Bookkeeping Final Exam review with
Complete Solutions
What is the purpose of maintaining a fixed asset register?
✔✔ A fixed asset register tracks details about a company's long-term assets, including their
purchase price, depreciation, and current value, helping manage and account for these assets
effectively.
How should a company record the receipt of a loan?
✔✔ When a company receives a loan, it debits the cash account to increase its balance and
credits the loans payable account to reflect the obligation to repay the loan.
What are accrued expenses, and how are they recorded?
✔✔ Accrued expenses are costs that have been incurred but not yet paid. They are recorded by
debiting the appropriate expense account and crediting the accrued expenses liability account.
What is the significance of the revenue recognition principle in bookkeeping?
✔✔ The revenue recognition principle dictates that revenue should be recorded when it is
earned, regardless of when cash is received, ensuring that financial statements reflect accurate
financial performance.
1
, How does one adjust for an error found in an account balance that was previously reconciled?
✔✔ To adjust for an error found in a reconciled account, you make a correcting journal entry to
adjust the account balance and document the nature of the error and the correction made.
What is a petty cash fund, and how is it managed?
✔✔ A petty cash fund is a small amount of cash kept on hand for minor expenses. It is managed
by keeping receipts for expenditures, periodically reconciling the fund, and replenishing it as
needed.
How do you record a customer prepayment in the books?
✔✔ A customer prepayment is recorded by debiting the cash account and crediting the unearned
revenue account, reflecting that the revenue has been received but not yet earned.
What are adjusting entries, and why are they necessary?
✔✔ Adjusting entries are made at the end of an accounting period to update account balances
before preparing financial statements, ensuring that revenue and expenses are recorded in the
correct period.
2
Complete Solutions
What is the purpose of maintaining a fixed asset register?
✔✔ A fixed asset register tracks details about a company's long-term assets, including their
purchase price, depreciation, and current value, helping manage and account for these assets
effectively.
How should a company record the receipt of a loan?
✔✔ When a company receives a loan, it debits the cash account to increase its balance and
credits the loans payable account to reflect the obligation to repay the loan.
What are accrued expenses, and how are they recorded?
✔✔ Accrued expenses are costs that have been incurred but not yet paid. They are recorded by
debiting the appropriate expense account and crediting the accrued expenses liability account.
What is the significance of the revenue recognition principle in bookkeeping?
✔✔ The revenue recognition principle dictates that revenue should be recorded when it is
earned, regardless of when cash is received, ensuring that financial statements reflect accurate
financial performance.
1
, How does one adjust for an error found in an account balance that was previously reconciled?
✔✔ To adjust for an error found in a reconciled account, you make a correcting journal entry to
adjust the account balance and document the nature of the error and the correction made.
What is a petty cash fund, and how is it managed?
✔✔ A petty cash fund is a small amount of cash kept on hand for minor expenses. It is managed
by keeping receipts for expenditures, periodically reconciling the fund, and replenishing it as
needed.
How do you record a customer prepayment in the books?
✔✔ A customer prepayment is recorded by debiting the cash account and crediting the unearned
revenue account, reflecting that the revenue has been received but not yet earned.
What are adjusting entries, and why are they necessary?
✔✔ Adjusting entries are made at the end of an accounting period to update account balances
before preparing financial statements, ensuring that revenue and expenses are recorded in the
correct period.
2
