FBLA ACCOUNTING I VOCABULARY
EXAM QUESTIONS WITH COMPLETE
ANSWERS
Slide error - Answer-Occurs when a decimal point is moved by mistake
Correcting entry - Answer-An entry made to correct an error in a journal entry
discovered after posting
Work sheet - Answer-A working paper used to collect information from the ledger
accounts in one place
Matching principle - Answer-Requires matching expenses incurred in an accounting
period with the revenue earned in the same period
Net income - Answer-The amount of revenue that remains after expenses for the
period have been subtracted
Net loss - Answer-Decreases owner's equity
Financial statements - Answer-Summarizes the changes resulting from business
transactions that occur during an accounting period
Income statement - Answer-Reports the net income or net loss for a specific period
of time
Statement of changes in owner's equity - Answer-Summarizes changes in the
owner's capital account as a result of business transactions that occur during the
period
Balance Sheet - Answer-A report of the balances in the permanent accounts at the
end of the period; reports the assets of a business and the claims against those
assets on a specific date
Report form - Answer-A balance sheet format that lists classifications one under
another
Statement of cash flows - Answer-Summarizes the amount of cash the business took
in, the sources of cash, the amount of cash the business paid out, the uses of cash
Ratio analysis - Answer-The process of evaluating the relationship between various
amounts in the financial statements
Profitability ratio - Answer-Used to evaluate the earnings performance of the
business during the accounting period
, Return on sales - Answer-Used to examine the portion of each sales dollar that
represents profit; net income/sales
Current assets - Answer-Those used up or converted to cash during the normal
operating cycle of the business
Current liabilities - Answer-Debts of the business that must be paid within the next
accounting period
Working capital - Answer-The amount by which current assets exceed current
liabilities
Liquidity ratio - Answer-A measure of the ability of a business to pay its current debts
as they become due and provide as they become due and to provide for an
unexpected need for cash
Current ratio - Answer-Reflects the relationship between current assets and current
liabilities
Quick ratio - Answer-A measure of the relationship between short-term assets and
current liabilities
Closing Entries - Answer-Journal entries made to close, or reduce to zero, the
balances in the temporary accounts and to transfer the net income or net loss for the
period to the capital account
Income summary account - Answer-Used to accumulate and summarize the revenue
and expenses for the period
Compound entry - Answer-A journal entry with two or more debits or two or more
credits
Post-closing trial balance - Answer-Prepared to make sure total debits equal total
credits after the closing entries are posted
Internal controls - Answer-Refer to procedures within the business that are designed
to protect cash and other assets and to keep reliable records
External controls - Answer-The measures and procedures provided outside the
business to protect cash and other assets
Checking account - Answer-Allows a person or business to deposit cash in a bank
and to write checks against the account balance
Check - Answer-Written order from a depositor telling the bank to pay a stated
amount of cash to the person or business named on the check
Depositor - Answer-A person or business that has cash on deposit in a bank
EXAM QUESTIONS WITH COMPLETE
ANSWERS
Slide error - Answer-Occurs when a decimal point is moved by mistake
Correcting entry - Answer-An entry made to correct an error in a journal entry
discovered after posting
Work sheet - Answer-A working paper used to collect information from the ledger
accounts in one place
Matching principle - Answer-Requires matching expenses incurred in an accounting
period with the revenue earned in the same period
Net income - Answer-The amount of revenue that remains after expenses for the
period have been subtracted
Net loss - Answer-Decreases owner's equity
Financial statements - Answer-Summarizes the changes resulting from business
transactions that occur during an accounting period
Income statement - Answer-Reports the net income or net loss for a specific period
of time
Statement of changes in owner's equity - Answer-Summarizes changes in the
owner's capital account as a result of business transactions that occur during the
period
Balance Sheet - Answer-A report of the balances in the permanent accounts at the
end of the period; reports the assets of a business and the claims against those
assets on a specific date
Report form - Answer-A balance sheet format that lists classifications one under
another
Statement of cash flows - Answer-Summarizes the amount of cash the business took
in, the sources of cash, the amount of cash the business paid out, the uses of cash
Ratio analysis - Answer-The process of evaluating the relationship between various
amounts in the financial statements
Profitability ratio - Answer-Used to evaluate the earnings performance of the
business during the accounting period
, Return on sales - Answer-Used to examine the portion of each sales dollar that
represents profit; net income/sales
Current assets - Answer-Those used up or converted to cash during the normal
operating cycle of the business
Current liabilities - Answer-Debts of the business that must be paid within the next
accounting period
Working capital - Answer-The amount by which current assets exceed current
liabilities
Liquidity ratio - Answer-A measure of the ability of a business to pay its current debts
as they become due and provide as they become due and to provide for an
unexpected need for cash
Current ratio - Answer-Reflects the relationship between current assets and current
liabilities
Quick ratio - Answer-A measure of the relationship between short-term assets and
current liabilities
Closing Entries - Answer-Journal entries made to close, or reduce to zero, the
balances in the temporary accounts and to transfer the net income or net loss for the
period to the capital account
Income summary account - Answer-Used to accumulate and summarize the revenue
and expenses for the period
Compound entry - Answer-A journal entry with two or more debits or two or more
credits
Post-closing trial balance - Answer-Prepared to make sure total debits equal total
credits after the closing entries are posted
Internal controls - Answer-Refer to procedures within the business that are designed
to protect cash and other assets and to keep reliable records
External controls - Answer-The measures and procedures provided outside the
business to protect cash and other assets
Checking account - Answer-Allows a person or business to deposit cash in a bank
and to write checks against the account balance
Check - Answer-Written order from a depositor telling the bank to pay a stated
amount of cash to the person or business named on the check
Depositor - Answer-A person or business that has cash on deposit in a bank
