INTUIT BOOKKEEPING PROFESSIONAL CERTIFICATE EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS, Exams of Accounting

Download INTUIT BOOKKEEPING PROFESSIONAL CERTIFICATE EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS and more Exams Accounting in PDF only on Docsity! INTUIT BOOKKEEPING PROFESSIONAL CERTIFICATE EXAM 2024 | ALL QUESTIONS AND CORRECT ANSWERS | ALREADY GRADED A+ | LATEST VERSION (JUST RELEASED) Jason's Medicinal Juniper Farm recently leased a stump drilling machine for 12 months on an operating lease. Will he be able to account for disposition of this equipment at the end of the lease? ------CORRECT ANSWER---------------No Why is deferred revenue considered a liability? ------CORRECT ANSWER-- -------------Because it is technically for goods or services still owed to customers In the same state, shoes, bananas, and a haircut would all be subject to the same sales tax rate. ------CORRECT ANSWER---------------False/it depends Funds in the Sales Tax Payable account can be treated as if they were Sales Revenue ------CORRECT ANSWER---------------False The following could be payroll deductions on an employee's paystub, expect: ------CORRECT ANSWER---------------SUTA The following are examples of employee-related items on a paystub, expect: ------CORRECT ANSWER---------------FUTA; Federal Unemployment Tax Payroll reports are for internal use only ------CORRECT ANSWER------------- --False The process of systematically repaying a loan over time is referred to as: --- ---CORRECT ANSWER---------------Amortization If I use the balance sheet approach for reconciling the books each month, all of the following accounts would be reconciled except: ------CORRECT ANSWER---------------Bank Statement Which of the following is not considered an element of a source document? ------CORRECT ANSWER---------------Company Logo Which of the following best describes the Transactional Method of Reconciliation? ------CORRECT ANSWER---------------The method of reviewing existing transactions & source documents to confirm the amount was spent Which of the following best describes the Report Method of Reconciliation? ------CORRECT ANSWER---------------The method of comparing the amount listed on a source document to the actual ending balance listed on the balance sheet A kind of lease in which ownership of the asset is intended at the end of the lease is called: ------CORRECT ANSWER---------------A capital lease A capital lease will show up on the profit and loss statement ------ CORRECT ANSWER---------------False In a lease agreement, the party that is paying rent is referred to as the: ----- -CORRECT ANSWER---------------Lessee Big Boss Building Company purchased some construction equipment to keep up with demand. The new bookkeeper booked this as an expense , is this correct? ------CORRECT ANSWER---------------No Aubergine's Antiques took out a capital lease for a moving van to transport heavier antiques. Will they be able to depreciate this equipment? ------ CORRECT ANSWER---------------Yes Ade just purchased $75 worth of new staplers for her Honey Helpers Bees business. She wants to book this as a noncurrent asset. Is that correct way to book it? ------CORRECT ANSWER---------------No Deferred Revenue is an account that is found in: ------CORRECT ANSWER---------------Current Liability Long-Term debt securities issued by the company are called: ------ CORRECT ANSWER---------------Bonds Payable Which would be considered deferred revenue? ------CORRECT ANSWER-- -------------Cash Inflow A line item on the Statement of Cash Flows shows a loan amount of - $2,000. What does this mean? ------CORRECT ANSWER---------------The company is paying off a loan for the amount of $2,000 What does the debt to equity ratio evaluate? ------CORRECT ANSWER----- ----------What portion of equity a company is using to finance its profits True or False: Generally, a high AP ratio indicates that you satisfy your accounts payable obligations quickly. ------CORRECT ANSWER--------------- True What does KPI stand for in accounting? ------CORRECT ANSWER----------- ----Key Performance Indicator The following are types of common errors except: ------CORRECT ANSWER---------------Error of Law True or False: All accounts can be reconciled. ------CORRECT ANSWER--- ------------True Which ratio would you calculate to view a business's capacity to generate adequte income to repay interest on its debt? ------CORRECT ANSWER---- -----------Coverage Ratio What are the 5 Account Types? ------CORRECT ANSWER---------------- Assets - Liabilities - Equity - Revenue - Expenses What is the accounting formula? ------CORRECT ANSWER--------------- Assets = Liabilities + Equity What does DEA/LER stand for? ------CORRECT ANSWER---------------- Debit Expenses and Assets - Credit Liabilities Equity Revenue What are the 5 steps of the Accounting-Cycle? ------CORRECT ANSWER-- -------------1. Identify transactions 2. record transactions 3. run reports 4. adjusting entries 5. close the books 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. 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 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---------------- O wner's equity account 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 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 Debits are always represented on what side of a T-chart? ------CORRECT ANSWER---------------- The left. Short-term Investments would be an example of what kind of account? ----- -CORRECT ANSWER---------------- An asset account. Accounts payable would be an example of what kind of account? ------ CORRECT ANSWER---------------- A liability account. Accounts receivable would be an example of what kind of account? ------ CORRECT ANSWER---------------- An asset account. 