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HBX- FINAL EXAM (FINANCIAL ACCOUNTING) QUESTIONS WITH CORRECT ANSWERS
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HBX- FINAL EXAM (FINANCIAL ACCOUNTING) QUESTIONS WITH CORRECT ANSWERS
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HBX CORE FINANCIAL ACCOUNTINGQUESTIONS WITH CORRECT ANSWERS
AcceleratedaDepreciationaMethodsa-aans--
Depreciationamethodsathatarecognizeamoreadepreciationaexpenseainatheaearlyayearsaandale
ssainathealaterayears.aDouble-
decliningabalanceaisaanaexampleaofaanaacceleratedadepreciationamethod.
AccountingaEquationa-aans--
Assetsa=aLiabilitiesa+aOwners'aEquity.aThisaequationaisafundamentalaandamustaalwaysabeatr
ueainadoubleaentryaaccounting.
AccountingaPerioda-aans--
Theaperiodaofatimeaforawhichatheafinancialaresultsaareareported;atypicallyaeitheraaamonthaoraa
aquarteraoraaayear.
AccountsaPayablea-aans--
Liabilityaaccountausedatoashowatheaobligationatoapayasuppliersawhoahaveaprovidedagoodsaor
aservicesaonacreditaterms.
AccountsaPayableaTurnovera-aans--
AccountsaPayableaTurnoveraisaaaratioathataisausedatoameasureahowaefficientlyaaabusinessais
apayingaitsavendors.aItaisacalculatedabyadividingatheacreditapurchasesaforatheaperiodabyatheaa
verageaaccountsapayableabalanceaforatheaperiod.aInatheaabsenceaofacreditapurchasesainfor
mation,aweamayauseacostaofagoodsasoldaasaaasubstitute.aThearatioarepresentsahowamanyati
mesatheaaccountsapayableaturnedaoveraduringatheaperiod.aForamostaratiosainathisacourse,aw
eauseaaveragesawhenacalculatingaratiosawithabalanceasheetanumbers,abutathisaisanotaneces
saryaandasomeamayachooseatoauseabeginningaoraendingabalances.
AccountsaReceivablea-aans--
Assetaaccountausedatoashowatheaclaimatoareceiveacashaatasomeafutureadateaforagoodsaorase
rvicesathatahaveabeenasuppliedatoaaacustomeraonacreditaterms.
AccountsaReceivableaTurnovera-aans--
AccountsaReceivableaTurnoveraisaaaratioathataisausedatoameasureahowaefficientlyaaabusines
saisacollectingareceivablesafromaitsacustomers.aItaisacalculatedabyadividingatheacreditasalesaf
oratheaperiodabyatheaaverageaaccountsareceivableabalanceaforatheaperiod.aInatheaabsenceao
facreditasalesainformation,aweamayauseatotalasalesaasaaasubstitute.aThearatioarepresentsaho
wamanyatimesatheaaccountsareceivableaturnedaoveraduringatheaperiod.aForamostaratiosainathi
sacourse,aweauseaaveragesawhenacalculatingaratiosawithabalanceasheetanumbers,abutathisai
sanotanecessaryaandasomeamayachooseatoauseabeginningaoraendingabalances.
,Accruala-aans--
Aarevenueaamountathataisarecordedaafterathearevenueaisaearnedabutabeforeatheapaymentaisa
receivedaoraanaexpenseaamountathataisarecordedaafteraitahasabeenaincurredabutabeforeathea
paymentahasabeenamade.aInaeitheracase,aforaanaaccrualatheaexchangeaofacashaisaexpecteda
atasomeafutureapointaafteratheainitialarevenueaoraexpenseaisarecognized.
AccrualaAccountingaMethoda-aans--
Thisaisatheaaccountingamethodataughtainathisacourse,afollowedabyamostacompanies,aandareq
uiredaunderaUSaGAAPaandaIFRS.aTheamethodafollowsathearevenuearecognitionaprinciple,aw
hichasaysathatarevenueashouldabearecognizedainatheaperiodainawhichaitaisaearnedaandarealiz
able,anotanecessarilyawhenatheacashaisareceivedaandatheamatchingaprincipleawhichasaysath
ataexpensesashouldabearecognizedainatheaperiodainawhichathearelatedarevenueaisarecognize
daratherathanawhenathearelatedacashaisapaid.
AccruedaExpensesa-aans--
Liabilityaaccountausedatoarecordaamountsaatatheaendaofaanaaccountingaperiodatoarecognizea
expensesathatawereaincurredainatheaperiodabutaforawhichanoainvoiceahasayetabeenareceiveda
norapaymentahasayetabeenamade.aExamplesaareasalaries/wagesapayable,aaccruedarentaex
pense,aaccruedalegalafees.aWhenatheaaccrualaisamade,atheadebitaisatoatheaappropriateaexpe
nseaaccounta(payrollaexpense,arentaexpense,alegalaexpense)aandatheacreditaisatoatheaaccru
edaexpenseaaccount,awhichaisaaaliabilityabecauseaitarepresentsaanaobligationawhichawillanee
datoabeapaidainatheafuture.aRememberaaccruedaexpensesaareaNOTaexpenses.
