Bookkeeping Basics — Proficiency Exam

15 questions · pass with 50%

1. Harbor Coffee has $18,000 of assets and $6,000 of liabilities. What is equity?
$12,000$24,000$6,000$18,000
2. The owner deposits $5,000 of personal cash into the business bank account. Which entry is correct?
Debit Owner's Equity and credit CashDebit Expense and credit CashDebit Cash and credit Owner's EquityDebit Accounts Payable and credit Cash
3. A customer still owes you $300 for a catering invoice. How should you classify that $300?
As a liability, because the customer might not payAs an asset called accounts receivableAs equity, because it will become profitAs an expense, until the cash arrives
4. Why do bookkeepers number accounts (for example 1010 Cash, 2000 Accounts Payable)?
Tax law requires those exact numbers in every countrySo accounts sort into a stable order on reportsNumbers replace the need for account namesSo the bank can process payroll
5. The owner takes $1,000 from the business checking account for personal rent. Which account should you debit?
Rent ExpenseWage ExpenseAccounts ReceivableOwner's Draw (equity)
6. When should you add a new account to the chart?
When a new type of activity will show up regularly and you need to report on it separatelyWhenever a purchase is over $20Every time you are unsure which existing account to useOnly at year-end, never during the year
7. You invoice a customer $600, due in two weeks. What is the journal entry on the invoice date?
Debit Cash $600, credit Sales $600Debit Sales $600, credit AR $600Debit AR $600, credit Sales $600No entry until the customer pays
8. The general ledger shows Accounts Payable of $3,100, but unpaid supplier invoices total $2,400. What does that tell you?
The AP control account and the AP subledger are out of balance and must be investigatedYou should ignore the subledger because the general ledger always winsThe business is more profitable than the invoices suggestYou should delete $700 of expenses to force a match
9. A trial balance shows total debits equal total credits. What can you conclude?
Every transaction used the correct expense accountBank and books match, so no reconciliation is neededRevenue is complete for the monthThe books are in arithmetic balance, but transactions could still be in the wrong accounts
10. You recorded a $400 supplier payment on 28 June. It does not appear on the 30 June bank statement. How do you treat it on the reconciliation?
Delete the payment from the ledger because the bank 'disagrees'List it as an outstanding check (timing difference) on the bank sideDebit Miscellaneous Expense for $400 so the rec tiesMove the $400 to accounts receivable
11. The bank statement shows a $15 service fee you have not recorded. What should you do?
Ignore it; fees under $25 do not need entriesSubtract it only on the rec worksheet and never touch the ledgerRecord a journal entry: debit Bank Fees Expense, credit CashDebit Cash and credit Bank Fees Expense
12. After timing items, the reconciled bank figure and the adjusted book balance still differ by $10. What is the right next step?
Find and correct the $10 — do not plug itSplit the $10 across several expense accountsAdd $10 to Sales so profit absorbs itWait until year-end; small differences do not matter
13. Gross wages are $3,000, employee withholdings are $700, and employer payroll taxes are $250. What is take-home (net) pay?
$3,250$2,050$3,000$2,300
14. You withhold $400 of income tax from employee pay. Until you send it to the tax authority, how should it appear in the books?
As revenue, because the cash is still in your bankAs a liability (tax withheld payable)As an owner drawAs a reduction of equity immediately
15. When you later pay that $400 withholding to the tax authority, which entry is correct?
Debit Wage Expense $400, credit Cash $400Debit Payroll Tax Expense $400, credit Cash $400Debit the withholding liability $400, credit Cash $400Debit Cash $400, credit Wage Expense $400

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