Future Business Leaders of America (FBLA) Accounting Practice Test

What is a checking account primarily used for?

1. To save for long-term investments

2. To deposit cash and write checks against the balance

3. To calculate tax obligations annually

4. To track employee earnings

The correct answer is: To deposit cash and write checks against the balance

A checking account is primarily designed for managing day-to-day financial transactions, making it a practical tool for individuals and businesses alike. The main purpose of a checking account is to provide a safe space to deposit cash and facilitate access to funds through methods such as writing checks, making electronic payments, or using a debit card. This allows account holders to easily pay bills, make purchases, and manage their finances without holding large amounts of physical cash. This functionality distinguishes checking accounts from other financial tools. For example, savings accounts are typically used for long-term savings and earning interest on deposits, while responsibilities like calculating tax obligations depend more on accounting practices and tax preparation rather than the specific use of a checking account. Additionally, tracking employee earnings pertains to payroll management, which is separate from the direct functionalities provided by checking accounts.