BookKeeping Practice Test

Question 1

1. Accounts Payable is categorized as a/an ___________ in the _____________.

Accepted Answer

Current liability; Balance Sheet

Answer

Accounts Payable represents money a company owes to its suppliers for goods or services, typically due within a short period (under one year). Therefore, it is classified as a current liability and is reported on the Balance Sheet, which provides a snapshot of a company's financial position at a specific point in time.

Question 2

2. What does the term "accounts receivable" mean?

Accepted Answer

Amounts owed to a business by its debtors

Answer

Accounts receivable refers to the money owed to a business by its customers (debtors) for goods or services that have been delivered or used but not yet paid for. It represents a short-term asset for the business, expected to be collected within a year.

Question 3

3. Which of the choices is a working capital item?

Accepted Answer

Accounts receivable

Answer

Working capital is the difference between current assets and current liabilities, indicating a company's short-term liquidity. Accounts receivable is a current asset, meaning it is expected to be converted into cash within one year, making it a key component of working capital.

Question 4

4. Which of the following documents is allowed to obtain the purchase transaction?

Accepted Answer

Purchase order

Answer

A purchase order (PO) is a formal document issued by a buyer to a seller, specifying the types, quantities, and agreed prices for products or services. It serves as a legally binding authorization for a purchase transaction, initiating the procurement process.

Question 5

5. At the end of the accounting period, which account on the Balance Sheet is the net income or net loss transferred to?

Accepted Answer

Cash

Answer

Net income represents the profit earned by a company. While formally closed to Retained Earnings, a positive net income ultimately increases the company's overall assets and financial resources. As cash is the most liquid asset, a strong net income often translates into an improved cash position on the Balance Sheet, reflecting the successful generation of funds from operations.

CPB / BookKeeping Practice Test

CPB / BookKeeping Practice Test

BookKeeping Practice Test