Accounting Fundamentals Certification (AFC) Practice Test – All Questions

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Breaking Down Cash Transactions in AccountingReceiving cash from sales affects which accounts in a state with no sales tax?Breaking Down Ending Capital Calculation for Sole ProprietorshipsHow is ending capital calculated for a sole proprietorship?Calculating Your Adjusted Bank Statement Balance Made EasyWhat will the adjusted bank statement balance be if the bank statement shows $4,800, with outstanding checks of $400, an outstanding deposit of $200, and a bank service charge of $15?Choosing the Right Investment for Active Management of an InheritanceWhat type of investment would suit a client looking for active management of a $10,000 inheritance?Choosing the Right Life Insurance: A Smart Move for MomsWhich type of life insurance is best suited for a healthy, 36-year-old mother who wants to ensure care for her children until they are self-sufficient?Consider High-Yield Savings Accounts for Steady and Low-Risk IncomeWhat would be an appropriate investment option for someone wanting low risk and steady income?Decoding Liabilities: What Every Accounting Student Needs to KnowIn financial reporting, what does "liabilities" refer to?Discover the Financial Benefits of Setting Up Automatic Savings PlansHow can setting up automatic savings plans benefit an individual financially?Essential Journal Entry for Setting Up a Petty Cash FundWhat is the correct journal entry to establish a petty cash fund of $500?Exploring Check Endorsements: Your Key to Secure TransactionsWhat are the three most common forms of check endorsements?Finding the Best Path for Overcoming Credit Card DebtWhat is the best option for a client with a large amount of credit card debt seeking to repay it?Finding the True Value of Your Home: Insights and StrategiesWhat is the best method for determining how much a house can sell for?Get Familiar with Adjusting Entries in AccountingWhat is always involved in adjusting entries?Getting Started: The Core of Your Chart of AccountsA chart of accounts typically begins with which type of accounts?Getting to Know Accounts Receivable: The Backbone of Asset ManagementWhat type of account is Accounts Receivable considered to be?Harnessing Client Strengths for Effective Budgeting SolutionsWhat is a good strategy for a client struggling with budgeting techniques?How Adjusting Your Withholdings Can Improve Cash FlowWhat recommendation would you give George, who regularly has to dip into savings to pay monthly bills?How Desk Shapes Influence Group Dynamics and HierarchyWhich desk or table shape is more likely to create an atmosphere of inequality?How Does Net Income Influence Owners Equity?What does the net income for an accounting period indicate regarding Owners Equity?How to Calculate Liabilities Using the Accounting EquationIf a company's assets total $192,000 and owner's equity is $110,000, what must its liabilities equal?Mastering Accounting Corrections: Understanding the Dawanda ExampleIf Dawanda Corporation debited Misc. Expenses instead of Advertising Expenses for a cash payment, what correction should be made?Mastering Accounting Fundamentals: Understanding Cash IncreasesHow is cash increased in accounting?Mastering Accounting Fundamentals: Your Guide to Insurance TransactionsWhen paying for an annual insurance policy with a check, how is the transaction recorded?Mastering Accounts Payable: Understanding Your Ending BalanceIf beginning accounts payable is $4,150, with debits of $2,200 and credits of $2,500, what will be the ending balance?Mastering Cash Received Calculations: An Essential Guide for Accounting StudentsWhat is the total cash received for a sale on account of $1,200 with a 7% sales tax when payment is made within the 2% discount period?Mastering Client Action Plans: The Key to SuccessWhen assisting a client in establishing an action plan, what is a critical step?Mastering GAAP: The Backbone of Financial ReportingWhat is the primary purpose of Generally Accepted Accounting Principles (GAAP)?Mastering Household Expenses and Taxes: The Power of Tax-Advantaged AccountsWhat action could help manage a client’s household expenses while minimizing income taxes?Mastering Journal Entries: Closing the Income Summary AccountWhat is the journal entry to close the Income Summary account when there is a net income?Mastering Journalizing: The Heart of Accounting TransactionsDuring what phase of accounting is journalizing primarily performed?Mastering Liquidity Ratios for Financial StabilityIf a client has monthly income of $10,000 and expenses of $8,000, what is her liquidity ratio with her savings and checking accounts?Mastering Rapport: The Art of Pacing in Client CommunicationWhich communication technique is effective for building rapport and engaging a client?Mastering Short-Term Goals in Financial CounselingIn financial counseling, what is an important aspect of setting short-term goals?Mastering SWOT Analysis: Your Key to Success in Accounting FundamentalsWhich type of analysis helps identify strengths, opportunities, and weaknesses?Mastering the Art of Posting: A Key Step in AccountingWhat is the process of transferring journal entries to the general ledger called?Mastering the Final Step in the Accounting CycleWhat is the final step in the accounting