CPB / BookKeeping Bookkeeping and Accounting 2

Question 1

A company purchases equipment for $12,000 cash. How is this transaction recorded?

Accepted Answer

Debit Equipment $12,000; Credit Cash $12,000

Answer

Debit Cash $12,000; Credit Equipment $12,000

Answer

Debit Expense $12,000; Credit Cash $12,000

Answer

Debit Equipment $12,000; Credit Revenue $12,000

Question 2

Which financial statement shows a company's revenues and expenses over a period of time?

Accepted Answer

Income Statement

Answer

Balance Sheet

Answer

Statement of Cash Flows

Answer

Statement of Retained Earnings

Question 3

Accounts Receivable has a normal balance of:

Accepted Answer

Debit

Answer

Credit

Answer

Either debit or credit

Answer

Neither debit nor credit

Question 4

What is the purpose of a bank reconciliation?

Accepted Answer

To match the company's cash book balance with the bank statement balance

Answer

To record daily cash receipts

Answer

To prepare the payroll register

Answer

To close temporary accounts at year-end

Question 5

Under the accrual basis of accounting, revenue is recognized when:

Accepted Answer

It is earned, regardless of when cash is received

Answer

Cash is received from the customer

Answer

The invoice is mailed to the customer

Answer

The fiscal year ends

Question 6

Which of the following is a liability account?

Accepted Answer

Unearned Revenue

Answer

Prepaid Insurance

Answer

Accumulated Depreciation

Answer

Retained Earnings

Question 7

The double-entry bookkeeping system requires that:

Accepted Answer

Total debits must equal total credits for every transaction

Answer

Every transaction is recorded in two separate journals

Answer

All accounts must have both a debit and a credit balance

Answer

Revenues always equal expenses