ABA Bookkeeping & General Ledger 3

Question 1

Which of the following is an example of a reversing entry?

Accepted Answer

Reversing an accrued expense entry at the start of the next period

Answer

Reversing entries are made at the beginning of a new period to cancel out accruals recorded in the prior period, simplifying subsequent cash entries.

Question 2

In a perpetual inventory system, when merchandise is sold, the bookkeeper records:

Accepted Answer

Both a sales entry and a cost of goods sold entry simultaneously

Answer

A perpetual system updates inventory and records cost of goods sold at each sale, unlike the periodic system which updates only at period-end.

Question 3

What does a credit balance in Accounts Receivable typically indicate?

Accepted Answer

An overpayment or advance payment by the customer

Answer

A credit balance in Accounts Receivable usually means a customer has overpaid or paid in advance, creating a liability to the company.

Question 4

Bank reconciliation adjustments for deposits in transit should be:

Accepted Answer

Added to the bank statement balance

Answer

Deposits in transit have been recorded in the books but not yet processed by the bank, so they are added to the bank statement balance.

Question 5

Which of the following accounts is NOT closed at the end of the accounting period?

Accepted Answer

Prepaid Insurance

Answer

Prepaid Insurance is a permanent (real) asset account that carries its balance forward to the next period and is not closed.

(ABA) Accredited Business Accountant Practice Test