Bookkeeping Flashcards
7 cards from real CPB / BookKeeping practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Bookkeeping flashcards as text
Which of the following adjusting entries records revenue that has been earned but not yet received?
Answer: Debit Accounts Receivable, Credit Revenue
Accrued revenue is recorded by debiting Accounts Receivable and crediting Revenue to recognize income earned but not yet collected.
What is the purpose of closing entries at the end of an accounting period?
Answer: To transfer temporary account balances to retained earnings
Closing entries zero out temporary accounts (revenues, expenses, dividends) and transfer their net balances to Retained Earnings.
A company uses the allowance method for bad debts. When a specific account is written off, the entry is:
Answer: Debit Allowance for Doubtful Accounts, Credit Accounts Receivable
Under the allowance method, writing off a bad debt debits the Allowance and credits Accounts Receivable, with no impact on net income.
Which inventory system updates the inventory account continuously after each purchase and sale?
Answer: Perpetual inventory system
The perpetual inventory system maintains a running balance in the Inventory account, updating it with every transaction.
If a company has total assets of $180,000 and total liabilities of $75,000, what is owner's equity?
Answer: $105,000
Owner's Equity = Assets − Liabilities = $180,000 − $75,000 = $105,000.
Which of the following is an example of an accrued expense?
Answer: Wages earned but not yet paid
Accrued expenses are costs incurred in the current period but not yet paid, such as wages owed to employees at period end.
What does a debit balance in the Retained Earnings account indicate?
Answer: The company has a deficit (accumulated losses)
A debit balance in Retained Earnings is called a deficit and means cumulative losses exceed cumulative profits since inception.