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 A schedule that contains all accounts needed to prepare financial statements is known as: ------CORRECT ANSWER---------------- The General Ledger Reorganizing journal entries and grouping them by account is known as: --- ---CORRECT ANSWER---------------- Posting to the ledger 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 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) The accounting cycle starts with the: ------CORRECT ANSWER---------------- Analysis of business transactions After analysis, the business transaction is recorded in the journal in: ------ CORRECT ANSWER---------------- Chronological order 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 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 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 A trial balance where total debits equal total credits indicates: ------ CORRECT ANSWER---------------- The ledger is in balance. Which of the following financial statements shows the balances of a company's assets, equity, and liability? ------CORRECT ANSWER------------- --- The Balance Sheet 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 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 Which of these accounts would have a balance of $0 at the beginning of each new accounting period? ------CORRECT ANSWER---------------- R evenue 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 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 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 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 True or False: In order to complete a Statement of Equity, you will need the net profit from the Income Statement. ------CORRECT ANSWER--------------- - True True or False: Business owners should use the General Ledger to make business decisions. ------CORRECT ANSWER---------------- False A Balance Sheet has four parts: a heading, assets, liabilities, and ______. - -----CORRECT ANSWER---------------- equity True or False: Financial reports should be produced before any adjustments have been made. ------CORRECT ANSWER---------------- False 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 After the Unadjusted Trial Balance is created, the process of going back and updating information is known as: ------CORRECT ANSWER-------------- -- Making adjustments An owner brought in a piece of equipment for servicing 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 The document that shows all of the account balances after adjustments have been made is known as: ------CORRECT ANSWER---------------- The Adjusted Trial Balance 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 True or False: The depreciation of a vehicle is not something that can be entered as an adjustment. ------CORRECT ANSWER---------------- False Which accounting assumption allows bookkeepers to break a company's financial life into smaller chunks of time? ------CORRECT ANSWER---------- ------ The Periodicity Assumption 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 Printing Pros had another big job to do in April and needed to hire additional help to make their deadline. The new employee received their first paycheck at the beginning of May. When should Printing Pros recognize the expense of paying their employee? ------CORRECT ANSWER---------------- April According to the Revenue Recognition Principle, when should a business recognize its revenue? ------CORRECT ANSWER---------------- When it is earned Which of the following best describes the Periodicity Assumption? ------ CORRECT ANSWER---------------- Companies can assume that business activity can be broken up into smaller measurements of time Cash Flow Statement: 3 types, definition & purpose ------CORRECT ANSWER---------------A summary that shows total income and spending for a given time period 1) operating activities 2) investment activities 3) financing activities What is a journal entry? ------CORRECT ANSWER---------------a way to document an accounting entry lists debits & credits & includes a description of the transaction Which of the following statements would best describe the Matching Principle? ------CORRECT ANSWER---------------- Expenses like manufacturing costs or depreciation should be recognized in the same period as the revenue it helped generate What is the general ledger purpose = contents ------CORRECT ANSWER--- ------------means for keeping records of a company's total financial accounts assets, liabilities, equity, expenses, income or revenue (typically) 5 Bookkeeping Ethics ------CORRECT ANSWER---------------1. objectivity 2. competence 3. integrity 4. confidentiality 5. professional conduct What is a liablity? ------CORRECT ANSWER---------------Other's claims What is equity? ------CORRECT ANSWER---------------Your claims Statement of Cash Flows ------CORRECT ANSWER---------------A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time. 1. operating activities 2. investment activities 3. financing activities Statement of Equity ------CORRECT ANSWER---------------Financial statement showing the beginning balance, additions to and deductions from, and the ending balance of the shareholders' equity account, for a specified period. Also called statement of shareholders equity. double-entry accounting ------CORRECT ANSWER---------------The recording of debit and credit parts of a transaction Deferred Expense ------CORRECT ANSWER---------------An asset created when a business makes advance payments of future expenses. accrued expenses ------CORRECT ANSWER---------------expenses incurred but not yet paid in cash or recorded Deferred Revenue ------CORRECT ANSWER---------------A liability created when a business collects cash from customers in advance of completing a service or delivering a product. Accrued Revenues ------CORRECT ANSWER---------------revenues for services performed but not yet received in cash or recorded Accrual assumption ------CORRECT ANSWER---------------Transactions are recorded using the accrual basis of accounting, where