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ALBERTA BOOKKEEPING
CERTIFICATION EXAM| QUESTIONS AND
CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2026 Q&A |
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Question 1 The primary purpose of bookkeeping is to: A. Predict stock prices B. Record financial transactions accurately C. Approve loans D. Manage marketing campaigns Correct Answer: B. Record financial transactions accurately Rationale: Bookkeeping systematically records financial activities for reporting and analysis. Question 2 Which accounting equation must always remain balanced? A. Assets = Expenses + Revenue B. Assets = Liabilities + Equity C. Revenue = Expenses + Equity D. Liabilities = Assets + Revenue Correct Answer: B. Assets = Liabilities + Equity Rationale: This fundamental equation ensures financial records are balanced. Question 3 A debit entry in accounting increases:
A. Revenue accounts B. Expense accounts C. Liability accounts D. Equity accounts Correct Answer: B. Expense accounts Rationale: Debits increase expenses and asset accounts. Question 4 A credit entry typically increases: A. Assets B. Expenses C. Liabilities D. Drawings Correct Answer: C. Liabilities Rationale: Credits increase liabilities, revenue, and equity accounts. Question 5 Which document is the primary source of bookkeeping entries? A. Financial statement B. Source document C. Audit report D. Tax return Correct Answer: B. Source document Rationale: Source documents provide evidence for recording transactions. Question 6 A purchase made on credit is recorded as:
A. Single-entry system B. Double-entry system C. Manual system D. Cash system Correct Answer: B. Double-entry system Rationale: Every transaction has debit and credit entries. Question 10 The normal balance of an asset account is: A. Credit B. Debit C. Neutral D. Negative Correct Answer: B. Debit Rationale: Assets increase with debits. Question 11 Which account represents owner withdrawals? A. Revenue B. Drawings C. Expenses D. Liabilities Correct Answer: B. Drawings Rationale: Drawings reduce owner’s equity. Question 12 A bookkeeping error where debits do not equal credits indicates:
A. Balanced books B. Trial balance error C. Profit increase D. Revenue growth Correct Answer: B. Trial balance error Rationale: Unequal debits and credits indicate recording errors. Question 13 Which financial statement shows profit or loss? A. Balance sheet B. Income statement C. Cash flow statement D. Ledger Correct Answer: B. Income statement Rationale: It summarizes revenues and expenses. Question 14 Which account is used to record utility bills? A. Revenue B. Expense C. Liability D. Asset Correct Answer: B. Expense Rationale: Utility bills are operating expenses. Question 15 A journal entry is:
A. Cash B. Expenses C. Revenue D. Assets Correct Answer: C. Revenue Rationale: Revenue increases with credits. Question 19 A business receives cash from a customer. This is: A. Credit sale B. Cash receipt C. Liability increase D. Expense Correct Answer: B. Cash receipt Rationale: Cash inflow is recorded as receipt. Question 20 Which accounting principle states expenses should match revenues? A. Consistency B. Matching principle C. Cost principle D. Revenue recognition Correct Answer: B. Matching principle Rationale: Expenses must align with related revenues. Question 21 Which account decreases equity?
A. Revenue B. Expenses C. Capital D. Income Correct Answer: B. Expenses Rationale: Expenses reduce profit and equity. Question 22 A supplier invoice is recorded as: A. Revenue B. Accounts payable C. Cash asset D. Equity Correct Answer: B. Accounts payable Rationale: It represents money owed to suppliers. Question 23 Which book records final financial summaries? A. Journal B. Ledger C. Financial statements D. Invoice book Correct Answer: C. Financial statements Rationale: Financial statements summarize all accounts. Question 24 Which account type includes rent expense?
