Double Entry 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 Double Entry Bookkeeping flashcards as text
Which of the following best describes a compound journal entry?
Answer: An entry involving more than two accounts
A compound journal entry involves three or more accounts, with total debits still equaling total credits.
On a balance sheet, which section lists accounts in order of liquidity?
Answer: Current assets
Current assets are listed in order of liquidity—most liquid (cash) first—reflecting how quickly each asset can be converted to cash.
When a business receives a $3,000 bank loan, the journal entry credits:
Answer: Notes Payable
Borrowing money increases Cash (debit) and creates an obligation recorded as Notes Payable (credit).
What does a credit balance in an Accounts Receivable account most likely indicate?
Answer: The company owes a customer a refund or credit
A credit balance in Accounts Receivable typically means a customer has overpaid or a credit memo was issued, resulting in a refund owed to the customer.
Which of the following correctly states the normal balance for each account type?
Answer: Assets: Debit; Liabilities: Credit; Equity: Credit
Assets have a normal debit balance; liabilities and equity have normal credit balances, consistent with the accounting equation.
A bookkeeper records a $500 purchase of inventory as $5,000. This is known as a(n):
Answer: Error of original entry (transposition/slide)
Recording an incorrect amount (e.g., $5,000 instead of $500) is an error of original entry, which will cause the trial balance to be out of balance if only one side is wrong.
After closing entries, which accounts will show a zero balance?
Answer: Revenue, Expenses, and Drawings
Closing entries zero out revenue, expense, and drawing accounts so they can accumulate fresh data in the next accounting period.