AIFB Certified Bookkeeping CBP Exam
**Question 1.** Which of the following documents initiates the accounting cycle?
A) Trial balance
B) Source document
C) Adjusted trial balance
D) Financial statements
Answer: B
Explanation: The accounting cycle begins when a source document (e.g., invoice, receipt) is generated,
providing evidence for a transaction.
**Question 2.** In a double‑entry system, which account is increased by a credit?
A) Asset
B) Expense
C) Liability
D) Dividend
Answer: C
Explanation: Credits increase liability, equity, and revenue accounts; they decrease assets and expenses.
**Question 3.** Which type of business entity records owners’ capital contributions in the “Owner’s
Equity” section?
A) Corporation
B) Partnership
C) Sole proprietorship
D) Non‑profit organization
Answer: C
Explanation: Sole proprietors report capital contributions under Owner’s Equity, not “Stockholders’
Equity.”
, AIFB Certified Bookkeeping CBP Exam
**Question 4.** A chart of accounts for a manufacturing company should include which of the following
primary account categories?
A) Sales, Advertising, Utilities
B) Raw Materials, Work‑in‑Process, Finished Goods
C) Salaries, Rent, Insurance
D) Cash, Accounts Receivable, Inventory
Answer: B
Explanation: Manufacturing firms need specific inventory accounts to track the production process.
**Question 5.** Which journal is most appropriate for recording a cash sale of equipment for $5,000?
A) Sales Journal
B) Purchases Journal
C) Cash Receipts Journal
D) General Journal
Answer: C
Explanation: Cash sales are recorded in the Cash Receipts Journal because cash is received.
**Question 6.** Under the accrual basis of accounting, revenue is recognized when:
A) Cash is received
B) The invoice is mailed
C) The service is performed or goods are delivered
D) The fiscal year ends
Answer: C
Explanation: Accrual accounting follows the revenue‑recognition principle, matching revenue to the
period earned.
, AIFB Certified Bookkeeping CBP Exam
**Question 7.** Which adjusting entry corrects for wages earned by employees but not yet paid at
month‑end?
A) Debit Wages Expense, Credit Wages Payable
B) Debit Wages Payable, Credit Cash
C) Debit Cash, Credit Wages Expense
D) Debit Wages Expense, Credit Cash
Answer: A
Explanation: Accrued wages increase expense and create a liability (Wages Payable).
**Question 8.** After posting all adjusting entries, the accountant prepares an **adjusted trial
balance** to:
A) Determine cash flow
B) Verify that debits still equal credits
C) Calculate tax liability
D) Close temporary accounts
Answer: B
Explanation: The adjusted trial balance confirms that the ledger remains balanced after adjustments.
**Question 9.** Which asset classification on the balance sheet is considered a current asset?
A) Land
B) Patent
C) Accounts Receivable
D) Bonds payable
Answer: C
, AIFB Certified Bookkeeping CBP Exam
Explanation: Current assets are expected to be converted to cash within one year; Accounts Receivable
meets this definition.
**Question 10.** The income statement primarily reports:
A) Cash inflows and outflows
B) Financial position at a point in time
C) Revenues and expenses for a period
D) Owner’s equity changes
Answer: C
Explanation: The income statement measures profitability by summarizing revenues and expenses over
a period.
**Question 11.** In a statement of cash flows, cash received from issuing common stock is classified as:
A) Operating activity
B) Investing activity
C) Financing activity
D) Non‑cash activity
Answer: C
Explanation: Financing activities include cash flows related to equity and debt financing.
**Question 12.** Horizontal analysis of financial statements involves:
A) Comparing each line item to a base‑year amount
B) Expressing each line item as a percentage of total assets
C) Calculating ratios like current ratio
D) Adjusting for inflation
Answer: A
**Question 1.** Which of the following documents initiates the accounting cycle?
A) Trial balance
B) Source document
C) Adjusted trial balance
D) Financial statements
Answer: B
Explanation: The accounting cycle begins when a source document (e.g., invoice, receipt) is generated,
providing evidence for a transaction.
**Question 2.** In a double‑entry system, which account is increased by a credit?
A) Asset
B) Expense
C) Liability
D) Dividend
Answer: C
Explanation: Credits increase liability, equity, and revenue accounts; they decrease assets and expenses.
**Question 3.** Which type of business entity records owners’ capital contributions in the “Owner’s
Equity” section?
A) Corporation
B) Partnership
C) Sole proprietorship
D) Non‑profit organization
Answer: C
Explanation: Sole proprietors report capital contributions under Owner’s Equity, not “Stockholders’
Equity.”
, AIFB Certified Bookkeeping CBP Exam
**Question 4.** A chart of accounts for a manufacturing company should include which of the following
primary account categories?
A) Sales, Advertising, Utilities
B) Raw Materials, Work‑in‑Process, Finished Goods
C) Salaries, Rent, Insurance
D) Cash, Accounts Receivable, Inventory
Answer: B
Explanation: Manufacturing firms need specific inventory accounts to track the production process.
**Question 5.** Which journal is most appropriate for recording a cash sale of equipment for $5,000?
A) Sales Journal
B) Purchases Journal
C) Cash Receipts Journal
D) General Journal
Answer: C
Explanation: Cash sales are recorded in the Cash Receipts Journal because cash is received.
**Question 6.** Under the accrual basis of accounting, revenue is recognized when:
A) Cash is received
B) The invoice is mailed
C) The service is performed or goods are delivered
D) The fiscal year ends
Answer: C
Explanation: Accrual accounting follows the revenue‑recognition principle, matching revenue to the
period earned.
, AIFB Certified Bookkeeping CBP Exam
**Question 7.** Which adjusting entry corrects for wages earned by employees but not yet paid at
month‑end?
A) Debit Wages Expense, Credit Wages Payable
B) Debit Wages Payable, Credit Cash
C) Debit Cash, Credit Wages Expense
D) Debit Wages Expense, Credit Cash
Answer: A
Explanation: Accrued wages increase expense and create a liability (Wages Payable).
**Question 8.** After posting all adjusting entries, the accountant prepares an **adjusted trial
balance** to:
A) Determine cash flow
B) Verify that debits still equal credits
C) Calculate tax liability
D) Close temporary accounts
Answer: B
Explanation: The adjusted trial balance confirms that the ledger remains balanced after adjustments.
**Question 9.** Which asset classification on the balance sheet is considered a current asset?
A) Land
B) Patent
C) Accounts Receivable
D) Bonds payable
Answer: C
, AIFB Certified Bookkeeping CBP Exam
Explanation: Current assets are expected to be converted to cash within one year; Accounts Receivable
meets this definition.
**Question 10.** The income statement primarily reports:
A) Cash inflows and outflows
B) Financial position at a point in time
C) Revenues and expenses for a period
D) Owner’s equity changes
Answer: C
Explanation: The income statement measures profitability by summarizing revenues and expenses over
a period.
**Question 11.** In a statement of cash flows, cash received from issuing common stock is classified as:
A) Operating activity
B) Investing activity
C) Financing activity
D) Non‑cash activity
Answer: C
Explanation: Financing activities include cash flows related to equity and debt financing.
**Question 12.** Horizontal analysis of financial statements involves:
A) Comparing each line item to a base‑year amount
B) Expressing each line item as a percentage of total assets
C) Calculating ratios like current ratio
D) Adjusting for inflation
Answer: A
