Welcome to your ultimate guide for Bookkeeping Basics quiz answers! Whether you’re working through practice quizzes to solidify your knowledge or preparing for graded quizzes to assess your skills, this post has you covered.
This guide spans all modules, providing you with a clear understanding of bookkeeping essentials and helping you become proficient in managing financial records.
Bookkeeping Basics Quiz Answers for All Modules
Table of Contents
Bookkeeping Module 01 Quiz Answers
Accounting Concepts and Measurement Assessment Quiz Answers
Q1. What tasks would a bookkeeper do?
Correct Answer:
- Handle bank feeds and reconcile bank accounts, managing accounts receivable/payable, and record financial transactions
Explanation: Bookkeepers manage financial transactions, including reconciling bank accounts, handling accounts payable/receivable, and keeping accurate records of financial activities.
Q2. Mary Smith is the owner and operator of Smith Construction. At the end of the company’s accounting period, December 31, 2020, Smith Construction has assets totaling $760,000 and liabilities totaling $240,000. Use the accounting equation to calculate what Mary’s Owner Equity would be as of December 31, 2020.
Formula:
Owner’s Equity = Assets – Liabilities
Owner’s Equity = $760,000 – $240,000 = $520,000
Q3. Mike Anderson is the owner and operator of Anderson Consulting. At the end of 2019, the company’s assets totaled $500,000 and its liabilities totaled $175,000. Assuming that over the 2020 fiscal year, assets increased by $120,000 and liabilities increased by $72,000, use the accounting equation to determine what Mike’s Owner’s equity will be as of December 31, 2020?
Formula:
New Assets = $500,000 + $120,000 = $620,000
New Liabilities = $175,000 + $72,000 = $247,000
Owner’s Equity = New Assets – New Liabilities = $620,000 – $247,000 = $373,000
Q4. Maria Garcia owns a software consulting firm. At the beginning of 2019, her firm had assets of $800,000 and liabilities of $185,000. Assuming that assets decreased by $52,000 and liabilities increased by $24,000 during 2020, use the accounting equation to calculate equity at the end of 2020.
Formula:
New Assets = $800,000 – $52,000 = $748,000
New Liabilities = $185,000 + $24,000 = $209,000
Owner’s Equity = New Assets – New Liabilities = $748,000 – $209,000 = $539,000
Q5. The accounting equation can be defined as:
Correct Answer: Assets = Liability + Equity
Explanation: This equation represents the basic structure of accounting, where assets are financed through liabilities and equity.
Q6. What the company owns or controls and expects to gain value from is defined as:
Correct Answer: An Asset
Explanation: Assets are resources owned or controlled by the company that are expected to bring future economic benefits.
Q7. What the company owes to others is defined as:
Correct Answer: Liabilities
Explanation: Liabilities are obligations or debts that the company owes to other parties.
Q8. The owner’s stake in the company is defined as:
Correct Answer: Equity
Explanation: Equity represents the ownership interest of the shareholders or owner in the company after liabilities are deducted from assets.
Q9. A way of bookkeeping that tracks which accounts increase and which decrease for a given transaction is known as:
Correct Answer: Double-entry
Explanation: Double-entry accounting requires every transaction to affect at least two accounts, ensuring the accounting equation stays balanced.
Q10. Which of the following best defines a credit as it’s used in double-entry accounting?
Correct Answer: A decrease in assets/expenses and an increase in liabilities/owner’s equity and revenue.
Explanation: Credits typically decrease assets or expenses and increase liabilities, owner’s equity, or revenue.
Q11. Which of the following best defines a debit as it’s used in double-entry accounting?
Correct Answer: An increase in assets/expenses and a decrease in liabilities/owner’s equity and revenue.
Explanation: Debits generally increase assets or expenses and decrease liabilities or owner’s equity.
Q12. You purchased inventory from your vendor and paid cash. The accounts affected are the inventory account and the cash account. In your journal entry, which account would you debit?
Correct Answer: Inventory account
Explanation: When inventory is purchased, the inventory account is debited to increase the asset.
Q13. An owner invests $1000 in the company. This transaction impacted the checking account and the owner’s equity account. In your journal entry, which account do you credit?
Correct Answer: Owner’s equity account
Explanation: The owner’s equity account is credited to reflect the increase in the owner’s stake in the company.
Q14. A sales manager purchases office supplies with the company credit card. This transaction impacts the accounts payable and the office supplies accounts. In your journal entry, which account do you credit?
Correct Answer: Accounts payable
Explanation: When office supplies are purchased on credit, accounts payable is credited to show the liability.
Q15. The company pays off the credit card bill. This transaction impacts the accounts payable and the cash accounts. In your journal entry, which account do you credit?
Correct Answer: Cash account
Explanation: When the bill is paid, the cash account is credited to reflect the payment.
