Certified Bookkeeper (CB) Practice Exam
Questions and Answers with Rationales 2025|
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1. Which financial statement reports a company’s assets, liabilities, and equity
at a specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings
Answer: C) Balance Sheet
Rationale: The Balance Sheet presents assets, liabilities, and equity at a specific
date, showing the company’s financial position.
2. What is the primary purpose of a trial balance?
A) To prepare financial statements
B) To detect errors in the ledger
C) To record transactions
D) To close temporary accounts
,Answer: B) To detect errors in the ledger
Rationale: A trial balance ensures debits equal credits and helps identify
discrepancies before preparing financial statements.
3. Which account is increased by a debit?
A) Accounts Payable
B) Revenue
C) Expense
D) Common Stock
Answer: C) Expense
Rationale: Expenses increase with debits, while liabilities and equity accounts
increase with credits.
4. When a company pays rent in advance, which type of account is debited?
A) Expense
B) Asset
C) Liability
D) Revenue
Answer: B) Asset
Rationale: Prepaid rent is an asset because it represents a future economic
benefit.
5. What is the formula to calculate net income?
, A) Assets – Liabilities
B) Revenues – Expenses
C) Liabilities + Equity
D) Cash Inflows – Cash Outflows
Answer: B) Revenues – Expenses
Rationale: Net income is the excess of revenues over expenses.
6. Which accounting principle requires revenue to be recorded when earned,
regardless of when cash is received?
A) Matching Principle
B) Revenue Recognition Principle
C) Conservatism Principle
D) Cost Principle
Answer: B) Revenue Recognition Principle
Rationale: Revenue must be recognized when earned, not necessarily when cash
is received.
7. What type of account is Accumulated Depreciation?
A) Asset
B) Liability
C) Contra Asset
D) Expense
Questions and Answers with Rationales 2025|
Verified for Guaranteed pass latest update
1. Which financial statement reports a company’s assets, liabilities, and equity
at a specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings
Answer: C) Balance Sheet
Rationale: The Balance Sheet presents assets, liabilities, and equity at a specific
date, showing the company’s financial position.
2. What is the primary purpose of a trial balance?
A) To prepare financial statements
B) To detect errors in the ledger
C) To record transactions
D) To close temporary accounts
,Answer: B) To detect errors in the ledger
Rationale: A trial balance ensures debits equal credits and helps identify
discrepancies before preparing financial statements.
3. Which account is increased by a debit?
A) Accounts Payable
B) Revenue
C) Expense
D) Common Stock
Answer: C) Expense
Rationale: Expenses increase with debits, while liabilities and equity accounts
increase with credits.
4. When a company pays rent in advance, which type of account is debited?
A) Expense
B) Asset
C) Liability
D) Revenue
Answer: B) Asset
Rationale: Prepaid rent is an asset because it represents a future economic
benefit.
5. What is the formula to calculate net income?
, A) Assets – Liabilities
B) Revenues – Expenses
C) Liabilities + Equity
D) Cash Inflows – Cash Outflows
Answer: B) Revenues – Expenses
Rationale: Net income is the excess of revenues over expenses.
6. Which accounting principle requires revenue to be recorded when earned,
regardless of when cash is received?
A) Matching Principle
B) Revenue Recognition Principle
C) Conservatism Principle
D) Cost Principle
Answer: B) Revenue Recognition Principle
Rationale: Revenue must be recognized when earned, not necessarily when cash
is received.
7. What type of account is Accumulated Depreciation?
A) Asset
B) Liability
C) Contra Asset
D) Expense