cycle?Mastering the Fundamentals: Why Every Transaction MattersWhat must occur if transactions for a business are properly recorded?Mastering the Income Statement: A Key to Financial SuccessIn accounting, which document reflects the company's operational outcomes over a specific period?Mastering the Last Step of the Posting ProcedureWhat is the last step in the posting procedure?Mastering the Meaning of Debits in AccountingIn accounting, what does the term "debit" usually signify?Mastering the Organization of Accounts in AccountingIn accounting, how are accounts organized within the general ledger?Mastering Vendor Payments: The Key Journal Entry ExplainedWhat is the journal entry for paying a vendor account?Navigating the Essentials of Merchandising BusinessesWhich of the following is NOT an element of a merchandising business?Rebuilding Your Credit: The Best Strategy to ChooseFor someone struggling with credit rebuild, which approach is generally more manageable?Rent vs. Buy: Making the Smart Move in HomeownershipWhat should a client know when deciding whether to rent or buy a home?Repair Services: Understanding Its Role as a Revenue Account in AccountingWhat type of account does Repair Services fall under in accounting?Smart Investment Choices for Low-Risk ClientsIf a client has a lower risk tolerance, which combination of investments should they consider?Smart Moves Toward Solvency: Understanding Your Financial OptionsA client wants to become solvent. Considering her financial situation, what action could she take?The Benefits of a Sole Proprietorship: Simplifying Business OwnershipWhat is a primary advantage of establishing a business as a sole proprietorship?The Best Way to Correct Journal Errors for Accounting StudentsWhat is the correct method for correcting an error in a journal?The Importance of Post-Trial Balance in AccountingWhat does a post-trial balance verify in the general ledger after closing entries are posted?The Importance of Preparing a Post-Trial BalanceWhat is the purpose of preparing a post-trial balance?Understand Overtime Calculations with Donatello's Earnings ScenarioIf Donatello works 43.5 hours in a week and earns $125.50 per hour, what is his total earnings for overtime pay on the extra 3.5 hours?Understanding Accounts Payable: A Key to Business Financial HealthWhat is the term used for amounts owed by a business to its creditors?Understanding Accounts Payable: Your Guide to LiabilitiesAccounts Payable is classified as which type of account?Understanding Accounts Receivable in Accounting FundamentalsWhen a service has been performed but no cash has been received, what would be included in the entry?Understanding Accounts Receivable Ledger: What You Need to KnowWhat type of accounts does the accounts receivable ledger contain?Understanding Accounts Receivable: The Asset Created When Making Sales on AccountWhat asset is created when a business makes a sale on account?Understanding Accrual Basis Accounting: The Foundation of Financial ClarityIn accounting, which term refers to transactions recorded that do not affect cash until the cash is actually received or paid?Understanding Accumulated Depreciation for Your AFC CertificationAccumulated Depreciation-Equipment is classified as which type of account?Understanding Affinity Fraud in Investment ScenariosWhat type of investment fraud should clients be concerned about when complex products are marketed by group members?Understanding Annual Percentage Rate (APR) for Smart BorrowingWhat term describes the cost of borrowing money, often expressed as a percentage?Understanding Asset Accounts and Their Importance in AccountingWhich account is categorized as an Asset Account?Understanding Asset Accounts in Accounting FundamentalsWhich of the following is an Asset Account?Understanding Asset Accounts in Accounting FundamentalsWhich of the following is considered an asset account?Understanding Assets in Accounting: A Quick OverviewWhich of the following is considered an asset?Understanding Assets: The Backbone of Your Company’s Financial HealthWhat does the term "assets" refer to in accounting?Understanding Beneficiaries in Estate PlanningWhat term designates the recipient of an asset upon the death of the owner?Understanding Business Structures: What's What? Which of the following is NOT an appropriate form of business organization?Understanding Cash as an Asset in AccountingWhat type of account is Cash considered in accounting?Understanding Cash Increases from Sales: The Basics of Accounting EntriesWhat entry would you make to show an increase in cash from sales?Understanding Closing Entries in AccountingWhat does the term "closing entries" refer to in accounting?Understanding Consumer Rights in LendingWhich scenario typically denotes a violation of consumer rights in lending?Understanding Credit Balances in Liability AccountsWhat balance indicates a credit balance in a liability account?Understanding Credit Balances: A Closer Look at Wages PayableWhich of the following accounts has a Credit Balance?Understanding Creditor Claims and Their Impact on Financial HealthIn accounting terms, how is a creditor's claim against the assets of a business reflected?Understanding Current Cost in Accounting: What You Need to KnowIn accounting terminology, what does 'Current Cost' refer to?Understanding Debit Balances in AccountingIf both