Future Business Leaders of America (FBLA) Accounting Practice Test

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Prepare for the FBLA Accounting Test with practice quizzes and comprehensive questions. Each question is designed to help deepen your understanding and enhance your readiness for the exam. Are you ready to excel?

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What do adjustments on a work sheet accomplish at the end of a fiscal period?

They eliminate all transactions
They update general ledger accounts
They prepare the journal entries
They summarize revenue only

The correct answer is: They update general ledger accounts

Adjustments on a work sheet at the end of a fiscal period are crucial for ensuring that the financial statements reflect the true financial position and performance of the business. By updating general ledger accounts, these adjustments ensure that all revenues and expenses are accurately recorded in the correct accounting period. This process involves making necessary adjustments for accrued items, deferrals, depreciation, and other accounting adjustments that may not have been captured in the daily transactions. This updating process helps in maintaining the integrity of the financial reports, allowing for accurate reporting of net income and financial position on the balance sheet. By making these adjustments, businesses can ensure compliance with the accrual basis of accounting, which states that transactions should be recognized when they occur, regardless of when cash is exchanged. This practice is essential for providing stakeholders with a clear and honest picture of the company's financial health.