A. Assets B. Expenses C. Revenue D. Drawings Correct Answer: C. Revenue Rationale: Revenue decreases with debits. Question 28 Which document proves payment was made? A. Invoice B. Receipt C. Ledger D. Budget Correct Answer: B. Receipt Rationale: Receipts confirm completed transactions. Question 29 Which accounting cycle step comes first? A. Posting B. Journalizing C. Trial balance D. Reporting Correct Answer: B. Journalizing Rationale: Transactions are first recorded in journals. Question 30 A business earns income from services. This is recorded as:
A. Expense B. Revenue C. Liability D. Asset Correct Answer: B. Revenue Rationale: Service income increases revenue. Question 31 The ledger is used to: A. Record original transactions B. Summarize journal entries by account C. Prepare tax returns D. Issue invoices Correct Answer: B. Summarize journal entries by account Rationale: The ledger organizes all transactions into individual accounts for tracking balances. Question 32 Which process transfers journal entries into the ledger? A. Posting B. Auditing C. Reconciling D. Balancing Correct Answer: A. Posting Rationale: Posting moves recorded transactions from journals to ledger accounts. Question 33 An unadjusted trial balance is prepared:
A. Cash increase B. Asset value reduction over time C. Revenue growth D. Loan repayment Correct Answer: B. Asset value reduction over time Rationale: Depreciation allocates asset cost over useful life. Question 37 Which financial statement shows financial position at a point in time? A. Income statement B. Balance sheet C. Cash flow statement D. Journal Correct Answer: B. Balance sheet Rationale: The balance sheet shows assets, liabilities, and equity. Question 38 A credit balance in a liability account means: A. Business owes money B. Business is owed money C. No transactions occurred D. Profit is negative Correct Answer: A. Business owes money Rationale: Liabilities normally carry credit balances. Question 39 Which statement reflects cash inflows and outflows?
A. Income statement B. Cash flow statement C. Balance sheet D. Trial balance Correct Answer: B. Cash flow statement Rationale: Cash flow statements track liquidity movement. Question 40 An error where debits equal credits but accounts are wrong is: A. Compensating error B. Arithmetic error C. Omission error D. Commission error Correct Answer: D. Commission error Rationale: Commission errors record correct amounts in wrong accounts. Question 41 Which error does NOT affect trial balance? A. Transposition error B. Omission error C. Single entry error D. Arithmetic error Correct Answer: A. Transposition error Rationale: Some errors still balance totals but misstate accounts. Question 42 A correcting entry is used to:
A. Revenue B. Expenses C. Retained earnings D. Drawings Correct Answer: C. Retained earnings Rationale: Permanent accounts carry forward balances. Question 46 Which adjustment records revenue earned but not yet received? A. Deferred expense B. Accrued revenue C. Prepaid revenue D. Capital revenue Correct Answer: B. Accrued revenue Rationale: Revenue earned but not received must be recorded. Question 47 Which statement summarizes revenues and expenses? A. Balance sheet B. Income statement C. Trial balance D. Ledger Correct Answer: B. Income statement Rationale: It shows profitability over a period. Question 48 A bank reconciliation is used to:
A. Create invoices B. Match bank and book records C. Record sales D. Prepare taxes Correct Answer: B. Match bank and book records Rationale: Reconciliation identifies differences between records. Question 49 Outstanding cheques are: A. Cleared immediately B. Not yet processed by bank C. Income records D. Expenses paid Correct Answer: B. Not yet processed by bank Rationale: Outstanding cheques are issued but not cleared. Question 50 Which document is used for internal record correction? A. Invoice B. Credit note C. Journal voucher D. Receipt Correct Answer: C. Journal voucher Rationale: Journal vouchers correct or authorize entries. Question 51 A suspense account is used when:
A. Income statement B. Statement of retained earnings C. Cash flow statement D. Ledger Correct Answer: B. Statement of retained earnings Rationale: It tracks equity changes over time. Question 55 Which adjustment is made for prepaid rent? A. Accrued expense B. Deferred expense C. Revenue adjustment D. Liability adjustment Correct Answer: B. Deferred expense Rationale: Prepaid rent is recognized over time. Question 56 A debit balance in an expense account means: A. Expense decrease B. Expense increase C. Liability increase D. Revenue increase Correct Answer: B. Expense increase Rationale: Expenses normally carry debit balances. Question 57 Which step comes last in the accounting cycle?
A. Journalizing B. Posting C. Financial statements D. Closing entries Correct Answer: D. Closing entries Rationale: Closing prepares accounts for next cycle. Question 58 Which account tracks retained profits? A. Revenue B. Retained earnings C. Expenses D. Cash Correct Answer: B. Retained earnings Rationale: Retained earnings accumulate profits over time. Question 59 A trial balance ensures: A. Profit maximization B. Debit equals credit totals C. Tax compliance D. Sales accuracy Correct Answer: B. Debit equals credit totals Rationale: It checks mathematical accuracy of records. Question 60 Which adjustment is required for depreciation?