the previous account balance and current entry posted to an account are debits, what is the nature of the new account balance?Understanding Debit Balances: Why Equipment is Key in Your AFC JourneyWhich of the following accounts typically has a debit balance?Understanding Debit Entries and Their Impact on LiabilitiesWhat does a debit entry typically signify in terms of liabilities?Understanding Debit Entries in Asset Accounts for Accounting FundamentalsThe asset account is increased by which type of journal entry?Understanding Debits and Credits: The Essentials of Accounting FundamentalsWhich of the following accounts is increased with a debit?Understanding Debt-to-Income Ratios for AFC SuccessWhat is the client's debt to income ratio if the annual gross income is $48,000?Understanding Earnings Calculation with Ann Eagle's Pay StructureWhat is Ann Eagle's total earnings for a two-week pay period if she worked 85 hours at a rate of $9.80 per hour and time and a half for hours over 40?Understanding Elizabeth's Earnings: A Deep Dive into Gross Salary and CommissionsWhat are Elizabeth's gross earnings for the week if her salary is 296.00 and her commission from sales of 63,255 is 1%?Understanding Errors in Trial Balance TotalsWhich error will result in unequal trial balance totals?Understanding Expense Account Balances: A Key Concept for AFC StudentsWhat is the typical balance type for an Expense account?Understanding Expenses: What Counts and What Doesn’tWhich of the following does NOT result in the recording of an expense?Understanding Generally Accepted Accounting Principles for AFC SuccessWhat is the set of rules used by accountants to ensure consistency in recording and reporting financial information called?Understanding Historical Cost in Accounting FundamentalsIn accounting, what is the accounting concept that reflects the actual amount paid for merchandise or other items bought?Understanding How Bank Service Charges Affect Your Cash AccountWhen the bank service charge is recorded, what happens to the cash account?Understanding How Interest Expense is CategorizedHow is Interest Expense categorized?Understanding How Liability Accounts WorkAn increase in a liability account would generally result from which action?Understanding How New Credit Cards Impact Your Credit ScoreWhat factor significantly affects a person's credit score?Understanding How to Calculate Cash Balance at Month-EndHow is cash balance at the end of the month calculated?Understanding How to Format Monthly Income Statement DatesHow is the date on a monthly income statement prepared on September 30 written?Understanding Implied Warranties: What You Need to KnowWhich statement is true regarding implied warranties?Understanding Income Statements: What Do Credit and Debit Totals Reveal?What does it indicate if the Income Statement Credit column total is greater than the Income Statement Debit column total on a worksheet?Understanding Land as an Asset in AccountingWhich type of account does Land represent in accounting?Understanding Liabilities: A Key Component of Financial HealthWhat term is used to describe financial obligations of a business to third parties?Understanding Liabilities: A Key Component of Your AFC JourneyWhich of the following is classified as a liability on a balance sheet?Understanding Liabilities: The Key Role of Accounts PayableWhich of the following accounts is specifically considered a liability?Understanding Liability Accounts: The Backbone of Financial ReportingWhat type of balance does a Liability Account typically have?Understanding Mortgage Insurance: What You Need to KnowWhat is required if a down payment of less than 20% is made on a mortgage?Understanding Net Loss in Your Accounting WorksheetsWhere is a net loss entered in the worksheets?Understanding Notes Payable: A Key to Financial ClarityWhat type of account is Notes Payable classified as?Understanding Overtime Pay: Here's What You Need to KnowWhat is the overtime pay rate if the regular earning rate is $125.50 per hour?Understanding Owner Withdrawals and Their Impact on Equity AccountsWhich type of account would be affected by owner withdrawals?Understanding Owner's Capital on a Balance SheetFrom where should amounts be obtained to determine an owner's capital when preparing a balance sheet?Understanding Owner's Equity: A Deep Dive into Accounting FundamentalsMicha Monroe, Capital is classified as which type of account?Understanding Peggy Lind, Capital: The Owner's Equity EssentialsWhat classification does Peggy Lind, Capital fall under?Understanding Peggy Lind, Drawing: The Owner’s Equity Account ExplainedWhat type of account is Peggy Lind, Drawing?Understanding Prepaid Insurance and Its Role in Financial Statement ReportingWhat type of account is represented by the value of prepaid insurance coverage used during a fiscal period?Understanding Prepaid Insurance: An Asset Account ExplanationWhat is the classification of Prepaid Insurance?Understanding Prepaid Insurance: An Asset for Your BusinessWhat type of account is Prepaid Insurance?Understanding Profitability Through Income Statement AnalysisWhat does it mean when the debit column on the income statement is less than the credit column?Understanding Rent Expense: Essential Insights for Your Accounting JourneyWhat type of account is Rent Expense?Understanding Repair Expenses in