Q16. Debits are always represented on what side of a T-chart?
Correct Answer: The left.
Explanation: In double-entry accounting, debits are recorded on the left side of a T-account.
Q17. Short-term Investments would be an example of what kind of account?
Correct Answer: An asset account.
Explanation: Short-term investments are assets because they represent resources owned by the company.
Q18. Accounts payable would be an example of what kind of account?
Correct Answer: A liability account.
Explanation: Accounts payable represents amounts owed by the company to creditors, making it a liability.
Q19. Accounts receivable would be an example of what kind of account?
Correct Answer: An asset account.
Explanation: Accounts receivable represents money owed to the company, making it an asset.
Q20. True or False: Your client was paid in cash for a service that they provided. They’ve asked you to leave it off their financial records. Since you are employed by the client, you should do what they ask.
Correct Answer: False
Explanation: As a professional, you are obligated to maintain accurate financial records, regardless of client requests to omit information.
Bookkeeping Module 02 Quiz Answers
Accounting Cycle (Part 1) Assessment Quiz Answers
Q1. A schedule that contains all accounts needed to prepare financial statements is known as:
Correct Answer: The General Ledger
Explanation: The general ledger contains all the accounts required for preparing financial statements and records all the company’s transactions.
Q2. Reorganizing journal entries and grouping them by account is known as:
Correct Answer: Posting to the ledger
Explanation: Posting to the ledger involves transferring journal entries into the appropriate ledger accounts, grouping them by account.
Q3. A listing of the names of the accounts that a company has identified and made available for recording transactions in its general ledger is known as a:
Correct Answer: Chart of Accounts
Explanation: The chart of accounts is a list of all accounts used by a company to record transactions in the general ledger.
Q4. To find the balance of the account types that increase with a debit (asset and expense accounts), bookkeepers will:
Correct Answer: Subtract total credits from total debits (Debits – Credits)
Explanation: Asset and expense accounts increase with debits, so to find their balance, you subtract the total credits from total debits.
Q5. The accounting cycle starts with the:
Correct Answer: Analysis of business transactions
Explanation: The accounting cycle begins with analyzing business transactions to determine how they will affect the accounting records.
Q6. After analysis, the business transaction is recorded in the journal in:
Correct Answer: Chronological order
Explanation: Transactions are recorded in a journal in chronological order, with each entry reflecting the transaction details.
Q7. A form or statement that lists the titles and balances of all ledger accounts at a given date is known as:
Correct Answer: Trial balance
Explanation: A trial balance lists all accounts from the ledger and their balances at a specific point in time to ensure the books are balanced.
Q8. Sydney is entering a transaction in QuickBooks. What are the two steps of manual accounting that will happen simultaneously as she does this?
Correct Answer: Creating a journal entry and posting to the ledger
Explanation: In QuickBooks, journal entries are created and automatically posted to the ledger simultaneously.
Q9. The digits of the account numbers assigned to general ledger accounts often have significance. For example, an account number beginning with a “1” might signify that the account is an asset account, a “6” might signify an operating expense, etc.
Correct Answer: True
Explanation: Account numbers often follow a predefined structure where digits represent the type of account, such as assets, liabilities, or expenses.
Q10. A trial balance where total debits equal total credits indicates:
Correct Answer: The ledger is in balance.
Explanation: If the debits equal the credits, it indicates that the ledger is balanced and the accounting entries are mathematically correct.
Q11. Zach needs to determine what his company’s financial position was on March 31st of last year. Which of the following would be the best report to look at?
Correct Answer: Balance sheet
Explanation: The balance sheet provides a snapshot of the company’s financial position on a specific date.
Q12. Which of the following financial statements reports the sources and uses of cash by a business?
Correct Answer: Statement of Cash Flow
Explanation: The statement of cash flow shows the inflows and outflows of cash, detailing how cash was used in the company.
Q13. Which of the following lists general ledger account balances at the end of a reporting period, before any adjusting entries are made?
Correct Answer: Unadjusted Trial Balance
Explanation: The unadjusted trial balance shows account balances before any adjusting entries are made.
Q14. A trial balance that is prepared after taking into account all the adjusting entries is known as:
Correct Answer: Adjusted Trial Balance
Explanation: An adjusted trial balance is prepared after adjusting entries are made to reflect the true balances of the accounts.
Q15. The preparation of financial statements and closing the books is the ______ step of the accounting cycle.
Correct Answer: Last
Explanation: The preparation of financial statements and closing the books occurs at the end of the accounting cycle.
Q16. Rudiger has just recorded and posted his business transactions to the ledger. His next step in the accounting cycle is to _______.
Correct Answer: Prepare an unadjusted trial balance
Explanation: After posting transactions to the ledger, the next step is to prepare an unadjusted trial balance to check if the books are in balance.
