Intuit Bookkeeping Exam Questions

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Intuit Bookkeeping Exam Questions & Answers 1.What is the Purpose of a balance sheet ANS To determine the financial health of an organization at a point in time.

2.Financial elements on the income statement ANS Expenses, Revenue 3.Financial elements on the balance sheet ANS Assets, Capital, and Liabilities 4.Accounts that increase with debit ANS Cash, equipment, assets, expenses, and dividends 5.Accounts that increase with credit ANS Contra-Asset Accumulated Depreciation, Account Payable, common stock, equity, revenue and liability 6.Lou has a landscaping company. He received a $10,000 payment for a landscaping job that he completed for the Rose family. How would you record this transaction? 1 / 4

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ANS Debit $10,000 to Cash; Credit $10,000 to Service Revenue – Landscaping 7.Definition of a debit in double-entry accounting ANS An increase in assets/ex- penses and a decrease in liabilities/owner's equity and revenue.

8.General Ledger ANS The debits and credits posted to the company's line of credit during the last 6 months 9.Transaction Journal ANS The debits and credits recorded for a rental equipment expense 10.income statement (profit and loss statement) ANS Report of all revenue and expenses for the month 11.Is the ending balance for the inventory on Balance Sheet?ANS Yes, Ending balance for the inventory 12.Reasons for making adjusting journal entries (Choose 3) ANS a. To record expi- ration of prepaid insurance. b. To record depreciation. c. To recognize unpaid salaries for the current period.

13.Economic Entity Assumption 2 / 4

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ANS The business is a separate entity, so the activ- ities of a business must be kept separate from any other financial activities of its business owners.

14.Reliability Assumption ANS Makes mandatory for companies to record only ac- counting transactions that can be verified through invoices, billing statements and bank statements.

15.Full Disclosure Principle ANS All information that is relative to the business and is important to a lender or investor has to be provided in financial statements or in the notes of the statements.

16.Conservatism Assumption ANS When bookkeepers are uncertain and need to determine how to report an item, this guides them to choose the option that shows less income or asset benefit.

17.Going Concern Assumption ANS Refers to a business that is now stable enough to operate and meet its obligations for the foreseeable future.

18.Monetary Unit Assumption ANS Refers to one monetary unit being used through- out all of the 3 / 4

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accounting activities.

19.Consistency Principle ANS Refers to when a business adopts a specific accounting method that it will enter all similar items in the exact same way in the future.

20.Materiality Principle ANS Refers to an accounting standard that can be ignored if the impact has such a small effect on the financial statements that it would not be misleading.

21.On February 28, ABC Company received an invoice for $1,200 for running social media ads in February. The invoice will be paid in March.Assuming ABC Company uses the accrual method of accounting, which is correct for February?ANS Expenses are increased by $1,200.

22.Which of the following accounts is not considered a long term asset?ANS In- ventory 23.Difference between current assets and long-term assets ANS Current assets are expected to be converted to cash within one year, while Long-term assets are expected to extend beyond a year from the reporting date.

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