the recognition of revenues and expenses arises when earned or used, respectively. If this assumption is not true, a business should instead use the cash basis of accounting Payroll Form 941 ------CORRECT ANSWER---------------Employer's quarterly federal tax return Payroll Form 940 ------CORRECT ANSWER---------------Employer's Annual Federal Unemployment (FUTA) Tax Return W-2 / W-3 Tax Form ------CORRECT ANSWER---------------Form you fill out that shows how much you have earned and paid in taxes What payroll forms are required to file with the state? ------CORRECT ANSWER---------------Quarterly state unemployment insurance forms, annual state withholding forms What is the connection between equity and income statement? ------ CORRECT ANSWER---------------Whatever net income doesn't get paid out as dividends serves to increase equity what has future value? ------CORRECT ANSWER---------------Assets wHAT IS OWED TO 3RD PARTIES? ------CORRECT ANSWER--------------- Liabilities What is an owner's share of assets? ------CORRECT ANSWER--------------- Equity What is earned from services performed and products sold? ------ CORRECT ANSWER---------------Income What is used in a current period? ------CORRECT ANSWER--------------- Expenses What is reconciliation? ------CORRECT ANSWER---------------compares your records to the bank's records to ensure your books are accurate Which accounts are reconciled? ------CORRECT ANSWER--------------- Accounts you get a statement from: Bank accounts, credit cards, other liability/equity/asset accounts with statements Steps for Reconciliation ------CORRECT ANSWER---------------1. record all the transactions in your books throughout the statement period 2. collect bank statements 3. identify mismatched transactions 4. research missing / unreconciled items 5. handle bank reconciling items and inaccurate items. complete the reconciliation Financial Position aka ------CORRECT ANSWER---------------Balance Sheet (Assets, Liabilities, Equity) Financial Summary aka ------CORRECT ANSWER---------------Income Statement (PNL) which account types carry a normal credit balance? ------CORRECT ANSWER---------------Liabilities, Equity and Income (LIE) What is the Payroll Register? ------CORRECT ANSWER---------------Where you record payroll transactions What is the Employee Earnings Record ------CORRECT ANSWER------------ ---lists each employee's wages, withholdings and other costs associated with payroll Tax form w-4 ------CORRECT ANSWER---------------how employees inform an employer of the correct federal tax withholdings for their paychecks is reconciling part of the adjusting process? ------CORRECT ANSWER------- --------no what does it mean to identify transactions? ------CORRECT ANSWER------- --------Tracking money in and out for company. keeping track of bank balances and transferring value from one part of company to another what does it mean to record transactions? ------CORRECT ANSWER-------- -------quickly and accurately record transaction Which report shows Accumulated Depreciation? ------CORRECT ANSWER---------------Balance Sheet (asset) Depreciation Expense is shown on which report? ------CORRECT ANSWER---------------PNL (Expense) what in an invoice? ------CORRECT ANSWER---------------sent to customer AFTER they receive a product/service if you're recording monthly depreciation, which accounts will be affected and how? ------CORRECT ANSWER---------------debit depreciation expense and credit accumulated depreciation what is a "payment on account" ------CORRECT ANSWER---------------made for purchases on account where the customer has not yet received a bill or invoice can you have current and long-term liabilities on the Balance Sheet? ------ CORRECT ANSWER---------------yes True or false: the owner can claim assets even when there are outstanding liabilities ------CORRECT ANSWER---------------false Equity or liability: dividends ------CORRECT ANSWER---------------equity equity or liability: note payable ------CORRECT ANSWER---------------liability equity or liability: common stock ------CORRECT ANSWER--------------- equity bill vs invoice ------CORRECT ANSWER---------------bill = due now. invoice = due in future when do you debit (decrease) a credit card on cash basis? when you purchase the item? or when you pay off the credit card? ------CORRECT ANSWER---------------when you purchase the item what type of account is capital? ------CORRECT ANSWER--------------- equity 3 reasons you could have a difference when reconciling the bank account - -----CORRECT ANSWER---------------1. you are trying to reconcile to the wrong ending balance 2. you are missing a transaction that has cleared the bank account 3. the amount you recorded the transaction for does not match the amount that shows on the bank statement is it likely that a journal entry adjustment will affect a credit card account when trying to reconcile? ------CORRECT ANSWER---------------no what does a comparative income statement show? ------CORRECT ANSWER---------------the income & expenses broken down to compare different years what should you do with uncleared checks when reconciling? ------ CORRECT ANSWER---------------leave them as they will likely clear on next month's statement what type of accounts do you reconcile? ------CORRECT ANSWER----------- ----accounts for which you receive a statement (petty cash, credit card payable, checking acct, etc.) what is a NSF fee ------CORRECT ANSWER---------------non-sufficient funds fee for when a payment bounces What is the book balance? ------CORRECT ANSWER---------------includes any uncleared checks or deposits in transit what is an outstanding check? ------CORRECT ANSWER---------------A check that has been issued by the company but has not been presented to the bank for payment. what type of accounts are NOT reconciled? ------CORRECT ANSWER------- --------Income, expense, COGS (any account w/out statements)