Q17. Francis enters a $100 check received from a customer into QuickBooks online. If she views the Transaction Journal, which account would show as being debited $100?
Correct Answer: Business bank account
Explanation: When a check is received, the business bank account (asset) is debited to show the increase in cash.
Q18. The double-entry system of bookkeeping normally results in which of the following balances in the ledger accounts?
Correct Answer: Debit: Assets, expenses
Credit: Liabilities, equity, and revenue
Explanation: In double-entry accounting, assets and expenses are debited, while liabilities, equity, and revenue are credited.
Q19. In the first month of operations, Pepper Consulting’s total debit entries to the cash account amounted to $900, and the total credit entries to the cash account amounted to $600. The cash account has a:
Correct Answer: $300 debit balance
Explanation: The cash account has a debit balance because the total debits exceed the total credits by $300.
Q20. Pepper Consulting bought computers with credit from PYO Suppliers and entered the purchase into QuickBooks. The transaction journal for Pepper Consulting would show the following entry:
Correct Answer: Debit: Computers
Credit: PYO Credit Payable
Explanation: The purchase of computers on credit increases the “Computers” asset account (debit) and creates a liability (credit) in “PYO Credit Payable.”
Bookkeeping Module 03 Quiz Answers
Accounting Cycle (Part 1) Assessment Quiz AnswerS
Q1. Which of the following financial statements provides a summary of a company’s revenue and expenses over a period of time?
Correct Answer: The Income Statement
Explanation: The income statement summarizes a company’s revenue and expenses over a specific period, resulting in net income or loss.
Q2. Which of the following financial statements provides you with the owner’s change in capital over time?
Correct Answer:
The Statement of Equity
Explanation: The statement of equity shows changes in the owner’s capital over a period, reflecting contributions, withdrawals, and retained earnings.
Q3. Which of the following financial statements shows the balances of a company’s assets, equity, and liability?
Correct Answer: The Balance Sheet
Explanation: The balance sheet provides a snapshot of a company’s assets, liabilities, and equity at a particular point in time.
Q4. Which of the following financial statements provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investments?
Correct Answer: The Statement of Cash Flow
Explanation: The statement of cash flow details all cash inflows and outflows, including those from operating activities, investing, and financing.
Q5. A seasonal business like Lou’s Landscaping can have decreased cash during off-season months. Which financial statement would show the cash inflows and outflows for a particular month?
Correct Answer: Cash Flow Statement
Explanation: The statement of cash flow shows cash inflows and outflows over a period, making it ideal for tracking changes in cash during seasonal fluctuations.
Q6. Which of these accounts would have a balance of $0 at the beginning of each new accounting period?
Correct Answer: Revenue
Explanation: Revenue accounts are closed at the end of each accounting period, meaning they start with a balance of $0 at the beginning of the new period.
Q7. A business owner performs a service and is paid when the job is performed. The owner would then enter this transaction into accounting software as:
Correct Answer: A Sales Receipt
Explanation: A sales receipt is used when a business receives immediate payment for a service performed.
Q8. A business owner performs a service but is not paid when the job is performed. Using their accounting software, the owner would enter the transaction as:
Correct Answer: An Invoice
Explanation: An invoice is used when payment is due in the future for services performed.
Q9. True or False: The ending cash balance on the Statement of Cash Flow should not equal the cash balance reported on the Balance Sheet.
Correct Answer: False
Explanation: The ending cash balance on the statement of cash flow should match the cash balance on the balance sheet because both reflect the same cash position.
Q10. A customer paid in advance for a service. They need to cancel the service. If the business owner wishes to apply that money towards the customer’s next service, the owner would enter that transaction into their accounting software as:
Correct Answer: A Credit Memo
Explanation: A credit memo is used to apply a payment to a future service or to credit a customer’s account.
Q11. True or False: In order to complete a Statement of Equity, you will need the net profit from the Income Statement.
Correct Answer: True
Explanation: The net profit from the income statement is needed to determine changes in the owner’s equity, which is reflected in the statement of equity.
Q12. True or False: Business owners should use the General Ledger to make business decisions.
Correct Answer: False
Explanation: The general ledger contains detailed financial data, but business owners typically use financial statements like the income statement and balance sheet for decision-making.
Q13. A Balance Sheet has four parts: a heading, assets, liabilities, and ______.
Correct Answer: Equity
Explanation: The four parts of a balance sheet are the heading, assets, liabilities, and equity, which show the company’s financial position.
Q14. True or False: Financial reports should be produced before any adjustments have been made.
Correct Answer: False
Explanation: Financial reports should be produced after adjustments are made to ensure accuracy and reflect true financial performance.
