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Quizzes > High School Quizzes > Career

FBLA Accounting 1 Practice Test

Boost exam readiness in personal finance, economics, math

Difficulty: Moderate
Grade: Grade 11
Study OutcomesCheat Sheet
FBLA Accounting Challenge trivia quiz engaging high school business students in interactive review.

Use this FBLA Accounting 1 and Personal Finance quiz to practice key skills and see where you stand. Work through 20 quick questions on terms, math, and the accounting cycle, then view your score to spot gaps before the exam or event. Replay to improve weak areas and track progress.

What is the basic accounting equation?
Assets + Liabilities = Owner's Equity
Assets - Liabilities = Owner's Equity
Assets = Liabilities - Owner's Equity
Assets = Liabilities + Owner's Equity
The basic accounting equation shows that assets equal liabilities plus owner's equity. This relationship is fundamental to maintaining balance in double-entry accounting.
Which of the following is considered an asset?
Dividends
Accounts Payable
Common Stock
Cash
Cash is a resource that a company owns, making it an asset. In contrast, accounts payable is a liability and common stock represents equity.
What does GAAP stand for?
Global Accounting and Auditing Practices
Governmental Accounting and Principles
Generally Approved Accounting Procedures
Generally Accepted Accounting Principles
GAAP stands for Generally Accepted Accounting Principles, which provide standardized guidelines for financial reporting. This ensures consistency and transparency when preparing financial statements.
Which financial statement summarizes a company's revenues and expenses?
Income Statement
Retained Earnings Statement
Statement of Cash Flows
Balance Sheet
The income statement summarizes revenues and expenses to show net income or loss over a period. It is distinct from the balance sheet, which details a company's assets, liabilities, and equity.
What is a debit in accounting?
An entry recorded on the left side of an account
An entry recorded on the right side of an account
An adjustment entry
A liability account
A debit is recorded on the left side of an account and typically increases asset or expense accounts. This concept is fundamental in double-entry accounting to maintain balanced records.
Which account is increased by a credit entry?
Asset account
Dividend account
Revenue account
Expense account
Credit entries increase accounts such as revenues, liabilities, and equity. In this context, a revenue account increases with a credit entry, reflecting its role in recognition of income.
What is the purpose of a trial balance?
To determine net income
To reconcile bank statements
To verify that total debits equal total credits
To prepare financial statements
The trial balance is used to ensure that the sum of all debits equals the sum of all credits in the ledger. This check is crucial for detecting any discrepancies before financial statements are finalized.
Under the accrual basis of accounting, when are revenues recognized?
At the end of the fiscal year
When earned regardless of cash receipt
When expenses are paid
When cash is received
Under the accrual basis of accounting, revenues are recorded when earned, not necessarily when cash is received. This principle ensures that financial statements accurately reflect the economic activity of a period.
Which depreciation method spreads an asset's cost evenly over its useful life?
Straight-line depreciation
Sum-of-the-years'-digits depreciation
Declining balance depreciation
Units of production depreciation
Straight-line depreciation allocates the cost of an asset evenly over its useful life. This method is favored for its simplicity and consistent expense recognition over time.
What is the purpose of subtracting accumulated depreciation from the asset cost on the balance sheet?
To calculate net income
To record a loss
To determine the book value of the asset
To assess the market value
Subtracting accumulated depreciation from an asset's cost yields its book value, reflecting the asset's remaining value. This adjustment is important for accurately presenting asset values on the balance sheet.
Which account represents recorded revenues that have not yet been received in cash?
Unearned Revenue
Accounts Payable
Prepaid Expenses
Accounts Receivable
Accounts Receivable is the asset account that records revenues that have been earned but not yet collected in cash. It reflects amounts due from customers, essential to the accrual accounting process.
Which of the following is classified as a liability on the balance sheet?
Equipment
Inventory
Retained Earnings
Accounts Payable
Accounts Payable is a current liability representing amounts owed to suppliers. Classifying this correctly is essential for understanding a company's short-term financial obligations.
Which statement best describes the double-entry accounting system?
Asset accounts are excluded from this system
Every transaction affects at least two accounts
Every transaction affects only one account
Only revenue and expense accounts are impacted
The double-entry accounting system requires that every financial transaction affects at least two accounts, with one debit and one credit entry. This interrelationship helps maintain the balance of the accounting equation.
Which inventory valuation method assumes that the last items purchased are the first sold?
Weighted Average
Last-In, First-Out (LIFO)
First-In, First-Out (FIFO)
Specific Identification
LIFO assumes that the most recent inventory purchases are sold first. This method can influence the cost of goods sold and net income, especially in periods of rising prices.
Which financial ratio measures a company's ability to cover short-term obligations with its most liquid assets?
Debt-to-Equity Ratio
Return on Assets
Gross Profit Margin
Quick Ratio
The quick ratio assesses a company's short-term liquidity by comparing liquid assets to current liabilities, excluding inventory. It provides insight into the company's ability to meet immediate obligations.
Which adjusting entry is necessary for incurred expenses that have not been paid by the period's end?
Accrued Expense
Deferred Revenue
Prepaid Expense
Unearned Revenue
Accrued expenses are recognized for costs that have been incurred but not yet paid at the end of the period. This adjusting entry ensures that expenses are matched to the period in which they occur, maintaining the integrity of the financial statements.
In preparing a bank reconciliation, which item is added to the bank's ending balance?
NSF Checks
Deposits in Transit
Outstanding Checks
Bank Service Charges
Deposits in transit are amounts that have been recorded by the business but not yet reflected in the bank statement. They are added to the bank's ending balance during the reconciliation process to align the records.
Under inflationary conditions, which inventory costing method is generally preferred for matching current costs with current revenues?
FIFO
LIFO
Specific Identification
Weighted Average
The LIFO method matches the more recent, higher costs with current revenues, providing a more accurate reflection of profitability during inflation. This approach typically results in lower taxable income when prices are rising.
When issuing bonds at a premium, how does this affect the interest expense recorded compared to the cash interest paid?
The interest expense is higher than the cash interest paid
Interest expense is not recorded until maturity
The interest expense is equal to the cash interest paid
The interest expense is lower than the cash interest paid
When bonds are issued at a premium, the premium is amortized over the life of the bonds, reducing the effective interest expense recorded each period. This results in the interest expense being lower than the actual cash interest paid.
A company uses the weighted-average method to value its inventory. If it purchased 100 units at $10 each and later 100 units at $15 each, what is the weighted-average cost per unit?
10.00
15.00
13.00
12.50
The weighted-average cost is computed by dividing the total cost of inventory by the total number of units available. In this case, ($10*100 + $15*100) equals $2500, and dividing by 200 units results in a cost of $12.50 per unit.
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Study Outcomes

