ACCT 201 ACTUAL 2026 CORE EXAM TEST QUESTIONS AND
ANSWERS GRADED A+
✔✔are assets a debit or credit balance - ✔✔debit
✔✔are liabilities a debit or credit balance - ✔✔credit
✔✔are common stock a debit or credit balance - ✔✔credit
✔✔are retained earnings a debit or credit balance - ✔✔credit
✔✔are revenue a debit or credit balance - ✔✔credit
✔✔are expenses a debit or credit balance - ✔✔debit
✔✔are dividends a debit or credit balance - ✔✔debit
✔✔the journal - ✔✔an accounting record in which transactions are initially recorded in
chronological order; shows debits and credits
✔✔general journal - ✔✔A journal that includes dates, account titles, explanations,
references, debits, and credits; prevents & locates errors
✔✔a simple entry - ✔✔A journal entry that involves only two accounts (a debit and a
credit)
✔✔a compound entry - ✔✔A journal entry with two or more debits or two or more
credits.
✔✔ledger - ✔✔the group of accounts maintained by a company; keeps track of
changes in the balance of accounts
✔✔a general ledger - ✔✔A ledger that contains all asset, liability, stockholders' equity,
revenue, and expense accounts.
✔✔posting - ✔✔transferring information from a journal entry to a ledger account; stating
the debits and credits w/ their date, amount, and reference number
✔✔trial balance - ✔✔a list of accounts and their balances at a given time; makes sure
the debits and credits are equal
✔✔the difference between the trial balance and the general ledger - ✔✔the trial balance
only lists the accounts and their balances while the general ledger includes ALL activity
for each account
,✔✔time period assumption - ✔✔Assumption that an organization's activities can be
divided into specific time periods
✔✔revenue recognition principle - ✔✔The principle that companies recognize revenue
in the accounting period in which the performance obligation is satisfied.
✔✔expense recognition principle - ✔✔The principle that matches expenses with
revenues in the period when the company makes efforts to generate those revenues.
✔✔interim periods - ✔✔Monthly or quarterly accounting time periods
✔✔fiscal year - ✔✔an accounting period that is one year long
✔✔accrual basis accounting - ✔✔the recording of transactions in the periods in which
the events occurred NOT when cash is exchanged
✔✔cash basis accounting - ✔✔the recording of transactions when cash is exchanged;
not used often b/c its misleading
✔✔adjusting entries - ✔✔Entries made at the end of an accounting period to ensure
that the revenue recognition and expense recognition principles are followed.
✔✔unearned revenue - ✔✔The liability created by receiving revenue in advance.
✔✔accrued expense - ✔✔An expense that the business has incurred but has not yet
paid; ex: Property taxes are due annually in March, but the expense accumulates
monthly. By December 31, the business owes $4,000 for the year-to-date portion.→ It
records accrued property tax of $4,000.
✔✔accrued revenue - ✔✔a revenue that has been earned but not yet received in cash;
ex: A contractor finishes a $12,000 project on December 28. The client will pay after
reviewing the final report in January.→ The contractor records accrued revenue of
$12,000.
✔✔defferals - ✔✔expenses or revenues that are recognized at a date later than the
point when cash was originally exchanged
✔✔prepaid expenses - ✔✔expenses paid in cash before they are used or consumed;
ex: rent, equipment; expire with the passage of time or through use
✔✔the entry to record prepaid insurance - ✔✔dr insurance expense - cr prepaid
insurance
, ✔✔depreciation - ✔✔the process of allocating the cost of an asset to expense over its
useful life
✔✔accumulated depreciation- equipment - ✔✔keeps track of the total amount of
depreciation expense for a piece of equipment; contra-asset account; discloses the
original cost of the equipment & the total cost that has been depreciated
✔✔contra asset account - ✔✔an account that is offset against an asset account on the
balance sheet
✔✔contra account - ✔✔an account that is paired with a related main account but has
the opposite normal balance. Its purpose is to reduce the value of that related account
while keeping the original balance visible.
✔✔closing - ✔✔making the accounts ready for the next period
✔✔temporary accounts - ✔✔accounts that close out at the end of the year; revenue,
expense, dividends
✔✔permanent account - ✔✔an account that is not closed at the end of the period; on
post closing trial balance; assets, liabilities, and stockholders equity
✔✔income summary - ✔✔a temporary account used in closing revenue and expense
accounts
✔✔retained earning - ✔✔where the net income/loss is closed into at the end of the term
✔✔the 4 closing entries - ✔✔- dr revenue, cr income summary
- dr income summary, cr expenses
- dr income summary, cr retained earnings
- dr retained earnings, cr dividends
✔✔correcting entries - ✔✔Entries to correct errors made in previous recordings
✔✔classified balance sheet - ✔✔A balance sheet that groups together similar assets
and liabilities; it improves users understanding of a company's financial position and
their claim on the assets
✔✔current assets - ✔✔Assets expected to be converted to cash within a year; ex: cash,
shortterm investments, accounts receivable, and inventory
✔✔long term investments - ✔✔investments held for over a year, not currently in use
ANSWERS GRADED A+
✔✔are assets a debit or credit balance - ✔✔debit
✔✔are liabilities a debit or credit balance - ✔✔credit
✔✔are common stock a debit or credit balance - ✔✔credit
✔✔are retained earnings a debit or credit balance - ✔✔credit
✔✔are revenue a debit or credit balance - ✔✔credit
✔✔are expenses a debit or credit balance - ✔✔debit
✔✔are dividends a debit or credit balance - ✔✔debit
✔✔the journal - ✔✔an accounting record in which transactions are initially recorded in
chronological order; shows debits and credits
✔✔general journal - ✔✔A journal that includes dates, account titles, explanations,
references, debits, and credits; prevents & locates errors
✔✔a simple entry - ✔✔A journal entry that involves only two accounts (a debit and a
credit)
✔✔a compound entry - ✔✔A journal entry with two or more debits or two or more
credits.
