I recently wrote and passed a two hour bookkeeping exam. It’s not that I felt the need to test my knowledge after all these years. The purpose was to get my CPB designation (Certified Professional Bookkeeper). The designation was one of many requirements I needed to meet in applying for a mentoring program being offered in partnership with IPBC and Ron Baker of Verasage, sponsored by Sage. And, while answering the exam questions, I started thinking about the clients we do QuickBooks training with. Whether the accounting software indicates it’s simple to learn or you’ll pick it up quickly, there’s a certain amount of bookkeeping knowledge required to be competent. If you’ve started working on an accounting software package and you’re struggling, you could have been tricked into thinking all you needed to know was how to operate a mouse! So, I thought it might be helpful to provide 9 bookkeeping questions to test your understanding of your bookkeeping software; to help you determine if it’s the software causing you the challenges or that you possibly need a little more guidance in the fine art of bookkeeping. (The answers are at the end of the last question).
Some accounting software is very forgiving while others require significant bookkeeping knowledge. And don’t get me started on the varied recording terminology from one package to another. According to Wikipedia the definition of ‘Bookkeeping’ in the context of a business, is simply the recording of financial transactions. Transactions include purchases, sales, receipts and payments by an individual or organization. There’s that word “simply” again!
Here are the 9 questions.
1) When doing a bank reconciliation, what are the cheques called that have not cleared the company’s bank account?
2) What is the normal balance for an asset account; Debit or Credit?
3) Which financial statement reports the revenue and expenses for a period of time; Balance Sheet, Income Statement or Statement of Cash Flow?
4) When recording cash received in the Cash account, will it be Debited or Credited?
5) When an asset account increases, is it usually Debited or Credited?
6) What report or form would you look at to ensure the debits are equal to the credits?
7) What is a listing of account numbers and titles without balances called?
8) Will the heading on the income statement specify *a point in time* or *a period of time*?
9) In accrual basis accounting, when is revenue recognized; when it is received or earned?
1) outstanding cheques 2) Debit 3) Income Statement 4) Debited 5) Debited 6) Trial Balance 7) Chart of Accounts 8) a period of time 9) earned
Congratulations if you got most of the answers correct. You should be quite comfortable moving forward in recording your bookkeeping entries, or able to define and determine what you need to learn. If you got less than 6 of them correct then I would suggest you receive some bookkeeping training before delving into the software. Community colleges, online courses, specialty training resources or your accounting professional can help you determine where you need to start and feel comfortable with your new found knowledge.
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Until next time,