AccruedaLiabilitya-aans--
Liabilityaaccountsathatarecordaexpensesathatahaveabeenarecognizedaonatheaincomeastatem
entabutahaveanotayetabeenapaid.aSimilaratoaaccruedaexpenses.
AccruedaPayrolla-aans--
Anaaccruedaexpensearecordedaatatheaendaofaaafinancialaperiodaforaamountsaofapayrollathatah
aveabeenaworkedabutanotayetapaid.aItaisaaacommonatypeaofaaccruedaexpense.aSeeaalsoaSala
ries/WagesaPayable.
AccruedaRevenuea-aans--
Anaassetaaccountathatarecordsarevenueathatahasabeenaearnedaandarecognizedaonatheainco
meastatementabutanotayetapaidaforabyatheacustomer.aAtatheatimeaofatheaaccrual,aweadebitathea
receivableaaccountaandacreditatheaappropriateaaccruedarevenueaaccount.aWhenatheacashat
ransferaultimatelyaoccurs,aweadebitatheacashaaccountaandacreditatheareceivableaaccount.
AccumulatedaDepreciationa-aans--
Aacontraaassetaaccountathataincludesatheacumulativeatotalaofaalladepreciationaexpensesarec
ordedatoadateaforaspecificaassets.aTheacreditabalanceainathisaaccountaoffsetsatheadebitabalan
ceainatheaassetaaccountawhichashowsatheaoriginalavalueaofatheaasset.aWhenatheaoriginalaass
etavalueaisanettedaagainstatheaaccumulatedadepreciationaforatheaassetayouaarriveaatatheaneta
bookavalueaofatheaasset.
, Accumulatedaotheracomprehensiveaincomea-aans--
Anaequityaaccountathataconsistsaofacumulativeaunrealizedagainsaoralossesaonalineaitemsacla
ssifiedaunderaotheracomprehensiveaincome.aItaincludesaitemsasuchaasaunrealizedagainsaoral
ossesaonainvestmentsaavailableaforasale,aforeignacurrencyagainsaoralosses,aandapensionapl
anagainsaoralosses.
Adjustinga(Journal)aEntriesa-aans--
Entriesamadeatoaadjustatheabalancesaofaassetaandaliabilityaaccountsatoareflectachangesainath
eiravaluesadueatoatheapassageaofatimeaoraanotheraimplicitatransaction.
AllowanceaforaDoubtfulaAccountsa-aans--
AacontraaassetaaccountathatanetsaagainstaAccountsaReceivable.aItaisagenerallyasetaupaasaan
aestimateaofaaccountsathatawillaultimatelyaprove atoabeauncollectible.aItaisathenareducedawhen
aaccountsaareawrittenaoff.aItamayabeaadjustedaataperiodaendatoareflectaanyaupdatedaestimate
s.aMayaalsoabeareferredatoaasaReserveaforaBadaDebts.
Amortizationa-aans--Theamethodaforarecognizingatheaexpenseaofalong-
livedaintangibleaassetsasuchaasapatents,acopyrights,aandabrands,aoverathealifeaofatheaassets
.aAmortizationaisausuallyacalculatedasimilaratoastraight-
lineadepreciation.aSomeacompaniesauseaanaaccumulatedaamortizationaaccount,awhileaothe
racompaniesamayadirectlyareduceatheavalueaofatheaassociatedaasset.
Annuitya-aans--
Anainvestmentawhereatheapurchaserareceivesathearightatoareceiveaaafixedaamountaeachayea
raforaaalifetimeaoraforaaacertainanumberaofayears.
Asseta-aans--
Aaresourceathataisaownedaoracontrolledabyaaabusinessaandaisaexpectedatoaprovideasomeafut
ureaeconomicabenefitatoatheabusiness.aExamplesaincludeacash,ainventory,aandaequipment.a
Theabusinessaexpectsathataitsaassetsawillahelpatoaproduceacashainflowainatheafuture.
AssetaTurnovera-aans--
AssetaTurnoveraisacalculatedabyadividingatheatotalasalesaforatheaperiodabyatheaaverageatotala
assets.aThisacalculationaisausedaasaaameasureaofaefficiencyainatheaDuPontaFramework.aFora
mostaratiosainathisacourse,aweauseaaveragesawhenacalculatingaratiosawithabalanceasheetanu
mbers,abutathisaisanotanecessaryaandasomeamayachooseatoauseabeginningaoraendingabalanc
es.
AverageaCollectionaPerioda-aans--
AverageaCollectionaPeriodaisaaameasurearelatedatoaaccountsareceivableaturnoverathatasho
wsatheaaverageanumberaofadaysaitatookaforaaabusinessatoacollectapaymentafromaaacustomer.
aItacanabeacalculatedabyadividingatheaaverageaaccountsareceivableabyatheacreditasalesaperad
ay.aAlternatively,aitacanabeacalculatedabyadividinga365abyatheaAccountsaReceivableaTurnov
er.aForamostaratiosainathisacourse,aweauseaaveragesawhenacalculatingaratiosawithabalanceas
heetanumbers,abutathisaisanotanecessaryaandasomeamayachooseatoauseabeginningaoraendin
gabalances.
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