American Institute of Professional Bookkeepers (AIPB) Practice Test

American Institute of Professional Bookkeepers (AIPB) Practice Test

This test is designed to help you prepare for the AIPB certification exam by covering key topics such as bookkeeping fundamentals, adjusting entries, payroll, depreciation, financial statements, and more.

Each question is multiple-choice, and the answers are provided at the end of the test.

Use this practice test to assess your knowledge, identify areas for improvement, and build confidence for the actual exam.

Good luck!

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American Institute of Professional Bookkeepers Practice Test

Congratulations - you have completed American Institute of Professional Bookkeepers Practice Test. You scored %%SCORE%% out of %%TOTAL%%. Your performance has been rated as %%RATING%%
Your answers are highlighted below.
Question 1
Which of the following is NOT a financial statement?
A
Balance Sheet
B
Income Statement
C
Trial Balance
D
Statement of Cash Flows
Question 2
What is the primary purpose of a trial balance?
A
To prepare financial statements
B
To ensure debits equal credits
C
To calculate net income
D
To record adjusting entries
Question 3
Which account is considered a permanent account?
A
Revenue
B
Expenses
C
Retained Earnings
D
Dividends
Question 4
What is the correct order of the accounting cycle?
A
Journalize, Post, Adjust, Close, Report
B
Post, Journalize, Adjust, Report, Close
C
Adjust, Journalize, Post, Report, Close
D
Journalize, Post, Report, Adjust, Close
Question 5
Which of the following is an example of a contra account?
A
Accounts Receivable
B
Accumulated Depreciation
C
Cash
D
Sales Revenue
Question 6
What is the effect of a debit to an expense account?
A
Increases the expense
B
Decreases the expense
C
Increases revenue
D
Decreases revenue
Question 7
Which financial statement shows a company’s financial position at a specific point in time?
A
Income Statement
B
Balance Sheet
C
Statement of Cash Flows
D
Statement of Retained Earnings
Question 8
What is the formula for calculating net income?
A
Revenue - Expenses
B
Assets - Liabilities
C
Revenue + Expenses
D
Liabilities + Equity
Question 9
Which of the following is a current liability?
A
Accounts Payable
B
Notes Payable (due in 5 years)
C
Equipment
D
Retained Earnings
Question 10
What is the purpose of adjusting entries?
A
To close temporary accounts
B
To correct errors in the ledger
C
To update account balances before financial statements are prepared
D
To record daily transactions 
Question 11
Which of the following is an example of an accrued expense?
A
Prepaid Rent
B
Unearned Revenue
C
Salaries Payable
D
Depreciation Expense
Question 12
What is the double-entry accounting rule?
A
Debits must equal credits for every transaction
B
Assets must equal liabilities plus equity
C
Revenue must equal expenses
D
Debits increase assets and credits decrease assets
Question 13
Which account is NOT closed at the end of the accounting period?
A
Revenue
B
Expenses
C
Dividends
D
Retained Earnings
Question 14
What is the normal balance of an asset account?
A
Debit
B
Credit
C
Both debit and credit
D
Neither debit nor credit
Question 15
Which of the following is a temporary account?
A
Cash
B
Accounts Payable
C
Sales Revenue
D
Retained Earnings
Question 16
What is the purpose of the post-closing trial balance?
A
To ensure all temporary accounts are closed
B
To verify that debits equal credits after closing entries
C
To prepare financial statements
D
To record adjusting entries
Question 17
Which of the following is an example of a prepaid expense?
A
Accounts Receivable
B
Prepaid Insurance
C
Unearned Revenue
D
Salaries Payable
Question 18
What is the formula for the accounting equation?
A
Assets = Liabilities + Equity
B
Revenue - Expenses = Net Income
C
Debits = Credits
D
Assets + Liabilities = Equity 
Question 19
Which of the following is a characteristic of a sole proprietorship?
A
Limited liability
B
Separate legal entity
C
Owner has unlimited liability
D
Ownership is divided into shares 
Question 20
What is the purpose of depreciation?
A
To allocate the cost of an asset over its useful life
B
To record the sale of an asset
C
To calculate net income
D
To adjust for inflation
Question 21
Which of the following is an example of a long-term asset?  
A
Accounts Receivable
B
Inventory
C
Building
D
Prepaid Expenses
Question 22
What is the journal entry to record a cash sale?
A
Debit Cash, Credit Sales Revenue
B
Debit Sales Revenue, Credit Cash
C
Debit Accounts Receivable, Credit Sales Revenue
D
Debit Cash, Credit Accounts Receivable 
Question 23
Which of the following is a component of stockholders’ equity?  
A
Accounts Payable
B
Retained Earnings
C
Notes Payable
D
Prepaid Expenses
Question 24
What is the purpose of the statement of cash flows?
A
To show changes in equity
B
To report cash inflows and outflows
C
To calculate net income
D
To list all assets and liabilities
