Certified Bookkeeper (CB) Practice Exam
2 QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2025
1. What type of account is "Accounts Receivable"?
A) Asset
B) Liability
C) Expense
D) Revenue
Answer: A) Asset
Rationale: Accounts Receivable represents money owed to the business,
classified as a current asset.
2. Which financial statement shows a company’s financial position at a specific
point in time?
,A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Retained Earnings Statement
Answer: C) Balance Sheet
Rationale: The Balance Sheet summarizes assets, liabilities, and equity at a
specific date.
3. What is the accounting equation?
A) Assets = Liabilities - Equity
B) Assets = Liabilities + Equity
C) Assets + Liabilities = Equity
D) Assets - Liabilities = Revenue
Answer: B) Assets = Liabilities + Equity
Rationale: This fundamental equation ensures the balance of the accounting
records.
4. Which account type is increased by a debit?
A) Revenue
B) Expense
C) Liability
D) Equity
, Answer: B) Expense
Rationale: Expenses and assets increase with debits, while liabilities, equity, and
revenue increase with credits.
5. What document authorizes payment to a vendor?
A) Purchase Order
B) Invoice
C) Check
D) Bill of Lading
Answer: C) Check
Rationale: A check is the payment instrument used to pay vendors.
6. What does the term "accrual basis accounting" mean?
A) Recording transactions when cash is received or paid
B) Recording revenues and expenses when they are incurred, regardless of cash
flow
C) Only recording cash transactions
D) None of the above
Answer: B) Recording revenues and expenses when they are incurred, regardless
of cash flow
Rationale: Accrual accounting recognizes revenues and expenses when earned or
incurred, not necessarily when cash changes hands.
2 QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2025
1. What type of account is "Accounts Receivable"?
A) Asset
B) Liability
C) Expense
D) Revenue
Answer: A) Asset
Rationale: Accounts Receivable represents money owed to the business,
classified as a current asset.
2. Which financial statement shows a company’s financial position at a specific
point in time?
,A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Retained Earnings Statement
Answer: C) Balance Sheet
Rationale: The Balance Sheet summarizes assets, liabilities, and equity at a
specific date.
3. What is the accounting equation?
A) Assets = Liabilities - Equity
B) Assets = Liabilities + Equity
C) Assets + Liabilities = Equity
D) Assets - Liabilities = Revenue
Answer: B) Assets = Liabilities + Equity
Rationale: This fundamental equation ensures the balance of the accounting
records.
4. Which account type is increased by a debit?
A) Revenue
B) Expense
C) Liability
D) Equity
, Answer: B) Expense
Rationale: Expenses and assets increase with debits, while liabilities, equity, and
revenue increase with credits.
5. What document authorizes payment to a vendor?
A) Purchase Order
B) Invoice
C) Check
D) Bill of Lading
Answer: C) Check
Rationale: A check is the payment instrument used to pay vendors.
6. What does the term "accrual basis accounting" mean?
A) Recording transactions when cash is received or paid
B) Recording revenues and expenses when they are incurred, regardless of cash
flow
C) Only recording cash transactions
D) None of the above
Answer: B) Recording revenues and expenses when they are incurred, regardless
of cash flow
Rationale: Accrual accounting recognizes revenues and expenses when earned or
incurred, not necessarily when cash changes hands.
