Accounting Basics For QuickBooks Proficiency Test

35 Questions | Total Attempts: 51

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Accounting Basics for QuickBooks Proficiency Test


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  • 1. 
    What does the term "Double entry accounting" mean?
    • A. 

      That the Income and Expense accounts are always part of every transaction

    • B. 

      There are always at least two accounts involved in every financial transaction

    • C. 

      That the Cost of Goods Sold account and the Liabilities account are always part of a transaction

    • D. 

      The Equity and Asset accounts are always involved in a transaction

  • 2. 
    Literally, "Debit" means what?
    • A. 

      The Expense account of a transaction

    • B. 

      The Equity account of a transaction

    • C. 

      The left side of a transaction

    • D. 

      The right side of a transaction

  • 3. 
    Which certain types of accounts increase when you debit them?
    • A. 

      Liabilities, equity, and income

    • B. 

      Checking, expenses, and income

    • C. 

      Assets, cost of goods sold, and expenses

    • D. 

      Income, assets, and liabilities

  • 4. 
    Which statement is a financial “picture” of your company?
    • A. 

      The General Ledger

    • B. 

      The Revenue & Income Summary

    • C. 

      The Chart of Accounts

    • D. 

      The Balance Sheet

  • 5. 
    Which of the following is one of the six accounting principles?
    • A. 

      The Even/Odd principle

    • B. 

      The T square principle

    • C. 

      The Matching principle

    • D. 

      The Square principle

  • 6. 
    What question does the Revenue principle answer?
    • A. 

      What is revenue?

    • B. 

      How do you measure revenue?

    • C. 

      When do you record revenue?

    • D. 

      All of the above

  • 7. 
    What are the three factors to determine whether or not accounting information is Reliable?
    • A. 

      Valid, Verifiable, and Positive

    • B. 

      Valid, Verifiable, and Neutral

    • C. 

      Valid, Verifiable, and Negative

    • D. 

      Valid, Reliable, and Assumable

  • 8. 
    Why is it important to choose the correct account type when setting up the chart of accounts?
    • A. 

      If the type is incorrect, then financial statements will be wrong

    • B. 

      The account type determines how QuickBooks uses the account

    • C. 

      The account type determines which financial statement the account appears on

    • D. 

      All of the above

  • 9. 
    The Balance Sheet is like which of the following?
    • A. 

      A statement from the beginning of the fiscal year

    • B. 

      A financial movie showing how your business is doing over a period of time

    • C. 

      A snapshot or picture of how your business looks at a certain time

    • D. 

      None of the above

  • 10. 
    In what two ways does QuickBooks use Account Type?
    • A. 

      To determine which financial statement the account appears on, and which principle the account falls under

    • B. 

      To determine which financial statement the account appears on, and how QuickBooks uses the account

    • C. 

      To determine how QuickBooks uses the account, and which principle the account follows

    • D. 

      Any of the above

  • 11. 
    When you double-click on a balance sheet account in the Chart of Accounts, what does QuickBooks display?
    • A. 

      The Account Register

    • B. 

      The Edit Account window

    • C. 

      The Add New Account window

    • D. 

      The Make Inactive window

  • 12. 
    When receiving payments in QuickBooks, you must specify which of the following?
    • A. 

      Which Labor account the payment will decrease

    • B. 

      What account the payment comes from

    • C. 

      Where the payment goes (Undeposited Funds, Checking, etc)

    • D. 

      What company is in the “Pay to the order of” field

  • 13. 
    What is the QuickBooks term for an invoice you've received from a vendor?
    • A. 

      Purchase Order

    • B. 

      Invoice

    • C. 

      Bill

    • D. 

      Debit

  • 14. 
    Why might you use a journal entry?
    • A. 

      To enter transactions that you cannot enter with a built-in form

    • B. 

      To correct errors

    • C. 

      For year-end adjustments

    • D. 

      All of the above

  • 15. 
    If your accounting records are incorrect, where in QuickBooks can you look to help solve the problem?
    • A. 

      Reports: Customers & Receivables: Open Invoices

    • B. 

      Reports: Inventory: Inventory Valuation Summary

    • C. 

      Reports: Vendors & Payables: Unpaid Bills Detail

    • D. 

      Any of the above

  • 16. 
    What is one tool or method outside of QuickBooks that can help support your financial data IN QuickBooks?
    • A. 

      A statement from your accountant

    • B. 

      Documents from vendors and customers, like bills and cleared checks

    • C. 

      A documented phone call from your banker

    • D. 

      Handwritten records from conversations with vendors

  • 17. 
    What is one way to verify the Accounts Payable balance on the Balance Sheet?
    • A. 

      Click Inventory: Inventory Valuation Summary to review the value of all inventory

    • B. 

      Click Reports: Vendors & Payables: Unpaid Bills Detail to review to whom you owe money

    • C. 

      Click Reports: Company & Financial: Profit and Loss Standard to review the Profit and Loss

    • D. 

