FINANCIAL ACCOUNTING ACTUAL EXAM
PAPER 2026 QUESTIONS AND SOLUTIONS
GRADED A PLUS
◉ Cost
Answer: the amount of resources that a company sacrifices to obtain
goods or services; often said to be incurred when the company pays
cash or uses credit to acquire the item
◉ Revenue Recognition Principle
Answer: revenues are reported when goods or services are
delivered, there is evidence of an arrangement for customer
payment, the price is fixed or determinable, and collection is
reasonably assured
◉ Expense Recognition Principle
Answer: expenses are recorded when incurred in earning revenue;
also called "matching"
◉ Accrual Basis Accounting
, Answer: records revenues when they are earned and expenses in the
same period as the revenues to which they relate, regardless of the
timing of cash receipts or payments
◉ Adjusting Journal Entries
Answer: entries necessary at the end of each accounting period to
measure all revenues and expenses of that period
◉ Contra Account
Answer: an account that is an offset to, or reduction of, another
account
◉ Carrying Value
Answer: the amount at which an asset or liability is reported
("carried") in the financial statements; also known as "net book
value" or "book value"
◉ Dividends
Answer: the distribution of a company's earnings to its stockholders'
as a return on their investment; not an expense!
◉ Permanent Accounts
Answer: accounts that track financial results from year to year by
carrying their ending balances into the next year
PAPER 2026 QUESTIONS AND SOLUTIONS
GRADED A PLUS
◉ Cost
Answer: the amount of resources that a company sacrifices to obtain
goods or services; often said to be incurred when the company pays
cash or uses credit to acquire the item
◉ Revenue Recognition Principle
Answer: revenues are reported when goods or services are
delivered, there is evidence of an arrangement for customer
payment, the price is fixed or determinable, and collection is
reasonably assured
◉ Expense Recognition Principle
Answer: expenses are recorded when incurred in earning revenue;
also called "matching"
◉ Accrual Basis Accounting
, Answer: records revenues when they are earned and expenses in the
same period as the revenues to which they relate, regardless of the
timing of cash receipts or payments
◉ Adjusting Journal Entries
Answer: entries necessary at the end of each accounting period to
measure all revenues and expenses of that period
◉ Contra Account
Answer: an account that is an offset to, or reduction of, another
account
◉ Carrying Value
Answer: the amount at which an asset or liability is reported
("carried") in the financial statements; also known as "net book
value" or "book value"
◉ Dividends
Answer: the distribution of a company's earnings to its stockholders'
as a return on their investment; not an expense!
◉ Permanent Accounts
Answer: accounts that track financial results from year to year by
carrying their ending balances into the next year
