Accounting PrinciplesCategory: Objective Test
60-minute test administered during the NLC.
Objective Test Competencies: Accounts Payable and Receivable; Basic Concepts, Principles and Terminology; Measurement, Valuation, Realization, and Presentation of Assets; Other Financial Statements (Cash Flow, Owner's Equity, Profit-Loss, etc.); Ownership Structure; Professional Standards and Ethics; Worksheet; Financial Statements (Balance Sheet and Income Statement)
Skills: This event provides recognition for PBL members who demonstrate an understanding of the basic principles of accounting and who give evidence of their knowledge in solving practical accounting problems
Objective Test Guidelines
- No materials may be brought to the testing site.
- Electronic devices must be turned off and out of sight.
- Financial calculators may be used for accounting, finance, and analysis & decision making events; calculators will be provided for all other events.
The general event guidelines below are applicable to all national competitive events. Please review and follow these guidelines when competing at the national level. When competing at the state level, check the state guidelines since they may differ.
- Dues: Competitors must have paid PBL national and state dues by 11:59 p.m. Eastern Time on April 15 of the current school year.
- NLC Registration: Participants must be registered for the NLC and pay the national conference registration fee in order to participate in competitive events.
- Deadlines: The state chair, or designee, must register each state competitor on the official online entry forms by 11:59 p.m. Eastern Time on the second Friday in May.
- Each state may submit three (3) individuals in all events requiring only objective tests and two (2) individuals or teams for all events that require a pre-judged or performance component.
- Each competitor can compete in two (2) events.
- Each competitor must compete in all parts of an event for award eligibility.
- A team shall consist of two or three members. Exceptions are Parliamentary Procedure which must be a team of four or five members, and LifeSmarts which must be a team of two members.
Competitors are not permitted to compete in an event more than once at the NLC unless one of the following circumstances applies:
- Modified Events: A competitor may compete in the same event when the event is modified. Note, if the only modification is a name change, competitors may not compete in the renamed event.
- Team Events: One (1) competitor of the team may have competed in the same event at one (1) previous NLC; however, they may not compete more than twice in the event at the national level.
- Chapter Events: Competitors may compete in a chapter event more than once (Community Service Project).
- Individual Entry: A competitor who competed as an individual entry in a team event at the national level may compete in the same event a second time as part of a team, but not a second time as an individual.
- Parliamentary Procedure: Two (2) competitors of the team may have competed in this event at a previous NLC; however, they may not compete more than twice at the national level.
- Pilot Event: Competition in a pilot event does not disqualify a competitor from competing in the same event if it becomes an official competitive event. The participant may compete in another event as well as a pilot event.
- Objective Tests: Ties are broken by comparing the correct number of answers to the last 10 questions on the exam. If a tie remains, the competitor who completed the test in a shorter amount of time will place higher. If this does not break the tie, answers to the last 20 questions will be reviewed and determine the winner.
- Objective and Production Tests: The production test scores will be used to break a tie.
- Objective Tests and Performances: The objective test score will be used to break a tie based on the tie-breaking criteria of objective tests.
- Reports/Projects and Performances: The report/project scores will be used to break a tie.
- Performances: Judges must break ties and all judges’ decisions are final.
- State chair/adviser must register all competitors for NLC competitive events online by 11:59 p.m. Eastern Time on the second Friday in May.
- All prejudged components (reports, websites, projects, statement of assurance) must be received by 11:59 p.m. Eastern Time on the second Friday in May.
- All prejudged projects and reports must be submitted electronically.
- All Statements of Assurance must be submitted online.
- All production tests must be received at FBLA-PBL by 11:59 p.m. Eastern Time on the third Friday in May.
- Desktop Publishing—the finished product must be uploaded in PDF format by 11:59 p.m. Eastern Time on the third Friday in May. Label all documents with the event title, competitor’s name, state, and school.
- All production tests must be uploaded online.
- State chair/adviser may make name changes only (no additional entries) by 11:59 p.m. Eastern Time on the first Friday in June. Competitor drops are the only changes allowed after this date and onsite.
The number of competitors will determine the number of winners. The maximum number of winners for each competitive event is 10. Only one (1) award is given to the schools competing in chapter events (Community Service Project and Local Chapter Annual Business Report).
- Financial calculators may be brought to objective testing and used for any accounting, finance, or analysis & decision making events.
- Certain events may allow the use of additional materials. Please refer to event guidelines.
