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HBX CORE FINANCIAL ACCOUNTING QUESTIONS WITH CORRECT ANSWERS
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HBX CORE FINANCIAL ACCOUNTING QUESTIONS WITH CORRECT ANSWERS
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HBX- FINAL EXAM (FINANCIALACCOUNTING) QUESTIONS WITH
CORRECT ANSWERS
AddressaYou,aaafancyadressamanufacturer,asoldaaadressafora$8,000aonacredit.aTheacostaofap
roducingathisadressawasa$1,000.aFirst,ahowawouldathearevenueaandareceivableafromathisatra
nsactionaimpactatheaaccountingaequationaofaAddressaYou?aPleaseaenteratheaamountsainath
eaboxesabelow.
Atatheasameatime,ahowawillathearelatedaexpenseafromathisatransactionaimpactatheaaccountin
gaequationaofaAddressaYou?a-aans--
Increasea$8KaAssets=aLiabilities+aIncreasea$8kaOwners'aEquitya
Decreasea$1KaAssets=aLiabilities+aDecreasea$1KaOwners'aEquity
WeaLikeatoaRocka(WLR),aaagraniteacountertopamanufacturer,adelivereda5acountertopsaata$2
,000aeachatoatheiraclient.aTheacostaofaproducingatheacountertopsawasa$500aeach.aTheaclient
apaidacashaforatheacountertops.aFirst,ahowawouldathearevenueafromathisatransactionaimpactat
heaaccountingaequationaforaWLR?
Atatheasameatime,ahowawillathearelatedaexpenseafromathisatransactionaimpactatheaaccountin
gaequationaofaWLR?a-aans--
Increasea$10KaAssets=aLiabilities+aIncreasea$10kaOwners'aEquity
Decreasea$2.5K=aLiabilities+aDecreasea$2.5KaOwners'aEquity
JarvardaUniversityaBookstoreapaida$67,000aforabooksapurchasedaonacreditainatheapreviousa
month.aHowawouldathisapaymentaimpactatheaaccountingaequation?a-aans--
Decreasea$67KaAssets=aDecreasea$67KaLiabilities+aOwners'aEquity
Whichaofatheafollowingademonstratesatheahistoricalacostaprinciple?
A.aJohnaisawonderingawhichamethodaofaaccountingaforainventoryainahisabikeashopawouldabea
mostaappropriate.aHeadecidesathataheashouldauseatheasameamethodathataheahasabeenausin
gaforathealastafewayears,asinceahisabusinessahasabeenaoperatingaessentiallyatheasameaway.a
(ExampleaofaConsistency)
B.aRealaEstateapricesainaOrdervilleahaveaincreasedadramaticallyaoverathealastafiveayears.aAlt
houghathealandaunderaChad'saofficeabuildingaisacurrentlyabelievedatoabeawortha$500,000,aitai
sarecordedaata$250,000abecauseathataisatheapriceaheapaidaforait.
,(Theaideaathataassetsaarearecordedaatatheiraoriginalacostaunderliesatheahistoricalacostaprinci
ple,asoathealandaunderaChad'saofficeabeingarecordedaatatheapriceaheapaidaforaitaisaanaexampl
eaofatheahistoricalacostaprinciple.)
C.Shelley'saAutomotiveareceivedaaalargeaorderafromaaacustomer,awhoaprepaidatheaentireaa
mount.aShella-aans--
B.aRealaEstateapricesainaOrdervilleahaveaincreasedadramaticallyaoverathealastafiveayears.aAlt
houghathealandaunderaChad'saofficeabuildingaisacurrentlyabelievedatoabeawortha$500,000,aitai
sarecordedaata$250,000abecauseathataisatheapriceaheapaidaforait.
(Theaideaathataassetsaarearecordedaatatheiraoriginalacostaunderliesatheahistoricalacostaprinci
ple,asoathealandaunderaChad'saofficeabeingarecordedaatatheapriceaheapaidaforaitaisaanaexampl
eaofatheahistoricalacostaprinciple.)
