Bookkeeping Vocabulary Quiz
12 multiple-choice questions on bookkeeping and accounting vocabulary: ledger, debit, credit, trial balance, accrual, depreciation and bank reconciliation. B2 level.
This quiz focuses on how the target vocabulary for Bookkeeping is actually used in context at B2 level, rather than testing bare definitions. Correct answers you will need to identify include terms such as ledger, debit, accrual, depreciation and trial, each embedded in a full example sentence so you have to judge meaning from context, not just recognise an isolated word.
Working through all 12 questions and checking the explanations in the FAQ below is a quick way to spot any terms you are still unsure of. Revisiting the quiz again after a day or two, rather than only once, is one of the most reliable ways to move new vocabulary from passive recognition into words you can use confidently yourself in speaking and writing.
Keep building your bookkeeping vocabulary.
Bookkeeping Vocabulary — FAQ
What is a 'ledger' in bookkeeping?
A ledger is the central book of accounts in which all financial transactions of a business are recorded. In double-entry bookkeeping, each transaction is recorded in at least two accounts — a debit in one and a credit in another. The general ledger contains all accounts, while subsidiary ledgers hold detailed records for specific areas such as accounts receivable.
What is the difference between a 'debit' and a 'credit'?
In bookkeeping, a debit is an entry on the left side of an account and a credit is an entry on the right side. Debits increase assets and expenses; credits increase liabilities, equity and revenue. The system requires total debits to equal total credits, keeping the equation Assets = Liabilities + Equity balanced.
What is a 'trial balance'?
A trial balance lists the balances of all accounts in the general ledger at a specific point in time. It verifies that total debits equal total credits. If they do not agree, an error has been made. A trial balance is produced before preparing the final financial statements.
What is 'accrual accounting'?
Accrual accounting records income and expenses when they are earned or incurred, regardless of when cash changes hands. For example, a sale is recorded when goods are delivered, not when payment is received. This contrasts with cash-basis accounting and gives a more accurate picture of a business's financial position.
What is 'depreciation'?
Depreciation is the process of spreading the cost of a fixed asset over its useful life, rather than recording the full cost as an expense in the year of purchase. It reflects the gradual reduction in an asset's value due to wear, tear and obsolescence, and gives a fairer picture of annual costs.
What is 'bank reconciliation'?
Bank reconciliation compares a company's internal cash records with the bank statement to ensure they match. Differences can arise from outstanding cheques, bank charges or errors. Regular reconciliation helps detect fraud and confirms the true cash balance available to the business.
What is a 'balance sheet'?
A balance sheet shows what a business owns (assets), what it owes (liabilities) and the owners' equity at a specific date. The accounting equation Assets = Liabilities + Equity must always hold, which is why it is called a balance sheet — the two sides must balance.
What does 'accounts payable' mean?
Accounts payable (AP) records amounts a business owes to suppliers for goods or services received but not yet paid for. The balance decreases when payments are made. Managing accounts payable efficiently is important for cash flow and maintaining good supplier relationships.
What is 'double-entry bookkeeping'?
Double-entry bookkeeping records every transaction as both a debit in one account and a corresponding credit in another. This keeps the accounting equation balanced and provides a complete record of every transaction. It was formalised in 15th-century Italy and remains the foundation of modern accounting.
What is a 'profit and loss account'?
A profit and loss account (P&L), or income statement, summarises a company's revenues, costs and expenses over a period, resulting in a net profit or loss. It is one of the three core financial statements alongside the balance sheet and the cash flow statement.