Level 1 exam — Finance & Accounting

Exam — fresh questions

12 questions to validate day-to-day bookkeeping: double-entry, accounting chain, purchase/sale entries, VAT and bank reconciliation (recall ~20%, application ~50%, arbitration ~30%).
Answer everything, then click Check: your score and explanations will appear.

1.1 · Recall

1. What does the double-entry principle state?

Every transaction on one account's debit AND another's credit, same amount Record only when payment happens One transaction, one account is enough Debits always exceed credits

Total debits = total credits in each entry: the foundation of accounting.

1.1 · Application

2. Rachid buys a machine paid by bank. Which entry?

Debit “fixed assets” (use) and credit “bank” (resource), same amount Credit both accounts: every purchase is credited One “machine” account only, no counterpart Debit “bank”, credit “machine”: money leaves so debit it

Use on debit (machine enters assets), resource on credit (bank) — balanced.

1.2 · Application

3. Rachid's “receivables” balance looks wrong. First reflex?

Ignore it: balances fix themselves Guess the right amount and overwrite Consult the account's ledger to find the faulty entry Redo the whole year's balance sheet

The ledger lists the account's movements; the trial balance controls the whole.

1.2 · Arbitration

4. Rachid's software generates ledger and trial balance alone. Must he still understand the chain?

Yes, but only the day before year-end No: software never errs, no need to understand Yes: without the chain, no error can be diagnosed or fixed No: only the journal matters, the rest is decoration

Software automates execution, not understanding — which stays the heart of the craft.

1.3 · Application

5. Rachid sells €120 incl. VAT (€100 excl. + €20 VAT). What income is recorded?

120, the total collected from the customer 20, the output VAT 140, incl. VAT plus extra 100, the excl. VAT — VAT goes to its dedicated account

Sales only record excl. VAT; output VAT is owed to the State.

1.3 · Arbitration

6. Rachid receives a supplier invoice payable in 30 days. When does he record it?

On receipt: the invoice records the debt, payment will settle it Next year, with the balance sheet In 30 days, at payment: only cash counts Never: credit invoices are not recorded

The invoice creates the right and obligation; payment (1.5) settles them afterwards.

1.1 · Recall

7. For an asset account, debiting means…

Moving it to liabilities Decreasing it Closing it for good Increasing it

Assets: debiting = increasing; liabilities: crediting = increasing.

1.4 · Application

8. Rachid collected 3,000 VAT and paid 1,200 input VAT. He pays over…

1,200, all the input 1,800, output minus input 4,200, the sum of both 3,000, all the output

VAT payable = output − input; if negative, it is a VAT credit.

1.5 · Application

9. What is Rachid's monthly bank reconciliation for?

Preparing the year's balance sheet Comparing book balance and statement, and explaining gaps Paying suppliers faster Calculating VAT to pay over

An essential control that makes cash reliable and spots anomalies.

1.5 · Application

10. Gap between Rachid's “bank” account and his statement: uncashed issued cheque + unrecorded fees. What to do?

Overwrite the book balance to copy the statement Wait for year-end to think about it Cry fraud and block the account at once Explain each gap (timing, fees); only flag the unexplained

Explained timing items and fees: normal. Unexplained gap: error or anomaly to investigate.

Cross-cutting · Arbitration (new V3)

11. Dilemma — Rachid sees output VAT sitting in the account and wants to use it for an urgent purchase before the deadline. You tell him…

Go ahead: output VAT is revenue like any other No: this money is owed to the State — spending it digs a hole at pay-over time Yes, but only if the accountant doesn't see it Go ahead: late-payment penalties don't exist

Output VAT does not belong to the business: ring-fence it separately, file and pay over on time.

Cross-cutting · Arbitration (new V3)

12. Dilemma — Year-end: Rachid has never reconciled his bank and suggests “reconciling everything at once at year-end”. You tell him…

No: instead never look at statements again Perfect: one big annual reconciliation is plenty No: accumulated gaps become unmanageable — reconcile monthly, from each statement Pointless: the bank statement rules, books need not be right

Monthly and systematic: catch errors and anomalies fast, keep cash reliable.

What's next?

Score ≥ 80%: move on to Level 2 V3 — balance sheet, income statement, inventory, notes and taxable profit.
Score < 80%: re-read the explanations above — each re-explains the concept — then redo the 48h challenges of the 5 sections before retrying.