FBLA ACCOUNTING 1 TEST

Front

What is unearned revenue?

Back

Unearned revenue is cash received by a business for goods or services that have not yet been delivered or performed. It is considered a liability until the service is provided or the goods are delivered.

Front

What happens to net income or net loss at the end of an accounting period?

Back

At the end of an accounting period, net income or net loss is transferred to the owner's capital account through closing entries.

Front

Where do you find the information needed to prepare the expense section of an income statement?

Back

The information needed to prepare the expense section of an income statement is obtained from the income statement debit column of the worksheet.

Front

What is a partnership?

Back

A partnership is a business structure where two or more individuals share ownership and the responsibilities of managing the business.

Front

Which of the following is not considered an asset account?

Back

Supplies expense is not considered an asset account; it is an expense account.

Front

What is the purpose of closing entries in accounting?

Back

Closing entries are used to transfer temporary account balances (like revenues and expenses) to permanent accounts (like the owner's capital account) at the end of an accounting period.

Front

Define accounts receivable.

Back

Accounts receivable is an asset account that represents money owed to a business by its customers for goods or services delivered but not yet paid for.

Front

What is the income summary account?

Back

The income summary account is a temporary account used during the closing process to summarize revenues and expenses before transferring the net income or loss to the owner's capital account.

Front

What is prepaid expense?

Back

Prepaid expense is an asset that represents payments made in advance for goods or services that will be received in the future.

Front

What is the difference between a corporation and a proprietorship?

Back

A corporation is a legal entity separate from its owners, providing limited liability, while a proprietorship is owned and operated by a single individual, who is personally liable for the business's debts.