AccountingWhat is Repair Expense categorized as in the framework of accounting?Understanding Revenue in Accounting: The Key to Financial HealthIn accounting, what term describes the money that a business earns?Understanding Revenue Recognition Under Accrual AccountingUnder accrual accounting, when is revenue recorded and reported?Understanding Revenue: The Backbone of Business FinanceWhat do the revenues generated from selling goods or services refer to in accounting?Understanding Sales and Fees Earned: The Revenue Accounts You Need to KnowWhat type of account are Sales and Fees Earned both classified as?Understanding Sales on Account: The Impact on Your AccountsWhen services are sold on account for $300, what is the impact on the accounts?Understanding Surpluses: Pierre's Financial SnapshotWhat is Pierre's financial situation if his total income is higher than his total expenses?Understanding T-Accounts: The Backbone of Accounting FundamentalsIn a T-account, where is the credit side located?Understanding Tax Implications on IRA Withdrawals for RetireesWhich withdrawal would most likely increase a retired couple's household taxable income?Understanding Temporary Accounts: A Key to Accounting FundamentalsWhich of the following accounts is considered a temporary account?Understanding Temporary vs. Permanent Accounts in AccountingWhich of the following is NOT classified as a temporary account?Understanding the Accumulated Depreciation Account: What You Need to KnowWhat is the primary function of the Accumulated Depreciation account?Understanding the Advantages of a Roth IRA for Your RetirementWhich type of retirement account allows for tax-free withdrawals in retirement if conditions are met?Understanding the Balance Sheet: Your Financial SnapshotWhat information does a balance sheet provide?Understanding the Business Entity Concept in AccountingWhich accounting concept mandates that financial information is recorded separately from the owner's personal finances?Understanding the Chart of Accounts: A Key to Effective AccountingWhich statement accurately describes the organization of a chart of accounts?Understanding the Classification of Supplies Purchased on AccountHow are supplies purchased on account classified in accounting?Understanding the Essentials of a Merchandising BusinessWhat defines the nature of a merchandising business?Understanding the Fiscal Year: What Students Need to KnowWhat does a fiscal year typically refer to?Understanding the General Ledger: Your Key to Mastering Accounting FundamentalsWhat is the primary ledger that contains all balances for balance sheet and income statement accounts?Understanding the Going Concern Principle in AccountingWhat accounting concept is described by the expectation that a business will remain in operation indefinitely?Understanding the High Cost of Cash Advance LoansWhich type of loan typically has the highest interest rates charged?Understanding the Highest Hourly Pay: Job Comparisons Made SimpleWhich job provides the highest hourly pay when considering salary and benefits?Understanding the Impact of a Lower Credit Score When Applying for a MortgageWhat is one implication of having a lower credit score when applying for a mortgage?Understanding the Impact of Expenses on Financial StatementsWhat occurs when total expenses are greater than total revenue?Understanding the Impact of Outstanding Checks on Your Bank BalanceWhat is the effect of an outstanding check on a bank statement balance?Understanding the Impact of Rent Payment on Rent ExpenseWhat effect does issuing a check in payment of rent have on Rent Expense?Understanding the Importance of a Trial Balance in AccountingWhat is the primary purpose of a trial balance?Understanding the Importance of a Trial Balance in AccountingWhich of the following statements is true regarding a trial balance?Understanding the Importance of Matching Cash Balances with Check StubsIf the balance on the next unused check stub equals the cash balance calculated, what does this indicate?Understanding the Importance of Posting in AccountingWhat is the process of transferring information from the journal to the individual general ledger accounts called?Understanding the Importance of Receipts in Debit Card TransactionsWhich accounting document is primarily used to record a debit card transaction?Understanding the Income Statement and Its Importance in Financial PerformanceWhich financial document summarizes a company's financial performance over a specific period?Understanding the Income Summary Account in Owner’s EquityWhat is the nature of the Income Summary account?Understanding the Logical Order of End-of-Period Accounting ProceduresWhat best describes the logical order during the end-of-period procedures?Understanding the Matching Principle in AccountingWhich accounting principle dictates that expenses should be recorded when incurred, not necessarily when paid?Understanding the Matching Principle in AccountingWhich term describes the process of allocating expenses across accounting periods?Understanding the Petty Cash Fund: Classification and ManagementWhat type of account is the petty cash fund classified as?Understanding the Relationship Between Net Income and Owner's EquityThe increase in which account is indicated by net income?Understanding the Role of Prepaid Insurance in AccountingWhat is the function