CAT Accounting Technician Financial Reporting & Bookkeeping 3

Question 1

Which of the following best describes a contra asset account?

Accepted Answer

An account with a credit balance that offsets a related asset

Answer

Contra asset accounts, like Accumulated Depreciation, carry a credit balance and reduce the gross value of the associated asset on the balance sheet.

Question 2

Depreciation expense is recorded on an asset to:

Accepted Answer

Allocate the cost of a long-term asset over its useful life

Answer

Depreciation systematically allocates an asset's cost to expense periods that benefit from its use.

Question 3

A trial balance that is in balance guarantees that:

Accepted Answer

Total debits equal total credits in the ledger

Answer

A balanced trial balance only confirms that total debits equal total credits; it does not detect all types of errors.

Question 4

Which inventory costing method assumes the oldest units are sold first?

Accepted Answer

FIFO

Answer

FIFO (First-In, First-Out) assumes the earliest purchased inventory is the first sold.

Question 5

An adjusting entry for accrued salaries expense would include:

Accepted Answer

Debit Salaries Expense; Credit Salaries Payable

Answer

Accrued salaries increase the expense (debit) and create a liability (credit to Salaries Payable) for amounts earned but not yet paid.

(CAT) Certified Accounting Technician Practice Test