FBLA Accounting 5

Question 1

Which accounting equation is always true?

Accepted Answer

Assets = Liabilities + Owner's Equity

Answer

The fundamental accounting equation states that Assets equal Liabilities plus Owner's Equity, maintaining the balance of the balance sheet.

Question 2

Straight-line depreciation is calculated using:

Accepted Answer

(Cost − Salvage Value) ÷ Useful Life

Answer

Straight-line depreciation divides the depreciable cost (cost minus salvage value) equally over the asset's useful life.

Question 3

Which of the following transactions would increase total assets and increase total liabilities?

Accepted Answer

Business purchases equipment on credit

Answer

Buying equipment on credit increases assets (equipment) and simultaneously increases liabilities (accounts or note payable).

Question 4

The operating activities section of the Statement of Cash Flows includes:

Accepted Answer

Cash received from customers

Answer

Operating activities include cash flows from the primary business operations, such as cash receipts from customers and cash paid to suppliers.

Question 5

Which type of account has a normal credit balance?

Accepted Answer

Notes Payable

Answer

Liability accounts like Notes Payable have normal credit balances because they increase with credits and decrease with debits.

FBLA - Future Business Leaders of America Practice Test