Bookkeeping Basic Test #1

Question 1

Is there usually a debit or credit balance on a contra revenue account?

Accepted Answer

Debit

Answer

A contra revenue account, such as Sales Returns and Allowances or Sales Discounts, reduces the total revenue reported. Since revenue accounts normally carry a credit balance, a contra revenue account must have the opposite effect to decrease revenue. Therefore, contra revenue accounts typically have a normal debit balance.

Question 2

What are the uses of a purchase order?

Accepted Answer

To place an order for goods with a supplier.

Answer

A purchase order (PO) is a formal document issued by a buyer to a seller. Its primary use is to officially request goods or services from a supplier, detailing the items, quantities, and agreed prices. It serves as a legally binding agreement once accepted by the supplier, initiating the procurement process.

Question 3

What are accounting source documents?

Accepted Answer

Documentary evidence of financial transactions.

Answer

Accounting source documents are the original records that provide the initial evidence of a financial transaction. These documents, such as invoices, receipts, and bank statements, are critical for verifying the accuracy of entries made in accounting journals and ledgers. They form the foundational proof for all financial reporting.

Question 4

What is the definition of a contra revenue account?

Accepted Answer

An account which is offset against a revenue account

Answer

A contra revenue account is specifically designed to reduce the balance of a related revenue account. Examples include Sales Returns and Allowances or Sales Discounts, which are subtracted from gross sales to arrive at net sales. These accounts typically carry a debit balance to offset the credit balance of the main revenue account.

Question 5

What is the use of the petty cash reconciliation form?

Accepted Answer

To reconcile petty cash and paid vouchers to the authorized petty cash float.

Answer

The petty cash reconciliation form is used to ensure accountability for the petty cash fund. It reconciles the physical cash remaining in the petty cash box plus the total value of all paid vouchers (receipts for expenses) against the original authorized petty cash float. This process verifies that all disbursements are properly accounted for and the fund balances correctly.

CPB / BookKeeping Practice Test

CPB / BookKeeping Practice Test

Bookkeeping Basic Test #1