of prepaid insurance in accounting?Understanding the Role of the Income Statement in Financial ReportingWhich of the following financial statements is primarily used to summarize a company's revenues and expenses over a specific period?Understanding the Source Document for Debit Card PurchasesWhat is the source document for a debit card purchase?Understanding the Source of Net Income in Service BusinessesWhere does the net income calculated for the income statement for a service business come from?Understanding Total Cash Inflow: A Simplified ApproachGiven a client with $1,500 income and $200 in gifts, what is her total cash inflow this month?Understanding Transactions: Balancing Asset Accounts in AccountingWhen only two asset accounts are affected in a transaction, what must occur?Understanding Utilities Expense in AccountingIn accounting, how is Utilities Expense classified?Understanding Wages Payable: The Dynamics of Credit Balances in AccountingWhat is the balance type for Wages Payable?Understanding What Happens to Temporary Account Balances at Fiscal Year-EndWhat happens to the balances of temporary accounts at the end of the fiscal period?Understanding When Prepaid Insurance Becomes an ExpenseWhen is prepaid insurance expensed?Understanding When to Prepare the Balance Sheet in Relation to the Income StatementWhen should the balance sheet be prepared in relation to the income statement?Understanding Withdrawals and Expenses in AccountingIs a withdrawal considered an expense?Understanding Withdrawals: The Heart of Owner's Equity in AccountingWhat is the correct treatment of withdrawals in accounting?Unlocking the Basics of Journalizing in AccountingWhich term describes the initial recording of a business transaction?Unraveling the Role of FASB in Accounting StandardsWhich agency is primarily responsible for developing accounting principles?Using Home Equity to Fund Your Kitchen Remodel: What You Need to KnowCan a married couple borrow enough to remodel their kitchen using their home equity?What Helps Indicate Financial Stability for Individuals?Which of the following would be considered an indicator of financial stability for an individual?What To Do First If Your Credit Card Is StolenIf your credit card is stolen, what should you do first?What to Do When You Spot Unauthorized Transactions on Your Bank StatementsWhat action should be taken immediately if bank statements show unauthorized transactions?What You Need to Know About Permanent Accounts in AccountingWhat are accounts called when their balances are carried forward from one accounting period to the next?What You Need to Start a Sole Proprietorship LegalWhat is typically required for a business to legally operate as a sole proprietorship?When to Consider a Home Equity Loan for RemodelingWhen should a home equity loan be considered for remodeling expenses?Who Pays for That? Understanding Tenant ResponsibilitiesWho is responsible for the repair of the screen door after Ginger runs through it?Why a Diversified Investment Portfolio is Your Safety NetWhat is the main benefit of having a diversified investment portfolio?Why Consistent Classifications Are Key to a Strong Chart of AccountsWhen establishing a chart of accounts, what is essential to maintain?Why Fees Earned Matters in Your Accounting JourneyWhat type of account is Fees Earned classified as?Why Increasing Your Deductible Matters in Risk ManagementWhat does increasing a deductible from $500 to $1500 represent in risk management?Why Providing Services on Credit Boosts Accounts ReceivableWhat is an example of a situation that increases accounts receivable?Why Receipts Matter in Accounting FundamentalsWhat source document is used when a consumer makes a payment on his or her account?Why Sales is Classified as a Revenue Account in AccountingSales is classified as which type of account?Why the Matching Principle is Key to Accounting SuccessWhat is the primary purpose of the matching principle in accounting?

More practice questions

These questions are part of the practice quiz. Start practicing

Under what classification would 'Sales' be categorized in accounting?
Which accounting principle states that expenses must be matched with revenues for the same period?
Which of the following statements about the petty cash fund is true?
Who typically uses financial statements?
If a company's assets are 106,219 and liabilities are 154,962, what is the capital?
Which government agency has enforcement powers to protect individual consumers?
Which of the following is not classified as an Asset?
When cash is paid for supplies, how is the supplies account affected?
Which warranty is mandated by state law?
What type of account is generally credited when establishing a petty cash fund?
Which insurance is usually necessary when taking out a mortgage with less than 20% down?
Which of the following actions constitutes an adjusting entry?
Which method is used to match a checkbook balance with the bank balance?
To calculate the component percentages on an income statement, how do you proceed?
What type of account is Accounts Receivable classified as?
In which scenario do temporary accounts typically close at the end of a fiscal period?
What is the purpose of preparing closing entries?
In what order should the closing entries be prepared?

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