Accounting Errors Exam Latest

AIPB Mastering Correction of Accounting Errors Exam (Latest Update 2025 / 2026) Questions & Answers | Grade A | 100% Correct (Verified Solutions)

Question:

Balance sheet accounts

Answer:

Balance sheet accounts include assets, liabilities and owners' equity.

Question:

Asset accounts

Answer:

have a normal debit balance (a debit to an asset account increases it).Examples; Cash, Accounts Receivable, and Equipment.

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Question:

Liability accounts

Answer:

have a normal credit balance (a credit to a liability account increases it).Examples; Accounts Payable and Mortgage Payable.

Question:

Owners' equity accounts

Answer:

have a normal credit balance (a credit to an owners' equity account increases it). Examples; corporation accounts such as Capital Stock or Retained Earnings; sole proprietorship or partnership accounts such as Owners' Capital.

Question:

Income statement accounts

Answer:

include revenue and expense accounts.

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Question:

Revenue accounts

Answer:

have a normal credit balance (a credit to a revenue account increases it).Revenue accounts increase income.

Question:

Expense accounts

Answer:

have a normal debit balance (a debt to an expense account increases it) Expense accounts decrease income.

Question:

Contra account

Answer:

is directly related to a specific asset, liability or stockholders' (owners') equity, revenue or expense account. The contra account has the opposite normal balance of its related account.

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Question:

Balance sheet contra accounts

Answer:

Asset contra accounts. Accounts Receivable has a debit balance; its contra account, Allowance for Doubtful Accounts, has a credit balance. Equipment has a debit balance; its contra account, Accumulated Depreciation - Equipment, has a credit balance.

Question:

Liability contra accounts

Answer:

Bonds Payable has a credit balance; its contra account, Discount on Bonds Payable, has a debit balance.

Question:

Income statement contra accounts

Answer:

Owners' equity contra accounts. Most Owners' equity accounts have a normal credit balance, but Treasury Stock has a debit balance and is treated as a contra account to total Owners' Equity (rather than to a particular account).Dividends Declared has a debit balance and is a contra account to Retained Earnings.

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