Americans with Disabilities Act (ADA)
FBLA‑PBL meets the criteria specified in the Americans with Disabilities Act for all participants who submit a special needs form.
Recording of Presentations
No unauthorized audio or video recording devices will be allowed in any competitive event. Participants in the performance events should be aware the national association reserves the right to record any performance for use in study or training materials.
Graduate students may compete in all PBL events.
- Dress for Success—Members must be in business attire. Please review the the FBLA-PBL Dress Code. If you question if you are properly attired, then change.
- Read and follow explicitly the state and national competitive events guidelines. Be aware of differences between state and national guidelines.
- Check the status of membership dues. Students must be dues-paid members by April 15 to compete in national competition. The sooner dues are paid the sooner members will receive PBL benefits.
- All materials must be received by the national center by the second Friday in May. Normally the state submits these materials, but some states request the local chapters submit their reports, website URLs, interview materials, etc.
- Remember, when competing at the district or state levels, materials are not sent to the national office.
- Become completely familiar with the procedures to be followed for participation in each type of event at the state and national levels.
- Determine from the rating sheets and guidelines the areas that will be judged and the weight given to each area.
- Obtain a variety of updated information on different subject areas and provide access to students for study.
- Contact former and current chapter members who have competed in previous years for suggestions.
- Find mentors and other experts who can help members prepare for competition. Involve faculty, advisory committee members, Professional Division members, businesspeople, community volunteers, and parents in study sessions and event preparation.
- Try to recreate as realistically as possible the conditions under which the competition will take place and PRACTICE.
- Make certain that the copies of materials to be submitted to judges are error-free and in the proper format.
- Make sure all materials are submitted by the deadline.
- PBL members and advisers must recognize the value of competitive events, maintain a professional attitude toward the events, and keep them in proper perspective. While competitive events are an important element of PBL’s overall program, events are just a portion of the many other activities and programs that build a successful organization.
- All objective tests are done online and consist of 100 multiple choice questions.
- Ask your professors to share with you the different textbooks they use as resources. Look over the end-of-chapter summary and the glossary words.
- Avoid talking to others as you enter the room.
- Instructions for online testing will be given to you once seated at a computer.
- The calculator function on the computer will be available for use. Financial calculators can be used for all accounting, finance, and “Analysis & Decision Making” events.
- If the equipment doesn’t work, raise your hand until help comes.
Sample Practice Materials
- Accounting Basics (Explanation)
- Pesentation of contract assets and contract liabilities
- Financial Statements
2. Analyze and journalize purchases of merchandise on account; demonstrate knowledge of net purchases; post to proper ledger accounts; and prove subsidiary ledger by preparing a schedule of accounts payable.
3. Record transactions and journalize entries to write off uncollectible accounts using the direct write-off and allowance method.
4. Prepare adjustments using aging accounts receivable, percentage of sales, and percentage of accounts receivable methods.
5. Explain the purpose of notes payable and notes receivable and calculate, record transactions, and journalize interest and payment of notes payable and receivable.
