📘 Title: Finance & Accounting – Practice Exam Questions Compiled by Rickie
Section 1 – Financial Accounting
1. The owner invests $20,000 in cash into the business. Record the journal entry and post it to the
ledger.
2. The business buys equipment for $5,000 on credit. Show the journal and ledger postings.
3. Prepare a trial balance using the following transactions: owner invests $15,000, pays rent $1,500,
purchases supplies $2,000 on cash, and receives $4,000 cash revenue.
4. Adjust the following entries: prepaid rent $500, accrued wages $300, depreciation on equipment
$1,000.
5. Prepare an adjusted trial balance after accounting for prepayments, accruals, and depreciation.
Section 2 – Managerial Accounting
1. Classify the following costs as fixed, variable, direct, or indirect: Rent, Raw materials, Labor,
Utilities.
2. A company has fixed costs of $10,000, selling price per unit $50, and variable cost per unit $30.
Calculate the break-even point in units.
3. Prepare an operating budget for a small company that projects sales of $20,000, cost of goods
sold $12,000, and operating expenses $4,000.
4. Compute the contribution margin ratio and explain its significance.
5. A company forecasts production costs for 3 months. Prepare a cash budget given beginning
cash $5,000, inflows $15,000 per month, and expenses $12,000 per month.
Section 3 – Financial Statement Analysis
1. Compute the current ratio and quick ratio given current assets $15,000, inventory $5,000, and
current liabilities $10,000.
2. Calculate the net profit margin if revenue is $50,000 and net income is $7,500.
3. Determine return on assets (ROA) if total assets $100,000 and net income $10,000.
4. Using a 3-year income statement, perform trend analysis on revenue and net income.
5. Prepare a common-size balance sheet and interpret the results.
Section 4 – Principles of Finance
1. Calculate the future value of $5,000 invested at 8% annual interest for 3 years (compound
interest).
2. Compute the present value of $10,000 to be received in 5 years at a 10% discount rate.
3. Evaluate an investment with an initial outlay of $20,000 and expected inflows of $6,000 per year
for 5 years at a 10% discount rate using NPV.
4. Calculate the internal rate of return (IRR) for the above investment.
5. Determine the payback period for the same investment.
Section 5 – Working Capital & Financial Planning
1. Given cash $10,000, inventory $20,000, receivables $15,000, payables $12,000, compute working
capital.
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Section 1 – Financial Accounting
1. The owner invests $20,000 in cash into the business. Record the journal entry and post it to the
ledger.
2. The business buys equipment for $5,000 on credit. Show the journal and ledger postings.
3. Prepare a trial balance using the following transactions: owner invests $15,000, pays rent $1,500,
purchases supplies $2,000 on cash, and receives $4,000 cash revenue.
4. Adjust the following entries: prepaid rent $500, accrued wages $300, depreciation on equipment
$1,000.
5. Prepare an adjusted trial balance after accounting for prepayments, accruals, and depreciation.
Section 2 – Managerial Accounting
1. Classify the following costs as fixed, variable, direct, or indirect: Rent, Raw materials, Labor,
Utilities.
2. A company has fixed costs of $10,000, selling price per unit $50, and variable cost per unit $30.
Calculate the break-even point in units.
3. Prepare an operating budget for a small company that projects sales of $20,000, cost of goods
sold $12,000, and operating expenses $4,000.
4. Compute the contribution margin ratio and explain its significance.
5. A company forecasts production costs for 3 months. Prepare a cash budget given beginning
cash $5,000, inflows $15,000 per month, and expenses $12,000 per month.
Section 3 – Financial Statement Analysis
1. Compute the current ratio and quick ratio given current assets $15,000, inventory $5,000, and
current liabilities $10,000.
2. Calculate the net profit margin if revenue is $50,000 and net income is $7,500.
3. Determine return on assets (ROA) if total assets $100,000 and net income $10,000.
4. Using a 3-year income statement, perform trend analysis on revenue and net income.
5. Prepare a common-size balance sheet and interpret the results.
Section 4 – Principles of Finance
1. Calculate the future value of $5,000 invested at 8% annual interest for 3 years (compound
interest).
2. Compute the present value of $10,000 to be received in 5 years at a 10% discount rate.
3. Evaluate an investment with an initial outlay of $20,000 and expected inflows of $6,000 per year
for 5 years at a 10% discount rate using NPV.
4. Calculate the internal rate of return (IRR) for the above investment.
5. Determine the payback period for the same investment.
Section 5 – Working Capital & Financial Planning
1. Given cash $10,000, inventory $20,000, receivables $15,000, payables $12,000, compute working
capital.
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