HereaareasomeaofatheaaccountsathataCompanyaFahasaonatheirabooks:
CashaandaCashaEquivalents$2,000
InsuranceaExpense$250
AccountsaPayablea$800
PrepaidaRent$400
AccountsaReceivable$750
DeferredaRevenue$1,650
Inventory$925
Whichaofatheaamountsabelowaisatheacorrectatotalaofaliabilities?a-aans--
Theacorrectaansweraisa$2,450,awhichaincludes:
AccountsaPayable$800
DeferredaRevenue$1,650
BreezeaInc.areceivesapaymentaofa$800,000afora4awindaturbinesathatawereadeliveredaandainv
oicedaonacreditainatheapreviousamonth.aHowawouldathisareceiptaimpactatheaaccountingaequa
tionaofaBreezeaInc.?aSelectaallathataapply.a-aans--
Increasea$800KaAssetsa&aDecreasea$800kaAssets=aLiabilities+aOwners'aEquity
HereaareasomeaofatheaaccountsathataCompanyaFahasaonatheirabooks:
CashaandaCashaEquivalents$2,000
InsuranceaExpense$250
AccountsaPayable$800
PrepaidaRent$400
AccountsaReceivable$750
DeferredaRevenue$1,650
Inventory$925
Whichaofatheaamountsabelowaisatheacorrectatotalaofaassets?a-aans--
Theacorrectaansweraisa$4,075,awhichaincludes:
CashaandaCashaEquivalents$2,000
PrepaidaRent$400
AccountsaReceivable$750
, Inventory$925
Whichaofatheafollowingademonstratesatheagoingaconcernaconcept?
A.aAQGaIndustriesasolda$20,000aofaproductaonacreditatoaSSAaManufacturing.aSSAadidanotap
ayaonatime.aAQGadecidesathataitaisafruitlessatoapursueacollectionasoatheyawriteaoffatheareceiv
ableafromaSSA.
B.aGail'saGarmentsahasabeenainabusinessafora20ayearsaandaduringathataperiodatheacompany
ahasagainedaaagoodareputation.aGailawouldalikeatheaControlleratoaacknowledgeatheavalueaofa
thatareputationabyaincludingaitaasaanaassetawortha$100,000abutatheacontrollerasaysasheacann
otadoait.
C.aAQGaIndustriesapurchasesa$20,000aofaproductaonacreditafromaRSIaManufacturing.aAQG
arecordsatheapurchaseaasaanaincreaseainainventoryaandaanaincreaseainaaccountsapayable.aA
QGafeelsathatatheyawillabeaableatoarealizeatheavalueafromatheainventoryaandasettleatheaobligat
ionatoaRSIainatheaweeksatoacome.a-aans--
C.aAQGaIndustriesapurchasesa$20,000aofaproductaonacreditafromaRSIaManufacturing.aAQG
arecordsatheapurchaseaasaanaincreaseainainventoryaandaanaincreaseainaaccountsapayable.aA
QGafeelsathatatheyawillabeaableatoarealizeatheavalueafromatheainventoryaandasettleatheaobligat
ionatoaRSIainatheaweeksatoacome.
Theaideaathataaacompanyawillabeaableatoarealizeatheabenefitsafromaitsaassetsaandasettleaanya
obligationsafromaitsaliabilitiesaunderliesatheagoingaconcernaconcept,asoathisadescriptionaofaA
QGarecordingatheatransactionawithaRSIaisaanaexampleaofatheagoingaconcernaconcept.
PerfectaPrintersaisaableatoaobtaina30adaysacreditatermsatoapurchaseaaaheavyadutyaprintingam
achineafora$200,000.aHowawillathisapurchaseaimpactatheaaccountingaequationaofaPerfectaPri
ntersaatatheatimeaofatheapurchase?aSelectaallathataapply.a-aans--
Increasea$200KaAssets=aIncreasea$200KaLiabilities+aOwners'aEquity
Assetsaincreaseabya$200,000abecauseatheacompanyanowahasaaamachine,aandaliabilitiesain
creaseabya$200,000abecauseatheacompanyanowahasatheaobligationatoapayaforatheamachinea
withina30adays.
Seeaeachaansweraoptionaforamoreadetail.
Whichaofatheafollowingawouldacauseaaadecreaseatoaliabilities?aSelectaallathataapply.
A.acompanyapaysa$550,awhichaisatheacurrentaportionadueaonaaalongatermabankaloan
B.aAacompanyasellsa$1,000aworthaofagiftacards
(Thisaeventawouldacauseaanaincreaseainacashaandaanaincreaseainadeferredarevenue.)
C.aAacompanyaprepaysafora12amonthsaofalandscapingaservices
(Thisaeventadoesanotaimpactaliabilities.aItawouldacauseaaadecreaseainacashaandaanaincreasea
inaprepaidaexpense.)
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