6. Record transaction journal entries related to accruals and deferrals.
7. Explain the nature of accounts payable.
8. Explain an allowance for returned goods.
9. Process sales orders and invoices for payment.
10. Process accounts payable checks.
11. Explain the nature of accounts receivable.
12. Maintain a customer file for accounts receivable
13. Process sales returns and allowances.
14. Explain and illustrate the calculation of interest revenue on notes receivable.
15. Illustrate the preparation of a loan amortization table.
2. Define the basic accounting equation and demonstrate how it is affected by individual transactions.
3. Identify resources to provide information on financial laws, regulations, and policies.
4. Define general accounting terms such as asset, liability, accounts payable, capital, income, expense, etc
5. Define double entry accounting, debits, and credits.
6. Describe the purpose of accounting, the role it plays in our economy, and who uses it
7. Describe the purpose and basic concepts of the GAAP.
8. Identify asset, liability, and capital or owner’s equity accounts.
9. Differentiate fixed assets, intangible assets, and current assets.
10. Differentiate between current and long-term liabilities.
11. Define cash and explain a cash transaction’s effect on the cash account.
12. Record business transactions involving cash in cash related journals.
13. Prove the accuracy of the cash account.
14. Describe Adjusting, Reversing, Closing Entries, and Error Correction.
15. Define the components of payroll.
16. Prepare a Chart of Accounts.
17. Use T accounts.
18. Record transactions in a general journal.
19. Post journal entries to general ledger accounts..
20. Prepare a trial balance and a post-closing trail balance.
21. Journalize and post adjusting and closing entries.
22. Define subsidiary ledgers and illustrate their use.
2. Utilize the analysis of data to make business decisions such as buying or replacing equipment.
3. Explain, compare, and analyze various depreciation methods and their effect on the value of assets.
4. Identify property, plant, and equipment assets and record their initial cost.
5. Classify fixed and intangible assets.
6. Compute and record the amortization of an intangible asset.
7. Compute percentages, ratios, and turnovers as applied to solvency and profitability measures.
8. Determine the cost of inventory using a variety of inventory costing methods.
9. Prepare depreciation schedules.
10. Define and illustrate capital expenditures vs. revenue expenditures.
11. Discuss the three methods of expensing long-term assets: depreciation, amortization, and depletion.
12. Illustrate the straight line, units of production, and double the declining balance methods of depreciation.
13. Illustrate recording the sale, disposal, and trade-in of property, plant, and equipment.
14. Illustrate the accounting treatment of intangible assets and natural resources.
15. Analyze the items that belong to current assets account, including cash, accounts receivable, and inventory.
16. Analyze the items that belong to long-term assets account, including tangible and intangible assets.
17. Explain inventory systems and inventory valuation methods.
18. Describe inventory and periodic and perpetual inventory systems..
19. Identify cash dividends, stock dividends, stock split, return on assets, and return on common equity.
2. Differentiate between stock splits and stock dividends and explain how each affects equity
3. Describe the purposes of the revenue, expense, and drawing accounts and illustrate the effects on capital/owner’s or stockholder’s equity.
4. Use cost-volume-profit and contribution margin analysis to plan operations.
5. Analyze cash inflows and cash outflows and prepare a cash flow statement.
6. Determine cash flows from operating activities, investing activities, and financing activities.
7. Describe working capital changes.
8. Calculate business profitability.
9. Prepare a budget and use it to make business decisions and evaluate the company’s performance.
10. Describe the many types of budgets.
2. Identify business reporting and information flow required for types of ownership.
3. Explain the characteristics associated with corporations, including PC, LLC.
4. Define the advantages and disadvantages of corporations.
5. Explain the characteristics of partnerships.
6. Define the advantages and disadvantages of partnerships.
7. Explain the characteristics of sole proprietorships.
8. Define the advantages and disadvantages of sole proprietorships.
9. Compare the accounting implications for different types of business ownership
10. Summarize the differences in the equity sections for sole proprietorships, partnerships, and corporations.
11. Define capital stock, its classes, its characteristics and all associated terms.
12. Describe an agency relationship.
13. Describe the different levels of liability and taxation for Subchapter S Corporations and Limited Liability Corporations.
2. Identify characteristics of professional conduct.
3. Identify and practice good ethical behavior.
4. Differentiate between good and poor business ethics
5. Adhere to financial laws and regulations and to established company rules, regulations, and policies.
6. Identify issues and trends affecting computers and information privacy.
7. Describe the importance of integrity, confidentiality, and high ethical standards in preparation of financial statements, and in interpretation and use of data.
8. Explain the importance of ethical business decisions.
9. Utilize security measure to minimize loss and to create trust (e.g., maintain data security and develop strategies to protect data).
10. Adhere to financial laws and regulations and to established company rules, regulations, and policies.
2. Record adjustments on the worksheet.
3. Prepare trial balance, income statement, and balance sheet sections of the worksheet.
4. Prepare a worksheet.
5. Illustrate how a worksheet can be used to provide a preview of the financial statements.
2. Explain the purposes of each financial statement and describe the way they articulate with each other.
3. Define terminology and classifications necessary for financial statements.
4. Prepare an income statement that reports the results of operations for any entity.
5. Interpret the information on an income statement.
6. Prepare and interpret a balance sheet that reports the financial condition of the entity.
7. Define the specific assets, liabilities, and stockholders’ equity accounts that appear in the balance sheet.
8. Prepare and analyze internal and external accounting reports using a balance sheet, an income statement, and analysis.
9. Analyze the effects of revenue on financial statements.
10. Compute the various financial ratios from a firm’s income statement, balance sheet, and statement of cash flows.
11. Perform all of the functions of the closing process, journalize and post the closing entries, prepare the post-closing trial balance, and prepare all of the appropriate financial statements and reports for a corporation.
12. Create financial statements for partnerships including end-of fiscal-period worksheet, income statement, distribution of net income statement/owner’s equity statement, balance sheet, adjusting and closing entries, and post-closing trial balance.