✔✔ledger - ✔✔the group of accounts maintained by a company; keeps track of
changes in the balance of accounts
✔✔a general ledger - ✔✔A ledger that contains all asset, liability, stockholders' equity,
revenue, and expense accounts.
✔✔posting - ✔✔transferring information from a journal entry to a ledger account; stating
the debits and credits w/ their date, amount, and reference number
✔✔trial balance - ✔✔a list of accounts and their balances at a given time; makes sure
the debits and credits are equal
✔✔the difference between the trial balance and the general ledger - ✔✔the trial balance
only lists the accounts and their balances while the general ledger includes ALL activity
for each account
,✔✔time period assumption - ✔✔Assumption that an organization's activities can be
divided into specific time periods
✔✔revenue recognition principle - ✔✔The principle that companies recognize revenue
in the accounting period in which the performance obligation is satisfied.
✔✔expense recognition principle - ✔✔The principle that matches expenses with
revenues in the period when the company makes efforts to generate those revenues.
✔✔interim periods - ✔✔Monthly or quarterly accounting time periods
✔✔fiscal year - ✔✔an accounting period that is one year long
✔✔accrual basis accounting - ✔✔the recording of transactions in the periods in which
the events occurred NOT when cash is exchanged
✔✔cash basis accounting - ✔✔the recording of transactions when cash is exchanged;
not used often b/c its misleading
✔✔adjusting entries - ✔✔Entries made at the end of an accounting period to ensure
that the revenue recognition and expense recognition principles are followed.
✔✔unearned revenue - ✔✔The liability created by receiving revenue in advance.
✔✔accrued expense - ✔✔An expense that the business has incurred but has not yet
paid; ex: Property taxes are due annually in March, but the expense accumulates
monthly. By December 31, the business owes $4,000 for the year-to-date portion.→ It
records accrued property tax of $4,000.
✔✔accrued revenue - ✔✔a revenue that has been earned but not yet received in cash;
ex: A contractor finishes a $12,000 project on December 28. The client will pay after
reviewing the final report in January.→ The contractor records accrued revenue of
$12,000.
✔✔defferals - ✔✔expenses or revenues that are recognized at a date later than the
point when cash was originally exchanged
✔✔prepaid expenses - ✔✔expenses paid in cash before they are used or consumed;
ex: rent, equipment; expire with the passage of time or through use
✔✔the entry to record prepaid insurance - ✔✔dr insurance expense - cr prepaid
insurance
, ✔✔depreciation - ✔✔the process of allocating the cost of an asset to expense over its
useful life
✔✔accumulated depreciation- equipment - ✔✔keeps track of the total amount of
depreciation expense for a piece of equipment; contra-asset account; discloses the
original cost of the equipment & the total cost that has been depreciated
✔✔contra asset account - ✔✔an account that is offset against an asset account on the
balance sheet
✔✔contra account - ✔✔an account that is paired with a related main account but has
the opposite normal balance. Its purpose is to reduce the value of that related account
while keeping the original balance visible.
✔✔closing - ✔✔making the accounts ready for the next period
✔✔temporary accounts - ✔✔accounts that close out at the end of the year; revenue,
expense, dividends
✔✔permanent account - ✔✔an account that is not closed at the end of the period; on
post closing trial balance; assets, liabilities, and stockholders equity
✔✔income summary - ✔✔a temporary account used in closing revenue and expense
accounts
✔✔retained earning - ✔✔where the net income/loss is closed into at the end of the term
✔✔the 4 closing entries - ✔✔- dr revenue, cr income summary
- dr income summary, cr expenses
- dr income summary, cr retained earnings
- dr retained earnings, cr dividends
✔✔correcting entries - ✔✔Entries to correct errors made in previous recordings
✔✔classified balance sheet - ✔✔A balance sheet that groups together similar assets
and liabilities; it improves users understanding of a company's financial position and
their claim on the assets
✔✔current assets - ✔✔Assets expected to be converted to cash within a year; ex: cash,
shortterm investments, accounts receivable, and inventory
✔✔long term investments - ✔✔investments held for over a year, not currently in use
