On March 1 a business pays $1,200 for a 12-month insurance policy and debits Prepaid Insurance. What adjusting entry is needed on March 31?

Debit Insurance Expense $100; credit Prepaid Insurance $100

Debit Prepaid Insurance $100; credit Insurance Expense $100

Debit Insurance Expense $1,200; credit Cash $1,200

No entry until the policy expires

Accounting & finance

FBLA Accounting practice test

Accounting tests the full accounting cycle for sole proprietorships, partnerships, and corporations, from journalizing transactions to preparing financial statements. Most questions are applied: expect calculations, adjusting entries, and reading statements rather than plain definitions.

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Topics on the FBLA Accounting test

Journalizing and posting transactions
Adjusting and closing entries
Income statement, balance sheet, and owner’s equity
Bank reconciliation and cash control
Payroll accounting and payroll taxes
Depreciation, inventory, and receivables

Free FBLA Accounting practice questions and answers

Try each question before opening the answer. Every AI practice test explains its answers the same way.

Question 1
On March 1 a business pays $1,200 for a 12-month insurance policy and debits Prepaid Insurance. What adjusting entry is needed on March 31?
1. ADebit Insurance Expense $100; credit Prepaid Insurance $100
2. BDebit Prepaid Insurance $100; credit Insurance Expense $100
3. CDebit Insurance Expense $1,200; credit Cash $1,200
4. DNo entry until the policy expires
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Answer: A. Debit Insurance Expense $100; credit Prepaid Insurance $100
One month of the policy has expired ($1,200 ÷ 12 = $100), so $100 moves from the Prepaid Insurance asset to Insurance Expense.
Question 2
Which account normally has a credit balance?
1. AAccounts Receivable
2. BOwner’s Drawing
3. CUnearned Revenue
4. DSupplies Expense
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Answer: C. Unearned Revenue
Unearned Revenue is a liability, and liabilities increase with credits. Receivables, drawing, and expense accounts normally carry debit balances.
Question 3
A bank statement shows a balance of $5,400. There is a $600 deposit in transit and $900 in outstanding checks. What is the adjusted bank balance?
1. A$4,500
2. B$5,100
3. C$5,700
4. D$6,000
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Answer: B. $5,100
Add deposits in transit and subtract outstanding checks: $5,400 + $600 − $900 = $5,100.

How to study for FBLA Accounting

Work every problem with T-accounts in mind: decide which accounts change, whether each goes up or down, and on which side. Most missed Accounting questions come from reversing a debit and a credit, not from the arithmetic.

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FBLA Accounting FAQ

How many questions are on the FBLA Accounting test?

Accounting is an objective test event. Under the current guidelines, FBLA objective tests are typically 100 multiple-choice questions in 50 minutes. Check the official FBLA competitive event guidelines for your season and conference.

What topics are on the FBLA Accounting test?

Expect questions on journalizing and posting transactions; adjusting and closing entries; income statement, balance sheet, and owner’s equity; bank reconciliation and cash control; payroll accounting and payroll taxes; and depreciation, inventory, and receivables.

Are these official FBLA Accounting questions?

No. The sample questions are original and written in the style of FBLA objective tests. TierOne is an independent study aid and is not affiliated with FBLA.