FBLA Accounting Exam: Trivia Quiz!

The ending inventory refers to the merchandise that a business has on hand at the end of the fiscal period. This includes any unsold goods or products that are still in the company's possession. It is important for businesses to accurately determine their ending inventory as it is used in calculating the cost of goods sold and ultimately impacts the financial statements and profitability of the business.

The correct answer is "merchandise a business has on hand at the beginning of the fiscal period." This means that the beginning inventory refers to the goods or products that a business has in its possession at the start of the fiscal period. It represents the stock that the business already has before any sales or purchases are made during that period.

To determine the interest on a promissory note, the accountant needs to know the principle, interest, rate, and term. This is because the interest on a promissory note is calculated based on these factors. The principle is the initial amount borrowed, the interest is the rate at which the borrower will be charged, the rate is the percentage at which the interest is calculated, and the term is the length of time for which the note is valid. By knowing these variables, the accountant can accurately calculate the interest on the promissory note.

Straight-line depreciation is a method of allocating the cost of a plant or any other asset evenly over its useful life. This means that the cost of the asset is spread out in equal amounts over the number of years it is expected to be used. This method assumes that the asset will depreciate in a straight line, meaning that its value will decrease by the same amount each year. Therefore, the given statement that straight-line depreciation allocates the cost of a plant equally over its useful life is true.

Long-term liabilities are debts that are not required to be paid within the next accounting period. This means that they are obligations that will not be settled within the next 12 months. Examples of long-term liabilities include long-term loans, bonds payable, and mortgages.

A debit to an account is not always an increase. In accounting, a debit entry can either increase or decrease an account balance depending on the type of account. Debit entries increase asset and expense accounts, while they decrease liability, equity, and revenue accounts. Therefore, a debit entry can have different effects on different types of accounts.

A payee is the person or business that is designated to receive payment from a check. They are the intended recipient of the funds and are entitled to cash or deposit the check. Therefore, the statement that a payee is a person or business to whom a check is payable is true.

The correct answer is c. Assets = Liabilities + Owner's Equity. This equation represents the fundamental principle of accounting, stating that the total value of a company's assets is equal to the sum of its liabilities and owner's equity. It shows the relationship between what a company owns (assets), what it owes (liabilities), and the owner's investment in the business (owner's equity). This equation is used as the foundation for preparing financial statements and analyzing the financial position of a company.

Depreciation is the process of allocating the cost of a plant asset over its useful life. This is done to match the expense of the asset with the revenue it generates over time. By spreading out the cost, it reflects the asset's gradual wear and tear or obsolescence. Therefore, the statement "Depreciation is allocating the cost of a plant asset over the asset's useful life" is true.

The statement is false because the Federal Tax Reform Law requires all individuals, regardless of age, to have a social security number.

In a corporation, the capital stock account represents the ownership interest of the shareholders. Similarly, in a sole proprietorship, the owner's equity account represents the owner's ownership interest in the business. Therefore, the correct answer is owner's equity.

This transaction is incorrect because it involves both a debit and a credit to the same account (Cash) with different amounts, which doesn't make sense and will cause the trial balance to be out of balance by the difference in the amounts ($18).

A bonus is not paid as a percentage of sales, but rather as an additional amount given to an employee as a reward or incentive for their performance. A commission, on the other hand, is a percentage of sales that an employee receives as a form of compensation for generating sales. Therefore, the statement that a bonus is an amount paid to an employee as a percentage of sales is incorrect.

The correct answer is balance sheet. Asset accounts from the worksheet are extended to the balance sheet because the balance sheet provides a snapshot of an organization's financial position at a specific point in time. It includes assets, liabilities, and owner's equity. By extending asset accounts from the worksheet to the balance sheet, the organization can accurately represent its assets and their respective values. This allows stakeholders to understand the organization's financial health and make informed decisions.

A long-term liability refers to a debt or obligation that is not expected to be settled within the next year. Wages, taxes payable, and bond payable are all short-term liabilities as they are expected to be settled within a year. However, a note payable due in 15 months is classified as a long-term liability because it is not expected to be settled within the next year.