  1. Understand fundamental accounting principles and the structure of financial statements.
  2. Analyze business transactions to accurately classify and record financial events.
  3. Apply financial calculations to determine key performance ratios and outcomes.
  4. Interpret income statements, balance sheets, and cash flow statements for business analysis.
  5. Evaluate accounting scenarios to reinforce test preparation and practical application.

FBLA Accounting 1 & Personal Finance Test Cheat Sheet

  1. Understand the Accounting Equation - Fun and simple: Assets = Liabilities + Owner's Equity. This balancing act ensures your financial statements always stay in harmony and helps you spot errors quickly.
  2. Master the Double-Entry System - Every transaction is like a two-way street: debits must equal credits. This clever method keeps your books honest and prevents sneaky mistakes from slipping through the cracks.
  3. Recognize the Matching Principle - Match each expense with the revenue it helps generate, and you'll get a crystal-clear picture of profitability. It's like pairing socks - you want everything to line up perfectly in the same period.
  4. Differentiate Between Cash and Accrual Accounting - Cash accounting waits for the money to change hands, while accrual records when it's earned or owed. Understanding both is key to choosing the best approach for your business.
  5. Familiarize Yourself with Financial Statements - Balance sheets, income statements, and cash flow statements each tell a unique chapter of the financial story. Learn to read them like a pro so you can make savvy decisions.
  6. Learn the Components of Owner's Equity - Owner's equity is made up of capital contributions, withdrawals, and retained earnings - the owner's financial fingerprint. Tracking these elements shows who owns what and how the business grows.
  7. Understand Depreciation Methods - Straight-line and declining-balance are two popular ways to spread asset costs over time. The method you choose can tweak your net income and asset values, so pick wisely.
  8. Grasp the Concept of Internal Controls - Think of these as the rules and safeguards that protect assets and ensure accurate reporting. Good controls keep fraud at bay and help you sleep better at night.
  9. Recognize the Significance of Adjusting Entries - Adjustments ensure revenues and expenses land in the right period under the accrual basis. Without them, your financial picture could be fuzzy or flat-out wrong.
  10. Comprehend the Role of Closing Entries - Closing entries sweep temporary account balances into permanent ones, so you start each new period with a clean slate. It's like clearing the board for a brand-new game.
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