FINANCIAL ACCOUNTING QUESTIONS
AND ANSWERS 100 PERCENT CORRECT
COUNTS 20 PERCENT OF COURSE GRADE
MGT 8803 BUSINESS FUNDAMENTALS FOR
ANALYTICS CERTIFICATION TEST SCRIPT
2026 FULL QUESTIONS AND SOLUTIONS
GRADED A+
⩥Entity Concept. Answer: The entity concept refers to the fact that a
business is a separately identifiable entity. Thus, the accounts of a
business should be separate and distinct from the accounts of the owners
and managers of the business. In addition, financial records should be
kept and reported for each separate entity, especially in the case of multi-
national companies and large companies with subsidiaries.
⩥Equity. Answer: Equity is the residual that belongs to the owners of the
business. If you add up all the resources of the business (assets) and
subtract all the claims that third parties (such as lenders and suppliers)
have against those assets, the residual (what is left over) is equity. Equity
includes two elements; first, money contributed to (invested in) a
business in exchange for some degree of ownership and second, earnings
that the business generates over time and retains in the business. Also
commonly known as shareholders' equity, stockholders' equity, or
owners' equity.
,⩥Expense. Answer: A cost associated with providing goods or services
to a customer.
⩥Expenses. Answer: Costs associated with providing goods or services
to customers.
⩥Explicit Transactions. Answer: Transactions that involve some activity,
event, or exchange of resources from one party to another. Explicit
transactions are often accompanied by invoices or other paper
documentation that initiates the recording of the transaction.
⩥Fair Market Value. Answer: The amount that an asset could be sold for
on the market at a given point in time; may not correspond to the value
of the asset recorded in the financial records at any point in time.
⩥FASB. Answer: The Financial Accounting Standards Board (FASB) is
the governing body that issues accounting rules and standards in the
United States. These rules and standards are often referred to as
generally accepted accounting principles, or GAAP.
⩥Financial Leverage. Answer: Financial Leverage is one of the three
components of the DuPont Framework. For the purposes of the DuPont
Framework, it is measured using the Leverage Ratio, also referred to as
the Equity Multiplier, but another measure of leverage is the Debt to
Equity Ratio.
, ⩥Financing Section. Answer: Section of the statement of cash flows that
includes all cash flows associated with raising and paying back money to
investors and creditors, or in other words, financing the business.
⩥Finished Goods Inventory. Answer: Goods at the final stage of the
manufacturing process when they are complete and available for sale to
customers.
⩥First In First Out (FIFO). Answer: An inventory valuation method
which determines the value of inventory sold as if the current units sold
are the oldest units remaining in the inventory (First In First Out). In a
period of steadily rising inventory costs, this method leaves the higher
costs in the inventory account and recognizes the older, lower costs as an
expense in Cost of Goods Sold.
⩥Fiscal Year. Answer: The twelve month period over which the financial
results of a company are reported. For many companies, the fiscal year
equals the calendar year with the last day of the fiscal year being
December 31. However, for other companies, the fiscal year may end on
June 30 or on the last Friday in September or on some other date that is
chosen by the company. For some companies, it can be 52 or 53 weeks
with the year ending on a slightly different date each year depending on
when the week ends.
⩥Fixed Assets. Answer: Long-lived physical assets which are expected
to provide value to the business for periods in excess of one year.
AND ANSWERS 100 PERCENT CORRECT
COUNTS 20 PERCENT OF COURSE GRADE
MGT 8803 BUSINESS FUNDAMENTALS FOR
ANALYTICS CERTIFICATION TEST SCRIPT
2026 FULL QUESTIONS AND SOLUTIONS
GRADED A+
⩥Entity Concept. Answer: The entity concept refers to the fact that a
business is a separately identifiable entity. Thus, the accounts of a
business should be separate and distinct from the accounts of the owners
and managers of the business. In addition, financial records should be
kept and reported for each separate entity, especially in the case of multi-
national companies and large companies with subsidiaries.
⩥Equity. Answer: Equity is the residual that belongs to the owners of the
business. If you add up all the resources of the business (assets) and
subtract all the claims that third parties (such as lenders and suppliers)
have against those assets, the residual (what is left over) is equity. Equity
includes two elements; first, money contributed to (invested in) a
business in exchange for some degree of ownership and second, earnings
that the business generates over time and retains in the business. Also
commonly known as shareholders' equity, stockholders' equity, or
owners' equity.
,⩥Expense. Answer: A cost associated with providing goods or services
to a customer.
⩥Expenses. Answer: Costs associated with providing goods or services
to customers.
⩥Explicit Transactions. Answer: Transactions that involve some activity,
event, or exchange of resources from one party to another. Explicit
transactions are often accompanied by invoices or other paper
documentation that initiates the recording of the transaction.
⩥Fair Market Value. Answer: The amount that an asset could be sold for
on the market at a given point in time; may not correspond to the value
of the asset recorded in the financial records at any point in time.
⩥FASB. Answer: The Financial Accounting Standards Board (FASB) is
the governing body that issues accounting rules and standards in the
United States. These rules and standards are often referred to as
generally accepted accounting principles, or GAAP.
⩥Financial Leverage. Answer: Financial Leverage is one of the three
components of the DuPont Framework. For the purposes of the DuPont
Framework, it is measured using the Leverage Ratio, also referred to as
the Equity Multiplier, but another measure of leverage is the Debt to
Equity Ratio.
, ⩥Financing Section. Answer: Section of the statement of cash flows that
includes all cash flows associated with raising and paying back money to
investors and creditors, or in other words, financing the business.
⩥Finished Goods Inventory. Answer: Goods at the final stage of the
manufacturing process when they are complete and available for sale to
customers.
⩥First In First Out (FIFO). Answer: An inventory valuation method
which determines the value of inventory sold as if the current units sold
are the oldest units remaining in the inventory (First In First Out). In a
period of steadily rising inventory costs, this method leaves the higher
costs in the inventory account and recognizes the older, lower costs as an
expense in Cost of Goods Sold.
⩥Fiscal Year. Answer: The twelve month period over which the financial
results of a company are reported. For many companies, the fiscal year
equals the calendar year with the last day of the fiscal year being
December 31. However, for other companies, the fiscal year may end on
June 30 or on the last Friday in September or on some other date that is
chosen by the company. For some companies, it can be 52 or 53 weeks
with the year ending on a slightly different date each year depending on
when the week ends.
⩥Fixed Assets. Answer: Long-lived physical assets which are expected
to provide value to the business for periods in excess of one year.
