ACCT 5312 FINAL EXAM LATEST 2026 UPDATE 100
QUESTIONS AND DETAILED VERIFIED ANSWERS
FROM ACTUAL EXAMS TEST GRADE A+
1.
Which of the following is NOT a component of internal control?
A. Control environment
B. Risk assessment
C. Cost of goods sold
D. Monitoring activities
Answer: C
Rationale: Cost of goods sold is an accounting expense, not part of the COSO
internal control framework.
2.
The primary objective of financial reporting is to:
A. Maximize stock price
B. Provide useful information for decision-making
C. Minimize taxes
D. Eliminate fraud completely
Answer: B
Rationale: Financial reporting aims to provide useful information to investors and
creditors.
3.
,Which financial statement shows a company’s financial position at a point in time?
A. Income statement
B. Cash flow statement
C. Balance sheet
D. Statement of retained earnings
Answer: C
Rationale: The balance sheet presents assets, liabilities, and equity at a specific
date.
4.
Revenue is recognized when:
A. Cash is received
B. Earned and realizable
C. Invoice is sent
D. Goods are produced
Answer: B
Rationale: Revenue recognition requires performance obligation satisfaction and
realizability.
5.
The matching principle requires:
A. Matching assets with liabilities
B. Matching revenues with expenses in the same period
C. Matching cash inflows with outflows
D. Matching taxes with income
Answer: B
Rationale: Expenses should be recognized in the same period as related revenues.
,6.
Depreciation is best defined as:
A. Cash outflow
B. Allocation of asset cost over time
C. Market value decline
D. Replacement cost
Answer: B
Rationale: Depreciation allocates cost, not value decline.
7.
Which inventory method results in the most recent costs in COGS during inflation?
A. FIFO
B. LIFO
C. Weighted average
D. Specific identification
Answer: B
Rationale: LIFO assigns most recent costs to COGS.
8.
Working capital is calculated as:
A. Assets – Equity
B. Current Assets – Current Liabilities
C. Total Assets – Total Liabilities
D. Cash – Debt
Answer: B
Rationale: Working capital measures short-term liquidity.
9.
, The statement of cash flows includes all EXCEPT:
A. Operating activities
B. Financing activities
C. Investing activities
D. Revenue activities
Answer: D
Rationale: Revenue activities are part of income statement, not cash flow
classification.
10.
Which is an example of a financing activity?
A. Purchase of equipment
B. Sale of inventory
C. Issuance of stock
D. Payment to suppliers
Answer: C
Rationale: Issuing stock raises capital and is financing activity.
11.
Accrual accounting differs from cash accounting because it:
A. Ignores revenue
B. Recognizes transactions when earned/incurred
C. Uses only cash inflows
D. Eliminates expenses
Answer: B
Rationale: Accrual accounting records when economic events occur.
12.
QUESTIONS AND DETAILED VERIFIED ANSWERS
FROM ACTUAL EXAMS TEST GRADE A+
1.
Which of the following is NOT a component of internal control?
A. Control environment
B. Risk assessment
C. Cost of goods sold
D. Monitoring activities
Answer: C
Rationale: Cost of goods sold is an accounting expense, not part of the COSO
internal control framework.
2.
The primary objective of financial reporting is to:
A. Maximize stock price
B. Provide useful information for decision-making
C. Minimize taxes
D. Eliminate fraud completely
Answer: B
Rationale: Financial reporting aims to provide useful information to investors and
creditors.
3.
,Which financial statement shows a company’s financial position at a point in time?
A. Income statement
B. Cash flow statement
C. Balance sheet
D. Statement of retained earnings
Answer: C
Rationale: The balance sheet presents assets, liabilities, and equity at a specific
date.
4.
Revenue is recognized when:
A. Cash is received
B. Earned and realizable
C. Invoice is sent
D. Goods are produced
Answer: B
Rationale: Revenue recognition requires performance obligation satisfaction and
realizability.
5.
The matching principle requires:
A. Matching assets with liabilities
B. Matching revenues with expenses in the same period
C. Matching cash inflows with outflows
D. Matching taxes with income
Answer: B
Rationale: Expenses should be recognized in the same period as related revenues.
,6.
Depreciation is best defined as:
A. Cash outflow
B. Allocation of asset cost over time
C. Market value decline
D. Replacement cost
Answer: B
Rationale: Depreciation allocates cost, not value decline.
7.
Which inventory method results in the most recent costs in COGS during inflation?
A. FIFO
B. LIFO
C. Weighted average
D. Specific identification
Answer: B
Rationale: LIFO assigns most recent costs to COGS.
8.
Working capital is calculated as:
A. Assets – Equity
B. Current Assets – Current Liabilities
C. Total Assets – Total Liabilities
D. Cash – Debt
Answer: B
Rationale: Working capital measures short-term liquidity.
9.
, The statement of cash flows includes all EXCEPT:
A. Operating activities
B. Financing activities
C. Investing activities
D. Revenue activities
Answer: D
Rationale: Revenue activities are part of income statement, not cash flow
classification.
10.
Which is an example of a financing activity?
A. Purchase of equipment
B. Sale of inventory
C. Issuance of stock
D. Payment to suppliers
Answer: C
Rationale: Issuing stock raises capital and is financing activity.
11.
Accrual accounting differs from cash accounting because it:
A. Ignores revenue
B. Recognizes transactions when earned/incurred
C. Uses only cash inflows
D. Eliminates expenses
Answer: B
Rationale: Accrual accounting records when economic events occur.
12.
