HBX CORE ACTUAL TEST PAPER 2026
FULL ANSWERS GRADED A+
⩥ Going Concern.
Answer: A company is considered to be a going concern if the entity is
expected to remain in operation and be able to satisfy all commitments
and obligations and realize the benefits and values of all assets for the
indefinite future. If there is evidence to the contrary, the business may no
longer be considered a going concern.
⩥ Goods available for sale.
Answer: In a retail business, goods available for sales can be calculated
as beginning inventory plus purchases of additional inventory in the
period. This calculation can be useful in determining cost of goods sold,
because at the end of a period, the goods available for sale during the
period with either remain in inventory or be moved to cost of goods
sold. This calculation is often used when using a periodic inventory
system.
⩥ Goodwill.
Answer: Goodwill is the excess of the amount paid to acquire a business
over the fair market value of the business' net assets. It is called
Goodwill because this excess is often associated with the assumed value
of the otherwise undefined intangible aspects of the business. Although a
company may feel that it has value in its brands and name, goodwill is
,only recorded as the result of an acquisition. Self-generated brand value
is not recorded as goodwill.
⩥ Gordon Growth Model.
Answer: A method for calculating the terminal value of an indefinite
stream of cash flows. The calculation gives the present value of infinite
cash flows by dividing the cash flow in the final year of our projection
by the difference between the discount rate and the growth rate.
⩥ Gross Book Value.
Answer: The amount at which an asset is recorded in the financial
records of the business. When an asset has just been purchased, this is
normally the price that was paid to purchase the asset plus any costs to
prepare the asset for service in the business. These extra costs may
include delivery, installation, and testing.
⩥ Gross Profit.
Answer: The amount by which the revenue exceeds the cost of goods
sold (or cost of sales).
⩥ Gross Profit Margin.
Answer: Gross Profit Margin is calculated by dividing the gross profit
by the total sales for the period, and is used as a measure of profitability.
It tells us what percentage of our revenue is left to cover other expenses
, after the cost of goods sold is subtracted. May also be referred to as
Gross Profit Percentage.
⩥ Historical Cost.
Answer: The historical cost principle refers to the fact that transactions
are recorded at the cost that existed at the time the transaction occurred.
In the case of assets, it means that their value in the financial records is
shown at historical cost, rather than current market value. When
combined with the principle of Conservatism, it means that an asset's
value may be reduced if it is deemed to have permanently lost value but
it cannot be increased if it is deemed to have gained value.
⩥ IASB.
Answer: The International Accounting Standards Board (IASB) is the
governing body that issues accounting rules and standards known as
International Financial Reporting Standards, or IFRS. IFRS are
commonly used throughout the world.
⩥ IFRS.
Answer: IFRS stands for International Financial Reporting Standards.
IFRS are the accounting rules and standards issued by the International
Accounting Standards Board (IASB) which are followed in many
countries outside the United States (US). In the US companies adhere to
a slightly different set of accounting rules and principles, referred to as
GAAP (Generally Accepted Accounting Principles) are issued by the
Financial Accounting Standards Board (FASB).
FULL ANSWERS GRADED A+
⩥ Going Concern.
Answer: A company is considered to be a going concern if the entity is
expected to remain in operation and be able to satisfy all commitments
and obligations and realize the benefits and values of all assets for the
indefinite future. If there is evidence to the contrary, the business may no
longer be considered a going concern.
⩥ Goods available for sale.
Answer: In a retail business, goods available for sales can be calculated
as beginning inventory plus purchases of additional inventory in the
period. This calculation can be useful in determining cost of goods sold,
because at the end of a period, the goods available for sale during the
period with either remain in inventory or be moved to cost of goods
sold. This calculation is often used when using a periodic inventory
system.
⩥ Goodwill.
Answer: Goodwill is the excess of the amount paid to acquire a business
over the fair market value of the business' net assets. It is called
Goodwill because this excess is often associated with the assumed value
of the otherwise undefined intangible aspects of the business. Although a
company may feel that it has value in its brands and name, goodwill is
,only recorded as the result of an acquisition. Self-generated brand value
is not recorded as goodwill.
⩥ Gordon Growth Model.
Answer: A method for calculating the terminal value of an indefinite
stream of cash flows. The calculation gives the present value of infinite
cash flows by dividing the cash flow in the final year of our projection
by the difference between the discount rate and the growth rate.
⩥ Gross Book Value.
Answer: The amount at which an asset is recorded in the financial
records of the business. When an asset has just been purchased, this is
normally the price that was paid to purchase the asset plus any costs to
prepare the asset for service in the business. These extra costs may
include delivery, installation, and testing.
⩥ Gross Profit.
Answer: The amount by which the revenue exceeds the cost of goods
sold (or cost of sales).
⩥ Gross Profit Margin.
Answer: Gross Profit Margin is calculated by dividing the gross profit
by the total sales for the period, and is used as a measure of profitability.
It tells us what percentage of our revenue is left to cover other expenses
, after the cost of goods sold is subtracted. May also be referred to as
Gross Profit Percentage.
⩥ Historical Cost.
Answer: The historical cost principle refers to the fact that transactions
are recorded at the cost that existed at the time the transaction occurred.
In the case of assets, it means that their value in the financial records is
shown at historical cost, rather than current market value. When
combined with the principle of Conservatism, it means that an asset's
value may be reduced if it is deemed to have permanently lost value but
it cannot be increased if it is deemed to have gained value.
⩥ IASB.
Answer: The International Accounting Standards Board (IASB) is the
governing body that issues accounting rules and standards known as
International Financial Reporting Standards, or IFRS. IFRS are
commonly used throughout the world.
⩥ IFRS.
Answer: IFRS stands for International Financial Reporting Standards.
IFRS are the accounting rules and standards issued by the International
Accounting Standards Board (IASB) which are followed in many
countries outside the United States (US). In the US companies adhere to
a slightly different set of accounting rules and principles, referred to as
GAAP (Generally Accepted Accounting Principles) are issued by the
Financial Accounting Standards Board (FASB).
