FINANCIAL ACCOUNTING FOR
MBAS 8TH EDITION STUDY GUIDE
2026 COMPREHENSIVE PROBLEMS
AND SOLUTIONS
◉ Economic Entity. Answer: Company keeps its activity separate from
its owners and other businesses. One firm, one set of books.
◉ Going Concern. Answer: The accounting assumption that a business
is expected to operate indefinitely. Assumes the company will continue
so asset values are at a historical cost.
◉ Monetary Unit. Answer: Financial transactions are denominated in a
stable unit of measure. Everything is in US dollars
◉ Accounting Periods. Answer: The results of operations for an entity
must be reported on a periodic basis, usually a year
◉ Revenue/Expense Matching. Answer: All expenses incurred to
generate revenues should be recognized during the same period as those
revenues
◉ Conservatism. Answer: Accounting theory advocates that it is better
for potential measurement errors to understate rather than overstate
profits
, ◉ Understandability. Answer: Information presented in a clear and
concise fashion so that users can interpret it and comprehend its
meaning.
◉ Relevance. Answer: The quality of information that indicates the
information makes a difference in a decision.
◉ Comparability. Answer: Ability to compare the accounting
information of different companies because they use the same
accounting principles. Quantitative assessment
◉ Consistency. Answer: Use of the same accounting principles and
methods from year to year within a company. Allows information to be
compared over time.
◉ Materiality. Answer: An item should not be reported if it is not large
enough to influence the users of a financial statement.
◉ Who is the rule making body for GAAP?. Answer: Financial
Accounting Standards Board (FASB)
◉ True or False: The 10K is required by the FASB. Answer: False
MBAS 8TH EDITION STUDY GUIDE
2026 COMPREHENSIVE PROBLEMS
AND SOLUTIONS
◉ Economic Entity. Answer: Company keeps its activity separate from
its owners and other businesses. One firm, one set of books.
◉ Going Concern. Answer: The accounting assumption that a business
is expected to operate indefinitely. Assumes the company will continue
so asset values are at a historical cost.
◉ Monetary Unit. Answer: Financial transactions are denominated in a
stable unit of measure. Everything is in US dollars
◉ Accounting Periods. Answer: The results of operations for an entity
must be reported on a periodic basis, usually a year
◉ Revenue/Expense Matching. Answer: All expenses incurred to
generate revenues should be recognized during the same period as those
revenues
◉ Conservatism. Answer: Accounting theory advocates that it is better
for potential measurement errors to understate rather than overstate
profits
, ◉ Understandability. Answer: Information presented in a clear and
concise fashion so that users can interpret it and comprehend its
meaning.
◉ Relevance. Answer: The quality of information that indicates the
information makes a difference in a decision.
◉ Comparability. Answer: Ability to compare the accounting
information of different companies because they use the same
accounting principles. Quantitative assessment
◉ Consistency. Answer: Use of the same accounting principles and
methods from year to year within a company. Allows information to be
compared over time.
◉ Materiality. Answer: An item should not be reported if it is not large
enough to influence the users of a financial statement.
◉ Who is the rule making body for GAAP?. Answer: Financial
Accounting Standards Board (FASB)
◉ True or False: The 10K is required by the FASB. Answer: False