June earns $8.50 per hour and is paid overtime for hours worked over 40. In this week, she worked 42.5 hours, which means she worked 2.5 hours of overtime. To calculate her gross earnings, we need to calculate her regular earnings for 40 hours and her overtime earnings for the remaining 2.5 hours. Her regular earnings for 40 hours would be 40 * $8.50 = $340. Her overtime earnings for 2.5 hours would be 2.5 * ($8.50 * 1.5) = $31.88. Adding these two amounts together, her gross earnings for the week would be $340 + $31.88 = $371.88.

Partner A withdrawing cash for personal use to purchase an automobile would result in a decrease in the partnership's cash balance and an increase in Partner A's withdrawal account. Therefore, the correct transaction would be to debit Partner A, withdrawal and credit cash. This accurately reflects the movement of funds from the partnership to Partner A for personal use.

The correct answer is d. All of the above. This means that the accountant will write off a customer as a bad debt using the direct-write method by debiting bad debts expense and crediting accounts receivable/customer in the general journal, posting to the bad debts expense and accounts receivable accounts, and posting to the customer's account showing it to be uncollectible. This method allows the company to recognize the loss from the uncollectible debt and remove it from the accounts receivable balance.

Net income or net loss is reported on the income statement. The income statement provides a summary of a company's revenues, expenses, and net income or net loss for a specific period of time. It shows the financial performance of a company by detailing its revenues and gains, as well as its expenses and losses. The net income or net loss is calculated by subtracting the total expenses and losses from the total revenues and gains. Therefore, the income statement is the document on which net income or net loss is reported.

Common stock is the type of stock issued by a corporation when only one class of stock is issued. This means that there are no other classes or types of stock available, such as preferred stock. Common stock represents ownership in a company and typically carries voting rights and the potential for dividends. It is the most common type of stock that investors can purchase and is often traded on public exchanges.

The company's gross profit on sales can be calculated by subtracting the cost of merchandise sold from the net sales. In this case, the net sales are $557,225 and the cost of merchandise sold is $404,000. Therefore, the gross profit on sales is $557,225 - $404,000 = $153,225.

When a business buys equipment, the bookkeeper debits the asset account. This is because the purchase of equipment increases the value of the company's assets, and debiting the asset account reflects this increase.

When a price reduction is given to a customer, it is considered a sales allowance. This is because a sales allowance is a deduction or discount given to a customer on the selling price of a product or service. It is a reduction in the amount of revenue earned from the sale. Therefore, a price reduction given to a customer would affect the sales allowance account.

When the accountant debits the withdrawals account, this will actually result in an increase to the account. Debiting an account means recording an entry on the left side, and for the withdrawals account, it represents an increase in the amount of money taken out or withdrawn from the business. Therefore, the statement "this will result in a decrease to the account" is incorrect.

The capital account represents the owner's equity in the business and is not closed at the end of the accounting period. It is a permanent account that carries forward the balance from one period to the next. Closing entries are only required for temporary accounts, such as supplies expense and fees owed, which need to be reset to zero at the end of the period to start fresh in the next period. Therefore, the correct answer is a. Capital.

The correct answer is b. When adjusting for depreciation expense, the bookkeeper will debit the depreciation account to record the expense and credit the accumulated depreciation account to update the carrying value of the asset. This allows for the recognition of the gradual decrease in the value of the asset over time.

The correct answer is "on a specific date." This is because a balance sheet provides a snapshot of a business's financial position at a specific point in time. It includes information about the company's assets, liabilities, and equity on that particular date. The balance sheet does not show how the business is doing over a specific period of time, such as 12 months. Instead, it provides a static view of the business's financial health at a given moment.

The bookkeeper recorded the return by debiting sales returns and allowances for $150 and crediting accounts receivable/customer. This means that the business received a return or allowance from a customer for $150, which reduced the amount of net sales. This is reflected in the financial records by decreasing the sales returns and allowances account and reducing the accounts receivable/customer balance.