      Click Reports: Vendors & Payables: Summary Report

  • 18. 
    What is "Expert Analysis"?
    • A. 

      It is a tool QuickBooks offers to help you understand and use many of the ratios accountants use

    • B. 

      It is a tool bankers use to analyze your financial data

    • C. 

      It is a tool QuickBooks uses to analyze financial data

    • D. 

      It is a tool accountants use while analyzing your financial data

  • 19. 
    Why is it not always meaningful to compare trends?
    • A. 

      Variable costs might increase in numbers from year to year, but decrease as percentage of income

    • B. 

      Sometimes there is a large increase in sales

    • C. 

      You may have a large increase in costs from one year to the next

    • D. 

      Income may be lower from one year to the next

  • 20. 
    When analyzing trends in variable expenses, how should you display expenses to get accurate trend data?
    • A. 

      As Percent of Expense

    • B. 

      As Percent of Income

    • C. 

      As Percent of Row

    • D. 

      As Percent of Column

  • 21. 
    When scheduling an unattended backup, why would you choose a time frame like 1AM?
    • A. 

      QuickBooks must be closed for the backup to work

    • B. 

      The computer must be turned off

    • C. 

      The QuickBooks company file must be open, but you cannot do any work in the file at the time of the backup

    • D. 

      The QuickBooks company file must be closed, but the computer must be turned on

  • 22. 
    Which of the following is NOT a suggested weekly accounting task?
    • A. 

      Back up data file to hard drive

    • B. 

      Pay bills

    • C. 

      Print cheques

    • D. 

      Review unpaid bills

  • 23. 
    What two Customer reports should you run every month?
    • A. 

      The Open Invoices report and the Item Price List

    • B. 

      The Open Invoices report and the Collections Report

    • C. 

      The Collections Report and the Item Price List

    • D. 

      The Sales by Customer Summary report and the Open Invoices report

  • 24. 
    How often should you back up your QuickBooks data file?
    • A. 

      Once a week

    • B. 

      Once a day

    • C. 

      Once a month

    • D. 

      Only when you set the closing date

  • 25. 
    What should you remember to do before creating an accountant's copy of your data file?
    • A. 

      Remove all users except the Administrator

    • B. 

      Set a closing date

    • C. 

      Have all employees get out of the data file

    • D. 

      Set up the chart of accounts

  • 26. 
    What report do you start with to create the Entry Journal?
    • A. 

      Balance Sheet Standard

    • B. 

      Journal report

    • C. 

      Make General Journal Entry window

    • D. 

      Custom Transaction Detail Report

  • 27. 
    When an accountant is working within an accountant's copy of a company file, what does QuickBooks display in the title bar?
    • A. 

      "Accountant's Copy"

    • B. 

      "Accountant's Copy Exists"

    • C. 

      "Your Company File"

    • D. 

      The title bar is the same, whether or not an accountant's copy exists

  • 28. 
    What is the Accountants Review?
    • A. 

      . A form your accountant fills out to enter and edit notes on your finances

    • B. 

      An agreement with your accountant formalizing each party’s responsibilities

    • C. 

      Feature that allows the accountant to review and make adjustments to your financial numbers

    • D. 

      All of the above

  • 29. 
    Which menu would you access to create a new company budget?
    • A. 

      The Edit menu

    • B. 

      The File menu

    • C. 

      The Company menu

    • D. 

      The List menu

  • 30. 
    What menu would you access to turn on Classes?
    • A. 

      Edit: Duplicate

    • B. 

      Edit: Copy

    • C. 

      Edit: Classes

    • D. 

      Edit: Preferences

  • 31. 
    . What does a budget offer in QuickBooks that a forecast does NOT offer?
    • A. 

      More options for class reports

    • B. 

      They offer the same options

    • C. 

      More reporting options

    • D. 

      Fewer reporting options

  • 32. 
    What does it mean if you report transactions on an accrual basis?
    • A. 

      You report all income that has been earned and all expenses that have been incurred, regardless if the money has been received or paid

    • B. 

      You only report income if the money has been received

    • C. 

      You only report expenses if they have been paid

    • D. 

      Both b. and c.

  • 33. 
    By default, Net Income for the prior year flows into which account in the next year?
    • A. 

      Retained Earnings

    • B. 

      Assets

    • C. 

      Liabilities

    • D. 

      Accounts Receivable

  • 34. 
    Which of the following is NOT a step for the improved closing entry?
    • A. 

      Change the name of the Retained Earnings account

    • B. 

      Create a new Retained Earnings account

    • C. 

      Delete the Retained Earnings account

    • D. 

      Transfer each year's income or loss into the new Retained Earnings account

  • 35. 
    When executing the Improved Closing Entry, what account type should you choose for the new Retained Earnings account?
    • A. 

      Retained Earnings

    • B. 

      Fixed Asset

    • C. 

      Equity

    • D. 

      Other Current Liability