FIN-FND

Final check — Finance & Accounting Fundamentals

Answer the 45 questions. You need 80% or more to pass. You can retry as many times as you like.

Question 1Which best describes the difference between accounting and finance?They are identical terms with no real differenceAccounting is for managers; finance is illegal for outsidersAccounting mainly records and reports the past; finance mainly plans and decides about the futureFinance only deals with taxes

Question 2What is the fundamental accounting equation?Assets = Liabilities − EquityAssets + Liabilities = EquityAssets = Liabilities + EquityEquity = Assets + Liabilities

Question 3In double-entry bookkeeping, for every transaction the total debits must equal the total:CreditsExpensesRevenuesAssets

Question 4A company buys equipment for $2,000 cash. What is the effect on the accounting equation?Total assets rise by $2,000Total assets are unchanged; one asset rises and another fallsEquity falls by $2,000Liabilities rise by $2,000

Question 5Which type of account normally increases with a debit?LiabilitiesEquityRevenueAssets and expenses

Question 6The complete list of all accounts a company uses is called its:Trial balanceChart of accountsBalance sheetGeneral journal

Question 7In the accounting cycle, transactions are first recorded chronologically in the:JournalLedgerTrial balanceIncome statement

Question 8A trial balance in which debits equal credits proves that:The financial statements are completely correctNo transactions were omittedTotal debits equal total credits, but errors may still existThe company is profitable

Question 9The income statement reports a company's performance:At a single point in timeOnly in cash termsOver a period of timeOnly for tax authorities

Question 10Revenue $400,000 and cost of goods sold $250,000. Gross profit is:$650,000$250,000$400,000$150,000

Question 11Which financial statement is a snapshot at a single date?Income statementCash flow statementBalance sheetStatement of retained earnings

Question 12If total assets are $900,000 and total liabilities are $550,000, equity equals:$350,000$550,000$1,450,000$900,000

Question 13Which item appears in the operating section of the cash flow statement?Cash paid to buy a buildingCash received from customersCash from issuing new sharesRepayment of a long-term loan

Question 14A company is profitable but keeps running short of cash. This most likely shows up as:High net income and strong operating cash flowNegative equity onlyA balanced trial balanceProfit on the income statement but weak or negative operating cash flow

Question 15Under accrual accounting, revenue is recognised when it is:Received in cashBudgetedTaxedEarned, regardless of when cash is received

Question 16The matching principle states that expenses should be:Recorded only when paid in cashIgnored until year-endMatched to the revenue they help generate, in the same periodAlways capitalised

Question 17You pay $1,200 in advance for 12 months of insurance. Under accrual accounting, this month's expense is:$100$1,200$0$600

Question 18Cash received in advance for services not yet delivered is recorded as:Revenue immediatelyDeferred (unearned) revenue, a liabilityAn expenseEquity

Question 19The modern revenue recognition model (IFRS 15 / ASC 606) recognises revenue as the seller transfers:Cash to the customerShares to investorsInventory to the warehouseControl of goods or services to the customer

Question 20A $50,000 machine has a $5,000 salvage value and a 9-year life. Annual straight-line depreciation is:$5,555$5,000$6,111$4,500

Question 21Spreading the cost of an intangible asset (such as a patent) over its useful life is called:DepreciationAmortizationAccrualCapitalisation

Question 22Depreciation is described as a non-cash expense because:It is never recorded in the accountsIt increases cashIt only affects the cash flow statementIt reduces profit but no cash leaves the business that period

Question 23Working capital is calculated as:Total assets − total liabilitiesCurrent assets − current liabilitiesRevenue − expensesEquity + liabilities

Question 24A shorter cash conversion cycle generally means:Cash returns to the business fasterCash is tied up for longerThe company is insolventInventory is never sold

Question 25Current assets are $120,000 (including $40,000 inventory) and current liabilities are $80,000. The quick ratio is:1.51.00.52.0

Question 26The current ratio is calculated as:Net income ÷ revenueCurrent liabilities ÷ current assetsTotal debt ÷ equityCurrent assets ÷ current liabilities

Question 27A high debt-to-equity ratio generally indicates:Lower financial risk and less leverageHigher leverage and greater financial riskThat the company has no debtStrong liquidity

Question 28Net margin is calculated as:Net income ÷ revenueGross profit ÷ equityNet income ÷ total assetsRevenue ÷ net income

Question 29Return on equity (ROE) measures:Profit relative to total revenueInventory relative to salesCash relative to liabilitiesProfit relative to shareholders' equity

Question 30Inventory turnover of 6 times per year means inventory is:Sold and replaced about six times a yearHeld for six yearsWorth six times revenueNever sold

Question 31What is the main difference between a budget and a forecast?There is no differenceA budget is the target/plan; a forecast is the updated expectation of what will likely happenA forecast is always for the pastA budget is only used for taxes

Question 32A favourable variance is one that:Reduces profit compared with budgetHelps profit compared with budget (higher revenue or lower cost)Has no effect on profitAlways means fraud

Question 33Zero-based budgeting requires managers to:Copy last year's budget exactlySet all budgets to zeroJustify every cost from a base of zeroIgnore variances

Question 34Factory rent that stays the same whether you produce 1,000 or 5,000 units is a:Variable costDirect material costFixed costMarginal cost

Question 35Contribution margin per unit is calculated as:Selling price − variable cost per unitRevenue − total assetsSelling price − fixed cost per unitFixed cost ÷ units

Question 36Fixed costs $40,000, price $25, variable cost $15 per unit. The break-even point in units is:1,600 units2,667 units4,000 units10,000 units

Question 37Using the same data (fixed $40,000, contribution margin $10), how many units are needed for a $20,000 profit?6,000 units5,000 units2,000 units4,000 units

Question 38The time value of money principle says that a dollar today is worth:Less than a dollar in the futureThe same as a dollar in the futureMore than a dollar in the future, because it can earn a returnNothing until invested

Question 39$1,000 invested at 5% per year for 3 years grows to approximately (FV = PV × (1+r)ⁿ):$1,150$1,050$1,500$1,158

Question 40Using the Rule of 72, at an 8% annual return money roughly doubles in:About 5 yearsAbout 14 yearsAbout 9 yearsAbout 20 years

Question 41A project should generally be accepted when its net present value (NPV) is:Greater than zeroEqual to zeroLess than zeroEqual to the payback period

Question 42The internal rate of return (IRR) is the discount rate at which:Revenue equals costPayback is shortestEquity equals debtNPV equals zero

Question 43A key weakness of the payback period method is that it:Ignores the time value of money and cash flows after paybackIs too complex to calculateAlways rejects good projectsRequires an external auditor

Question 44Splitting authorisation, recording and custody of assets among different people is called:Segregation of dutiesDepreciationConsolidationCapitalisation

Question 45Which statement about IFRS and US GAAP is correct?IFRS is more rules-based; US GAAP is more principles-basedThey are identical worldwideBoth prohibit LIFO inventory costingIFRS is more principles-based; US GAAP is more rules-based, and US GAAP permits LIFO while IFRS prohibits it

Final check — Finance & Accounting Fundamentals

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