Bookkeeping Exam Questions with Correct Answers

Bookkeeping Exam Questions with
Correct Answers
Bookkeeper - ANSWER-A person in charge of keeping the financial records of an
organization

Bookkeeping - ANSWER-The process of recording business transactions

Service business - ANSWER-A business that performs a service in exchange for
payment

Accounting - ANSWER-The art of recording, classifying, and summarizing in a
significant manner and in terms of money, transactions and events which are of a
financial character, and interpreting the results

Account title - ANSWER-The name given to an account

Transaction - ANSWER-Any activity that occurs in the business that changes part of the
accounting equation (assets, liabilities, or owner's equity)

Account balance - ANSWER-The amount in an account OR The difference between the
increases and decreases (debits and credits) in an account

Asset - ANSWER-Anything of value owned and used in a business

Liability - ANSWER-Anything owed by a business

Owner's equity - ANSWER-The value remaining in the business when liabilities have
been deducted from assets - Total Assets - Total Liabilities. The amount of claim an
owner has to the assets of a business

Account payable - ANSWER-A liability account recording that money is or will be owed

Accounting equation - ANSWER-Assets = Liabilities + Owner's Equity

Creditor - ANSWER-An entity or person who has lent money

Debtor - ANSWER-An entity or person who owes money

General Journal - ANSWER-A two-column journal is a book in which original
transactions of the business are first recorded; it's sometimes called the book of original
entry.

, General Ledger - ANSWER-A company's set of numbered accounts for its accounting
records; it provides a complete record of financial transactions over the life of the
company

Journal sides - ANSWER-Must always equal, left side is assets, right side is liabilities
and owner's equity

Chart of Accounts - ANSWER-a list of account titles in the order in which they can be
found in the ledger.

Opening a ledger account - ANSWER-preparing a page in the ledger for use.

Posting from journal to ledger - ANSWER-the act of transferring the entries from the
journal to its ledger account.

Original entry - ANSWER-The transaction which is the first when starting a business

Debit - ANSWER-An entry recording an amount, listed on the left-hand side or column
of an account

Credit - ANSWER-An entry recording an amount, listed on the right-hand side or column
of an account

Balance side, Account (Bal) - ANSWER-The difference between the total debits and
total credits in an account; all accounts have a "normal" balance

Contra Account - ANSWER-An account that shows the estimated decrease in value of
the account to which it relates; also referred to as a "minus" or "valuation" account

Permanent/Real Account - ANSWER-Balance sheet accounts that retain an account
balance from one accounting period to the next, i.e. assets, liabilities, owner's equity

Temporary/Nominal Account - ANSWER-Income statement accounts that are intended
to accumulate data for one accounting period only; their account balances are
periodically transferred to the Owner's Equity account

T-Account - ANSWER-A tool that's used to help understand individual ledger accounts
and the effects of each transaction; it is a way to organize and summarize transactions
in an individual ledger

Chart of Accounts - ANSWER-A listing of the names of the accounts that a company
has identified and made available for recording transactions in its general ledger

Division - ANSWER-A method of categorizing accounts for easier reference