CB Quality Assurance & Compliance 5

Question 1

Which of the following is the best example of an error of principle in bookkeeping?

Accepted Answer

Debiting Rent Expense instead of Prepaid Rent for an advance payment

Answer

An error of principle occurs when a transaction is recorded using the wrong type of account, such as expensing an item that should be capitalized or treated as prepaid.

Question 2

A bookkeeper wants to verify that all checks issued during the month were properly authorized. Which document would be most useful for this review?

Accepted Answer

The check register cross-referenced against approved vouchers

Answer

Comparing the check register against approved payment vouchers confirms that each disbursement had proper prior authorization.

Question 3

Under the Fair Labor Standards Act (FLSA), which of the following records must employers retain for at least 3 years?

Accepted Answer

Payroll records including hours worked and wages paid

Answer

The FLSA requires employers to keep payroll records, including time cards and wage computations, for a minimum of 3 years.

Question 4

Which of the following best describes materiality as it applies to financial reporting?

Accepted Answer

An item is material if its omission or misstatement could influence the economic decisions of users

Answer

Materiality is a threshold concept: information is material if omitting or misstating it could affect the decisions of financial statement users.

Question 5

A bookkeeper is asked to back-date a journal entry to the prior fiscal year to improve that year's reported profit. This action would violate which ethical principle?

Accepted Answer

Integrity

Answer

Back-dating entries to manipulate reported results is a deliberate misrepresentation that violates the principle of integrity, which requires honest and straightforward conduct.

(CB) Certified Bookkeeper Practice Test

(CB) Certified Bookkeeper Practice Test

CB Quality Assurance & Compliance 5