FBLA Accounting 2

Question 1

Which financial statement shows a company's revenues and expenses over a specific period?

Accepted Answer

Income Statement

Answer

The income statement reports revenues and expenses during a defined accounting period to show net income or loss.

Question 2

Depreciation is best described as:

Accepted Answer

The allocation of an asset's cost over its useful life

Answer

Depreciation systematically allocates the cost of a long-term tangible asset over its estimated useful life.

Question 3

When a business collects cash before providing a service, the liability recorded is called:

Accepted Answer

Unearned Revenue

Answer

Unearned revenue is a liability because the company owes the customer a service or product not yet delivered.

Question 4

The LIFO inventory method assumes that:

Accepted Answer

Newest inventory is sold first

Answer

Last-In, First-Out (LIFO) assumes the most recently purchased goods are sold before older inventory.

Question 5

A trial balance is prepared to verify that:

Accepted Answer

Total debits equal total credits in the ledger

Answer

A trial balance lists all ledger account balances to confirm that total debits equal total credits.

FBLA - Future Business Leaders of America Practice Test