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Bookkeeping for Small Business Exam Questions and Answers
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Bookkeeping for Small Business ExamQuestions and Answers
1. Each accounting transactions begins with some type of source document, which
differs depending on the type of transaction. Which source document is not a purchases
source document?
Incorrect
A) Vendor invoices
B) Purchase orders
C) Packing slips
D) Sales orders
E) Receiving reports - Answer -D) Sales orders
2. Which internal control involves allocating bookkeeping tasks among personnel so that
one individual does not have the ability to make an accounting error (either intentionally
or unintentionally) and also cover it up? This principle implies that the person with
physical access to cash or other moveable assets (investments or inventory) should not
also be involved with the related record keeping.
Incorrect
A) Segregation of duties
B) Restricted access
C) Document controls
D) Processing controls
E) Reconciliation controls - Answer -A) Segregation of duties
3. Which cash receipts system keeps details of only the current period's activity and
groups all other open items into a single beginning balance amount?
Incorrect
A) Open item system
B) Balance Forward system
C) Order-entry system
D) Point of sale system - Answer -B) Balance Forward system
4. Which of the following is not a recommendation for controlling and safeguarding
receipts when processing mail receipts?
Incorrect
A) The company should assign someone with no other cash receipt or processing
B) The secretary or receptionist opening the mail should separate customer
C) The secretary or receptionist should forward the actual checks to accounting
, D) The secretary or receptionist should prepare the original deposit slip along with a -
Answer -C) The secretary or receptionist should forward the actual checks to
accounting
5. The bank statement reconciliation process is a very effective after-the-fact internal
control tool. Moreover, the process is crucial to many small businesses since their
accounting systems are often cash-driven. Which of the following statements regarding
the bank statement reconciliation process is false?
Incorrect
A) The bank statement reconciliation helps detect errors (both the company's and
B) The bank statement reconciliation reveals bank debits and credits that have not
C) The bank statement reconciliation should be performed by someone with other
D) The bank statements should be received by the person responsible for receiving -
Answer -C) The bank statement reconciliation should be performed by someone with
other
6. Reconciling the accounts receivable subsidiary ledger (or aged trial balance) to the
accounts receivable account in the general ledger is crucial to most small businesses. If
differences between the aged trial balance and subsidiary ledger are not resolved,
either the company's financial statements or billing statements mailed to customers (or
both) are misstated. If differences go back beyond the current month, locating and
resolving the individual differences becomes increasingly difficult and time-consuming.
Which of the following statements is false?
Incorrect
A) Small businesses can gain some assurance that cash receipts journals and sales
journals were posted to the general ledger by recalculating the accounts receivable
general ledger balance.
B) Accounting persons recalculate the ending general ledger balance by starting with
the beginning general ledger balance, subtracting totals per the sales journals, - Answer
-B) Accounting persons recalculate the ending general ledger balance by starting with
the beginning general ledger balance, subtracting totals per the sales journals, adding
totals per the cash receipts journals, and adjusting for any other transactions posted to
the general ledger.
7. Which of the following is not a processing and recording purchases activity?
Incorrect
A) Processing invoices
B) Recording invoices in the accounting system
C) Disbursing cash
D) Bank reconciliation - Answer -D) Bank reconciliation
8. After the accounting staff has completed the initial invoice processing (received the
invoice, obtained approval for its payment, and updated the vendor information), the
staff performs clerical processes to record the purchases in the accounting records.
Which of the following statements is false?
Incorrect
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