FBLA Accounting 3

Question 1

Which accounting principle requires that expenses be recorded in the same period as the revenues they helped generate?

Accepted Answer

Matching Principle

Answer

The matching principle dictates that expenses must be recorded in the period associated with the revenues they helped produce.

Question 2

A company's current ratio is calculated by dividing:

Accepted Answer

Current Assets by Current Liabilities

Answer

The current ratio measures short-term liquidity by comparing current assets to current liabilities.

Question 3

Which entry correctly records a $500 cash sale under double-entry bookkeeping?

Accepted Answer

Debit Cash $500; Credit Revenue $500

Answer

A cash sale increases both Cash (debit) and Revenue (credit) by $500, following the double-entry system.

Question 4

The concept of 'going concern' assumes that:

Accepted Answer

A business will continue to operate indefinitely into the future

Answer

The going concern assumption holds that a company will remain in operation long enough to fulfill its obligations and plans.

Question 5

Which account would be found on the balance sheet?

Accepted Answer

Retained Earnings

Answer

Retained earnings is an equity account that appears on the balance sheet, representing accumulated net income not distributed as dividends.

FBLA - Future Business Leaders of America Practice Test