A form for recording accounting information in chronological order is called a journal. This is where all financial transactions are initially recorded before being transferred to the ledger. The journal serves as a primary record of all the transactions, including the date, description, and amount. It helps in maintaining a systematic and organized approach to record-keeping in accounting. The ledger and general ledger, on the other hand, are secondary records that summarize and categorize the information from the journal. Therefore, the correct answer is journal.

FICA tax is the correct answer because it is a tax that is paid by both the employer and the employee on the employee's gross wages. FICA stands for Federal Insurance Contributions Act, and it includes both Social Security tax and Medicare tax. These taxes are used to fund social security benefits and healthcare for retired and disabled individuals.

The correct answer is "gross profit on sales" because it accurately describes the difference between net sales and the cost of merchandise sold. Gross profit on sales represents the amount of revenue remaining after subtracting the direct costs associated with producing or acquiring the merchandise being sold. It is an important financial metric that indicates the profitability of a company's core operations before considering other expenses such as operating expenses.

When a business uses a petty cash fund, the fund is not debited each time it is replaced. Instead, the fund is initially debited when it is established, and then it is replenished by debiting the appropriate expense accounts and crediting the petty cash fund account. This ensures that the petty cash fund remains at a constant balance, and any expenses made from the fund are recorded accurately.

The year and month are written on each journal page to provide a clear and organized record of the transactions. This helps in identifying and categorizing the entries by date, making it easier to locate and analyze specific transactions. Additionally, including the year and month on each page ensures that the information remains accurate and consistent throughout the journal.

The correct answer is $600; insurance expense and prepaid insurance. On December 31, the store needs to make an adjustment to reflect the portion of the insurance policy that has been used up during the fiscal period. Since the policy was purchased on September 1 and the fiscal period ends on December 31, there are 4 months (September, October, November, December) that have passed. Each month represents 1/12th of the policy's value, so 4/12th or $600 has been used up. Insurance expense is debited to reflect the expense incurred, and prepaid insurance is credited to reduce the prepaid asset.

To find the cash balance on June 1, we need to subtract the cash receipts and disbursements for June from the closing cash balance. Therefore, the cash balance on June 1 would be $8,000 - $15,526 + $12,200 = $4,674.

The correct answer is $157.19. To calculate the amount of interest on a 90-day, $7,500 interest-bearing note at 8.5%, we can use the formula: Interest = Principal x Rate x Time. Plugging in the values, we get: Interest = 7,500 x 0.085 x (90/365) = $157.19.

Retained earnings are the profits that a corporation has earned and kept for reinvestment or distribution to shareholders. They represent the accumulated earnings of the company over time. Retained earnings will be shown on the balance sheet of a corporation, which is a financial statement that provides a snapshot of the company's financial position at a specific point in time. The balance sheet includes assets, liabilities, and shareholders' equity, where retained earnings are a component of shareholders' equity.

The balance sheet presents the financial position of a business at a specific point in time. It includes assets (resources owned), liabilities (obligations), and owner's equity (ownership interest). The balances shown are final, representing cumulative transactions up to that date. This financial statement helps stakeholders assess the company's financial health, solvency, and ability to meet its obligations.

Double-entry accounting is a fundamental accounting method that ensures accuracy and reliability in recording financial transactions. In this system, each transaction affects at least two accounts, with one account debited and another credited. The total debits must always equal the total credits, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced. This approach provides a comprehensive view of the financial health of a business and helps detect errors and discrepancies. By recording transactions in this manner, double-entry accounting enhances transparency, facilitates financial analysis, and enables stakeholders to make informed decisions based on accurate and complete financial information.

The correct answer is to add only purchases to beginning inventory and deduct ending inventory. This method calculates the cost of merchandise sold by considering only the purchases made during the accounting period and deducting the value of the ending inventory. This approach ensures that only the cost of the goods actually sold is accounted for, providing an accurate measure of the cost of merchandise sold.