Bookkeeping Practice Test Exam UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

Bookkeeping Practice Test Exam
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
For each of the statements fill in the blanks with Cash Basis or Accrual Basis.

a. When recording expenses, reporting on ________________________

shows the expense at the time of the payment, and
________________________ shows the expense at the time it occurs.

b. When recording revenue, reporting on ________________________

shows at the time the revenue is earned, and

________________________ shows the revenue at the time the payment

is received. - CORRECT ANSWER a) Cash Basis, Accrual Basis

b)Accrual Basis


For each statement select YES or NO to indicate whether the equation is true.

YES NO Assets + Income = Equity

YES NO Income - Cost of Goods Sold - Expenses = Net Income

YES NO Assets = Liabilities + Equity

YES NO Income - Liabilities - Expenses = Net Income - CORRECT ANSWER NO

YES
YES

NO



For each statement select TRUE or FALSE, to indicate if it is a valid reason for making
adjusting journal entries.



To record depreciation of fixed assets. - CORRECT ANSWER True

,For each statement select TRUE or FALSE, to indicate if it is a valid reason for making
adjusting journal entries.



To record payments received from customers. - CORRECT ANSWER False



For each statement select TRUE or FALSE, to indicate if it is a valid reason for making
adjusting journal entries.


To record the payroll liabilities for unpaid wages at

the end of the year. - CORRECT ANSWER True



For each statement select TRUE or FALSE, to indicate if it is a valid reason for making
adjusting journal entries.



To record debit card transactions. - CORRECT ANSWER False



For each statement select TRUE or FALSE, to indicate if it is a valid reason for making
adjusting journal entries.



To enter Accounts Payable transactions. - CORRECT ANSWER False



For each statement select TRUE or FALSE, to indicate if it is a valid reason for making
adjusting journal entries.



To record the amortization of prepaid insurance. - CORRECT ANSWER True



Choose all of the account types that have a normal debit a.

a. Liability

b. Asset
c. Expense

,d. Revenue

e. Equity - CORRECT ANSWER b) Asset

c) Expense


You are the bookkeeper for an ad agency. You receive a purchase order from a customer in
November for an ad design. Your company completes the work on December 28th. On
December 31st you prepare an invoice and email the invoice to the customer on January 1st.
On February 4th you receive a check that's dated January 29th. If you are on the accrual basis
of accounting, in which month do you recognize the revenue?

a. November

b. December

c. January

d. February - CORRECT ANSWER b) December



Which of the following are good reasons to use a double-entry accounting software? (Choose
all that apply).

a. It will prevent anyone from embezzling from your company.

b. As a bookkeeper, it will prevent you from entering incorrect amounts.

c. It will only save transactions if the debit and credit amounts are equal.

d. It will ensure that the equations (Assets = Liabilities + Equity, as well as,

Income - COGS - Expense = Net Income) for your financial statements

are never out of balance. - CORRECT ANSWER c. It will only save transactions if the
debit and credit amounts are equal.
d. It will ensure that the equations (Assets = Liabilities + Equity, as well as, Income - COGS -
Expense = Net Income) for your financial statements are never out of balance.


Which of the following are important tools for payroll accounting? (Choose all that apply).

a. Payroll Register

b. Payroll Accounting Sheet

c. Employee Earnings Record

d. W-4 Form - CORRECT ANSWER a. Payroll Register

, c. Employee Earnings Record

d. W-4 Form



For each statement indicate if it is part of the adjusting process by choosing TRUE or FALSE.


Reconciling the income statement at the end of the

period for proper revenue recognition. - CORRECT ANSWER False



For each statement indicate if it is part of the adjusting process by choosing TRUE or FALSE.



Pay off credit card payable balances to reduce liability

balances. - CORRECT ANSWER False



For each statement indicate if it is part of the adjusting process by choosing TRUE or FALSE.



Review all accounts and enter journal entries at the

end of the accounting period to ensure accurate

balances. - CORRECT ANSWER True



For each statement indicate if it is part of the adjusting process by choosing TRUE or FALSE.


Deleting uncleared transactions from the bank

accounts in order to report accurate balances. - CORRECT ANSWER False



Indicate whether the following are ethical responsibilities of a bookkeeper by marking TRUE
or FALSE.



Keeping all financial information and data for the

client confidential. - CORRECT ANSWER True