Question 25
Which of the following is an example of an intangible asset?
A
Inventory
B
Patent
C
Building
D
Cash
Question 26
What is the journal entry used to record an inventory purchase on an account?
A
Debit Inventory, Credit Accounts Payable
B
Debit Accounts Payable, Credit Inventory
C
Debit Cash, Credit Inventory
D
Debit Inventory, Credit Cash
Question 27
Which of the following is a characteristic of a corporation?
A
Unlimited liability
B
Limited life
C
Separate legal entity
D
Ownership is not transferable
Question 28
What is the purpose of the retained earnings statement?
A
To show changes in retained earnings during the period
B
To list all assets and liabilities
C
To report cash flows
D
To calculate net income
Question 29
Which of the following is an example of a current asset?
A
Land
B
Accounts Receivable
C
Building
D
Notes Payable (due in 3 years)
Question 30
What is the journal entry to record depreciation expense?
A
Debit Depreciation Expense, Credit Accumulated Depreciation
B
Debit Accumulated Depreciation, Credit Depreciation Expense
C
Debit Cash, Credit Depreciation Expense
D
Debit Depreciation Expense, Credit Cash
Question 31
Which of the following is an example of a liability?
A
Accounts Receivable
B
Accounts Payable
C
Inventory
D
Retained Earnings
Question 32
What is the purpose of the income statement?
A
To show financial position at a point in time
B
To report revenues and expenses over a period
C
To list all assets and liabilities
D
To report changes in equity
Question 33
Which of the following is an example of an operating activity on the statement of cash flows?
A
Issuing stock
B
Paying dividends
C
Collecting cash from customers
D
Purchasing equipment
Question 34
What is the journal entry to record a payment of accounts payable?
A
Debit Accounts Payable, Credit Cash
B
Debit Cash, Credit Accounts Payable
C
Debit Accounts Receivable, Credit Cash
D
Debit Cash, Credit Accounts Receivable 
Question 35
Which of the following is an example of a financing activity on the statement of cash flows?
A
Paying salaries
B
Purchasing inventory
C
Issuing bonds
D
Selling equipment
Question 36
What is the purpose of the balance sheet?
A
To report revenues and expenses
B
To show financial position at a point in time
C
To report cash flows
D
To calculate net income
Question 37
Which of the following is an example of an investing activity on the statement of cash flows?
A
Paying dividends
B
Purchasing equipment
C
Issuing stock
D
Paying salaries
Question 38
What is the journal entry to record a sale on account?
A
Debit Accounts Receivable, Credit Sales Revenue
B
Debit Sales Revenue, Credit Accounts Receivable
C
Debit Cash, Credit Sales Revenue
D
Debit Sales Revenue, Credit Cash
Question 39
Which of the following is an example of an equity account?
A
Accounts Payable
B
Retained Earnings
C
Notes Payable
D
Prepaid Expenses
Question 40
What is the purpose of the statement of retained earnings?
A
To report changes in retained earnings
B
To list all assets and liabilities
C
To report cash flows
D
To calculate net income
Question 41
Which of the following is an example of a revenue account?  
A
Sales Revenue
B
Accounts Payable
C
Cash
D
Retained Earnings
Question 42
What is the journal entry to record a receipt of cash from a customer on account?
A
Debit Cash, Credit Accounts Receivable
B
Debit Accounts Receivable, Credit Cash
C
Debit Cash, Credit Sales Revenue
D
Debit Sales Revenue, Credit Cash
Question 43
Which of the following is an example of an expense account?
A
Sales Revenue
B
Rent Expense
C
Accounts Payable
D
Retained Earnings
Question 44
What is the purpose of the general ledger?  
A
To record all financial transactions
B
To prepare financial statements
C
To calculate net income
D
To list all assets and liabilities
Question 45
Which of the following is an example of a contra-revenue account?
A
Sales Revenue
B
Sales Returns and Allowances
C
Accounts Receivable
D
Retained Earnings
Question 46
What is the journal entry to record a payment of salaries?
A
Debit Salaries Expense, Credit Cash
B
Debit Cash, Credit Salaries Expense
C
Debit Salaries Payable, Credit Cash
D
Debit Cash, Credit Salaries Payable
Question 47
Which of the following is an example of a non-current liability?
A
Accounts Payable
B
Notes Payable (due in 5 years)
C
Salaries Payable
D
Unearned Revenue
Question 48
What is the purpose of the chart of accounts?
A
To list all accounts used by a company
B
To prepare financial statements
C
To calculate net income
D
To record adjusting entries 
Question 49
Which of the following is an example of a contra-asset account?
A
Accounts Receivable
B
Accumulated Depreciation
C
Cash
D
Sales Revenue
Question 50
What is the journal entry to record a purchase of equipment for cash?
A
Debit Equipment, Credit Cash
B
Debit Cash, Credit Equipment
C
Debit Accounts Payable, Credit Equipment
D
Debit Equipment, Credit Accounts Payable
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