Free CPB Financial Recordkeeping & Reporting Questions and Answers

Question 1

What is the primary purpose of a ledger in financial recordkeeping?

Accepted Answer

To organize and summarize financial transactions

Answer

To track inventory levels

Answer

To prepare tax returns

Answer

To calculate payroll

Question 2

Which financial statement shows a company's financial position at a specific point in time?

Accepted Answer

Balance sheet

Answer

Income statement

Answer

Cash flow statement

Answer

Statement of retained earnings

Question 3

What is double-entry bookkeeping?

Accepted Answer

Recording each transaction in debit and credit accounts

Answer

Recording transactions twice by mistake

Answer

Tracking cash only

Answer

Ignoring liabilities

Question 4

Which report summarizes revenues and expenses over a period of time?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Cash flow statement

Answer

Trial balance

Question 5

What does the term 'accrual basis' refer to in accounting?

Accepted Answer

Recording revenues and expenses when earned or incurred

Answer

Recording cash transactions only

Answer

Recording transactions when cash changes hands

Answer

Ignoring unpaid bills

Question 6

Which document is used to authorize payment to a vendor?

Accepted Answer

Purchase order

Answer

Invoice

Answer

Receipt

Answer

Payroll register

Question 7

What is the purpose of a trial balance?

Accepted Answer

To verify debit and credit balances are equal

Answer

To prepare financial statements

Answer

To list inventory items

Answer

To calculate taxes owed

Question 8

Which of the following is considered a liability?

Accepted Answer

Accounts payable

Answer

Cash

Answer

Equipment

Answer

Owner's equity

Question 9

What is depreciation?

Accepted Answer

Allocation of asset cost over time

Answer

Increase in asset value

Answer

Payment of liabilities

Answer

Recording revenues