchase of equipment on credit?
✔✔ You record a debit to the Equipment account and a credit to the Accounts Payable account.
What is an income statement?
✔✔ An income statement summarizes revenues and expenses to show the net income or loss
over a specific period.
What is the purpose of adjusting entries?
✔✔ Adjusting entries are made to update account balances before preparing financial statements,
ensuring that revenues and expenses are recognized in the correct period.
How is the double-entry bookkeeping system different from single-entry bookkeeping?
✔✔ The double-entry system records each transaction in at least two accounts, with debits and
credits balancing out, while the single-entry system records each transaction only once, typically
affecting only one account.
2
, What is the role of a journal in bookkeeping?
✔✔ A journal records all financial transactions in chronological order before they are posted to
the general ledger.
What are assets and how are they classified?
✔✔ Assets are resources owned by a business that provide future economic benefits. They are
classified as current or non-current, depending on their expected use or conversion to cash.
What is the purpose of reconciling bank statements?
✔✔ The purpose of reconciling bank statements is to ensure that the bank’s records match the
company’s records, identifying and correcting any discrepancies.
How do you record the payment of an invoice?
✔✔ You record a debit to the Accounts Payable account and a credit to the Cash or Bank
account.
What is an expense in bookkeeping?
3
Answers Already Passed
What is the primary purpose of bookkeeping?
✔✔ The primary purpose of bookkeeping is to systematically record and organize financial
transactions to provide accurate financial information.
What is an account in bookkeeping?
✔✔ An account is a record used to track financial transactions related to a specific asset,
liability, equity, revenue, or expense.
What is the difference between a debit and a credit?
✔✔ A debit increases assets and expenses while decreasing liabilities and equity, whereas a
credit decreases assets and expenses while increasing liabilities and equity.
What is a trial balance?
✔✔ A trial balance is a statement that lists all the accounts and their balances to ensure that total
debits equal total credits.
1
,What is the purpose of a general ledger?
✔✔ The purpose of a general ledger is to provide a complete record of all financial transactions
in each account.
How do you record a transaction involving a purchase of equipment on credit?
✔✔ You record a debit to the Equipment account and a credit to the Accounts Payable account.
What is an income statement?
✔✔ An income statement summarizes revenues and expenses to show the net income or loss
over a specific period.
What is the purpose of adjusting entries?
✔✔ Adjusting entries are made to update account balances before preparing financial statements,
ensuring that revenues and expenses are recognized in the correct period.
How is the double-entry bookkeeping system different from single-entry bookkeeping?
✔✔ The double-entry system records each transaction in at least two accounts, with debits and
credits balancing out, while the single-entry system records each transaction only once, typically
affecting only one account.
2
, What is the role of a journal in bookkeeping?
✔✔ A journal records all financial transactions in chronological order before they are posted to
the general ledger.
What are assets and how are they classified?
✔✔ Assets are resources owned by a business that provide future economic benefits. They are
classified as current or non-current, depending on their expected use or conversion to cash.
What is the purpose of reconciling bank statements?
✔✔ The purpose of reconciling bank statements is to ensure that the bank’s records match the
company’s records, identifying and correcting any discrepancies.
How do you record the payment of an invoice?
✔✔ You record a debit to the Accounts Payable account and a credit to the Cash or Bank
account.
What is an expense in bookkeeping?
3
