MA 2A EXAM /LATEST MA 2A EXAM 2026/2027 APPROVED
EXAM COMPLETE ACTUAL QUESTIONS AND CORRECT
DETAILED ANSWERS WITH RATIONALES (100% CORRECT
VERIFIED ANSWERS) LATEST UPDATED VERSION 2026
EDITION |GUARANTEED SUCCESS A+
1. Which principle requires that expenses be recorded in the same period
as the revenues they help to generate?
A) Materiality principle
B) Historical cost principle
C) Matching principle (CORRECT ANSWER)
D) Revenue recognition principle
Rationale: The matching principle dictates that expenses should be
matched with the revenues they produce, ensuring accurate net income
calculation for a given period.
2. A company receives $5,000 in advance for services not yet
performed. How should this be recorded?
A) Debit Cash, credit Service Revenue
B) Debit Service Revenue, credit Cash
C) Debit Unearned Revenue, credit Cash
D) Debit Cash, credit Unearned Revenue (CORRECT ANSWER)
,Rationale: Cash received before performance is a liability (Unearned
Revenue), not revenue, until the service is provided.
3. Which financial statement reports a company’s financial position at a
specific point in time?
A) Income statement
B) Statement of cash flows
C) Balance sheet (CORRECT ANSWER)
D) Retained earnings statement
Rationale: The balance sheet shows assets, liabilities, and equity as of a
specific date, unlike income statements which cover a period.
4. Under accrual accounting, revenue is recognized when:
A) Cash is received
B) Earned, regardless of when cash is received (CORRECT ANSWER)
C) The customer orders goods
D) The fiscal year ends
Rationale: Accrual accounting recognizes revenue when earned,
following GAAP, not upon cash receipt.
5. A debit entry will:
A) Increase a liability account
,B) Increase an asset account (CORRECT ANSWER)
C) Increase equity
D) Decrease an expense
Rationale: Debits increase assets and expenses; credits increase
liabilities, equity, and revenue.
6. Which account normally has a credit balance?
A) Cash
B) Accounts Payable (CORRECT ANSWER)
C) Dividends
D) Rent Expense
Rationale: Accounts Payable is a liability, carrying a normal credit
balance.
8. Which step occurs first in the accounting cycle?
A) Post to ledger
B) Prepare trial balance
C) Analyze transactions (CORRECT ANSWER)
D) Record adjusting entries
, Rationale: The cycle starts with analyzing source documents and
transactions.
9. Prepaid rent is initially recorded as an asset. At period end, the
expired portion is:
A) Credited to Rent Expense
B) Debited to Rent Expense, credited to Prepaid Rent (CORRECT
ANSWER)
C) Debited to Prepaid Rent
D) Credited to Cash
Rationale: Adjusting entry transfers expired prepaid rent from asset to
expense.
10. Which financial statement primarily helps assess liquidity?
A) Income statement
B) Balance sheet (CORRECT ANSWER)
C) Statement of changes in equity
D) Notes to financial statements
Rationale: Liquidity is determined by current assets vs. current liabilities
on the balance sheet.
12. Double-entry bookkeeping means:
EXAM COMPLETE ACTUAL QUESTIONS AND CORRECT
DETAILED ANSWERS WITH RATIONALES (100% CORRECT
VERIFIED ANSWERS) LATEST UPDATED VERSION 2026
EDITION |GUARANTEED SUCCESS A+
1. Which principle requires that expenses be recorded in the same period
as the revenues they help to generate?
A) Materiality principle
B) Historical cost principle
C) Matching principle (CORRECT ANSWER)
D) Revenue recognition principle
Rationale: The matching principle dictates that expenses should be
matched with the revenues they produce, ensuring accurate net income
calculation for a given period.
2. A company receives $5,000 in advance for services not yet
performed. How should this be recorded?
A) Debit Cash, credit Service Revenue
B) Debit Service Revenue, credit Cash
C) Debit Unearned Revenue, credit Cash
D) Debit Cash, credit Unearned Revenue (CORRECT ANSWER)
,Rationale: Cash received before performance is a liability (Unearned
Revenue), not revenue, until the service is provided.
3. Which financial statement reports a company’s financial position at a
specific point in time?
A) Income statement
B) Statement of cash flows
C) Balance sheet (CORRECT ANSWER)
D) Retained earnings statement
Rationale: The balance sheet shows assets, liabilities, and equity as of a
specific date, unlike income statements which cover a period.
4. Under accrual accounting, revenue is recognized when:
A) Cash is received
B) Earned, regardless of when cash is received (CORRECT ANSWER)
C) The customer orders goods
D) The fiscal year ends
Rationale: Accrual accounting recognizes revenue when earned,
following GAAP, not upon cash receipt.
5. A debit entry will:
A) Increase a liability account
,B) Increase an asset account (CORRECT ANSWER)
C) Increase equity
D) Decrease an expense
Rationale: Debits increase assets and expenses; credits increase
liabilities, equity, and revenue.
6. Which account normally has a credit balance?
A) Cash
B) Accounts Payable (CORRECT ANSWER)
C) Dividends
D) Rent Expense
Rationale: Accounts Payable is a liability, carrying a normal credit
balance.
8. Which step occurs first in the accounting cycle?
A) Post to ledger
B) Prepare trial balance
C) Analyze transactions (CORRECT ANSWER)
D) Record adjusting entries
, Rationale: The cycle starts with analyzing source documents and
transactions.
9. Prepaid rent is initially recorded as an asset. At period end, the
expired portion is:
A) Credited to Rent Expense
B) Debited to Rent Expense, credited to Prepaid Rent (CORRECT
ANSWER)
C) Debited to Prepaid Rent
D) Credited to Cash
Rationale: Adjusting entry transfers expired prepaid rent from asset to
expense.
10. Which financial statement primarily helps assess liquidity?
A) Income statement
B) Balance sheet (CORRECT ANSWER)
C) Statement of changes in equity
D) Notes to financial statements
Rationale: Liquidity is determined by current assets vs. current liabilities
on the balance sheet.
12. Double-entry bookkeeping means:
