Bookkeeping Flashcards
7 cards from real CPB / BookKeeping practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Bookkeeping flashcards as text
What type of account is 'Accumulated Depreciation'?
Answer: Contra asset
Accumulated Depreciation is a contra asset account that offsets the cost of a fixed asset to show its net book value.
Which of the following transactions increases both an asset and a liability?
Answer: Purchase supplies on account
Purchasing supplies on account increases Supplies (asset) and increases Accounts Payable (liability).
The principle that expenses should be recognized in the same period as the revenues they help generate is called the:
Answer: Matching principle
The matching principle requires that expenses be recorded in the same accounting period as the revenues they helped produce.
A check written by the company for $540 was mistakenly recorded in the cash payments journal as $450. This is a:
Answer: Transposition error
A transposition error occurs when digits are reversed (540 recorded as 450), and the difference is always divisible by 9.
Which financial ratio measures a company's ability to meet short-term obligations using only its most liquid assets?
Answer: Quick (acid-test) ratio
The quick ratio excludes inventory and prepaid expenses, focusing on cash, marketable securities, and net receivables versus current liabilities.
When goods are shipped FOB shipping point, who bears the freight cost and risk of loss in transit?
Answer: The buyer
FOB shipping point means ownership transfers to the buyer at the seller's dock, so the buyer bears freight costs and risk of loss during transit.
Which account is credited when a company declares a cash dividend?
Answer: Dividends Payable
When a cash dividend is declared, Dividends Payable (liability) is credited because the company now owes the dividend to shareholders.