AIPB Mastering Correction of Accounting Errors Exam (Latest Update 2025 / 2026) Questions & Answers | Grade A | 100% Correct (Verified Solutions)
Question:
Balance sheet accounts
Answer:
Balance sheet accounts include assets, liabilities and owners' equity.
Question:
Asset accounts
Answer:
have a normal debit balance (a debit to an asset account increases it).Examples; Cash, Accounts Receivable, and Equipment.
- / 4
Question:
Liability accounts
Answer:
have a normal credit balance (a credit to a liability account increases it).Examples; Accounts Payable and Mortgage Payable.
Question:
Owners' equity accounts
Answer:
have a normal credit balance (a credit to an owners' equity account increases it). Examples; corporation accounts such as Capital Stock or Retained Earnings; sole proprietorship or partnership accounts such as Owners' Capital.
Question:
Income statement accounts
Answer:
include revenue and expense accounts.
- / 4
Question:
Revenue accounts
Answer:
have a normal credit balance (a credit to a revenue account increases it).Revenue accounts increase income.
Question:
Expense accounts
Answer:
have a normal debit balance (a debt to an expense account increases it) Expense accounts decrease income.
Question:
Contra account
Answer:
is directly related to a specific asset, liability or stockholders' (owners') equity, revenue or expense account. The contra account has the opposite normal balance of its related account.
- / 4
Question:
Balance sheet contra accounts
Answer:
Asset contra accounts. Accounts Receivable has a debit balance; its contra account, Allowance for Doubtful Accounts, has a credit balance. Equipment has a debit balance; its contra account, Accumulated Depreciation - Equipment, has a credit balance.
Question:
Liability contra accounts
Answer:
Bonds Payable has a credit balance; its contra account, Discount on Bonds Payable, has a debit balance.
Question:
Income statement contra accounts
Answer:
Owners' equity contra accounts. Most Owners' equity accounts have a normal credit balance, but Treasury Stock has a debit balance and is treated as a contra account to total Owners' Equity (rather than to a particular account).Dividends Declared has a debit balance and is a contra account to Retained Earnings.
- / 4