BMAL 530
Accounting for Non-Financial
Managers
MIDTERM EXAM REVIEW
©LU 2024/2025
,1. Which of the following accounting methods records revenue
when it is earned, regardless of when cash is received?
a) Cash Basis
b) Accrual Basis
c) Hybrid Basis
d) Deferred Revenue
Answer: b) Accrual Basis
Rationale: The accrual basis of accounting recognizes revenue
when earned, not necessarily when cash is received.
2. Which financial statement provides information about a
company's profitability over a specific period?
a) Balance Sheet
b) Statement of Cash Flows
c) Income Statement
d) Statement of Retained Earnings
Answer: c) Income Statement
©LU 2024/2025
, Rationale: The income statement summarizes revenues and
expenses, showing the company's profitability for a given time
frame.
3. What is the primary purpose of budgeting in a business?
a) To record transactions
b) To monitor cash on hand
c) To plan and control operations
d) To determine tax liabilities
Answer: c) To plan and control operations
Rationale: Budgeting involves setting financial goals and
outlining the steps needed to achieve them, facilitating the
management of resources.
4. In cost-volume-profit (CVP) analysis, the contribution margin is
defined as:
a) Sales Revenue - Total Fixed Costs
b) Total Revenue - Total Costs
c) Sales Revenue - Variable Costs
d) Gross Profit - Operating Expenses
©LU 2024/2025
Accounting for Non-Financial
Managers
MIDTERM EXAM REVIEW
©LU 2024/2025
,1. Which of the following accounting methods records revenue
when it is earned, regardless of when cash is received?
a) Cash Basis
b) Accrual Basis
c) Hybrid Basis
d) Deferred Revenue
Answer: b) Accrual Basis
Rationale: The accrual basis of accounting recognizes revenue
when earned, not necessarily when cash is received.
2. Which financial statement provides information about a
company's profitability over a specific period?
a) Balance Sheet
b) Statement of Cash Flows
c) Income Statement
d) Statement of Retained Earnings
Answer: c) Income Statement
©LU 2024/2025
, Rationale: The income statement summarizes revenues and
expenses, showing the company's profitability for a given time
frame.
3. What is the primary purpose of budgeting in a business?
a) To record transactions
b) To monitor cash on hand
c) To plan and control operations
d) To determine tax liabilities
Answer: c) To plan and control operations
Rationale: Budgeting involves setting financial goals and
outlining the steps needed to achieve them, facilitating the
management of resources.
4. In cost-volume-profit (CVP) analysis, the contribution margin is
defined as:
a) Sales Revenue - Total Fixed Costs
b) Total Revenue - Total Costs
c) Sales Revenue - Variable Costs
d) Gross Profit - Operating Expenses
©LU 2024/2025
