Future Business Leaders of America (FBLA) Agribusiness Practice Test

What is a passbook used for?

1. Recording checking account transactions

2. Recording savings account transactions

3. Budgeting expenses

4. Documenting loan repayments

The correct answer is: Recording savings account transactions

A passbook is primarily used for recording savings account transactions. Traditionally, it is a small booklet issued by banks to account holders that allows them to keep a detailed record of deposits, withdrawals, and interest earned on their savings account. This physical record provides a transparent and easily accessible way for individuals to monitor their savings over time. In a passbook, each financial transaction related to the savings account is manually updated by the bank or by the account holder, reflecting the current balance and transaction history. This feature distinguishes it from other financial tools. For example, checking account transactions are typically managed through checks or digital banking systems rather than a passbook, budgeting expenses usually relies on different methods, and documenting loan repayments is a separate process that often involves loan statements rather than a passbook. Keeping track of savings account activity is the primary function of a passbook, making it an essential tool for individuals looking to monitor their savings effectively.