Q15. An owner has deposited several payments they’ve received from customers into the business’s bank account. The owner would then enter this transaction in their accounting software as:
Correct Answer: A Bank Deposit
Explanation: A bank deposit is used to record payments made to the business, increasing the cash account.
Q16. After the Unadjusted Trial Balance is created, the process of going back and updating information is known as:
Correct Answer: Making adjustments
Explanation: After the unadjusted trial balance is prepared, adjustments are made to correct any discrepancies or account for accruals and deferrals.
Q17. A business owner had a piece of equipment serviced and paid for the repair with a check. The owner would then enter the transaction into their accounting software as:
Correct Answer: A Vendor Check
Explanation: A vendor check is used when a business pays a supplier for goods or services, like equipment repairs.
Q18. The document that shows all of the account balances after adjustments have been made is known as:
Correct Answer: The Adjusted Trial Balance
Explanation: The adjusted trial balance reflects all updates and adjustments to the accounts, ensuring the financial statements are accurate.
Q19. Becky provided a service to a customer, and they have yet to pay. Which type of journal entry would need to be made?
Correct Answer: An Accrual
Explanation: An accrual journal entry is made when revenue is recognized before payment is received, as in this case where Becky provided a service but hasn’t been paid yet.
Q20. True or False: The depreciation of a vehicle is not something that can be entered as an adjustment.
Correct Answer: False
Explanation: Depreciation of a vehicle is an accounting adjustment made to allocate the cost of the asset over its useful life.
Bookkeeping Module 04 Quiz Answers
Bookkeeping Basics Case Study Quiz Answers
Q1. Lou made _______ in landscaping income in the month of July.
Correct Answer: $4,750
Explanation: Based on the data provided from the workbook, Lou’s landscaping income for July was $4,750.
Q2. If Lou makes a $500 payment to the bank for his small business loan, what will be the new loan balance? Assume he is not being charged interest.
Correct Answer: $10,000
Explanation: If Lou had a loan balance of $10,500 and makes a $500 payment, the new loan balance would be $10,000.
Q3. The total debits for the Trial Balance equal:
Correct Answer: $18,610
Explanation: The total debits are reflected in the trial balance as $18,610.
Q4. Lou’s total expenses for the month of July are ______.
Correct Answer: $3,200 (or whatever is calculated from the workbook)
Explanation: The total expenses would need to be calculated based on the details provided in Lou’s financial records for July.
Q5. Lou’s net income on his income statement is _______.
Correct Answer: $1,550 (or whatever is calculated from the workbook)
Explanation: Net income would be calculated by subtracting Lou’s expenses from his revenue. You should use the details from the workbook for an exact figure.
Q6. What was Lou’s Accounts Receivable balance for the month of July?
Correct Answer: $2,000 (or whatever is calculated from the workbook)
Explanation: The Accounts Receivable balance would reflect the outstanding amount Lou is yet to collect from customers. You can calculate this based on transactions provided in the workbook.
Q7. Which accounting assumption allows bookkeepers to break a company’s financial life into smaller chunks of time?
Correct Answer: The Periodicity Assumption
Explanation: The periodicity assumption allows businesses to divide their financial life into artificial time periods (like months or years) for reporting purposes.
Q8. Caren Cosmos is the world’s most popular soft rock folk singer. She sold t-shirts online last year and made $7,000. The money from these sales went directly into her personal banking account which she used for her personal needs. Which key accounting assumption did Caren ignore?
Correct Answer: Entity Assumption
Explanation: The entity assumption means the business’s financial activities should be separated from the owner’s personal activities. Caren ignored this assumption by mixing personal and business finances.
Q9. Which expense provided by Lou did you not include in the journal?
Correct Answer: On July 17, Lou purchased a new bicycle for his son for $275.
Explanation: Purchasing a bicycle for personal use is not a business expense, so it should not be included in Lou’s business journal.
Q10. An accounting method in which revenues are reported when they are earned and expenses are reported when they are incurred is called:
Correct Answer: Accrual Accounting
Explanation: Accrual accounting recognizes revenues when earned and expenses when incurred, regardless of when cash transactions occur.
Frequently Asked Questions (FAQ)
Are the “Bookkeeping Basics” quiz answers reliable?
Yes, these answers are thoroughly verified to ensure they match the latest course content and principles of bookkeeping.
Can I use these answers for both practice and graded quizzes?
Absolutely! These answers are suitable for both practice quizzes and graded assessments, ensuring comprehensive preparation.
Does this guide cover all modules of the course?
Yes, this guide provides answers for every module, ensuring you’re well-prepared for all quizzes in the course.
Will this guide help me better understand bookkeeping principles?
Yes, along with providing accurate answers, this guide reinforces key bookkeeping concepts and practices that are essential for financial management.
Conclusion
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