ACCT 20103 FINAL EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026
Accounting Equation - Answers Assets = Liabilities + Stockholders Equity, includes common stock and
retained earnings
Stockholders Equity - Answers Owners claim on assets, includes common stock and retained earnings
Transaction Type Asset Source - Answers Assets increase and claims increase
Transaction Type Asset Exchange - Answers One asset increases, another asset decreases
Transaction Type Asset Use - Answers Assets decrease, claims decrease
Transaction Type Claims Exchange - Answers One claim increases, another claim decreases
Managerial Accounting - Answers Uses financial, economic, and nonfinancial data for internal
decisions
Product Cost - Answers Direct materials, direct labor, manufacturing overhead, included in inventory
Period Cost - Answers Selling and administrative expenses, expensed in period
Accrual Accounting - Answers Revenue earned and expenses incurred, regardless of cash
Revenue Recognition - Answers Record revenue when earned
Matching Principle - Answers Match expenses with related revenue
Accounting Cycle - Answers Record, adjust, report, close
Income Statement - Answers Reports revenues and expenses over time
Balance Sheet - Answers Reports assets, liabilities, and equity at a point in time
Raw Materials Used - Answers Beginning raw materials + Purchases - Ending raw materials
Total Manufacturing Cost - Answers Direct materials + Direct labor + Manufacturing overhead
Cost of Goods Manufactured (COGM) - Answers Total manufacturing cost + Beginning work in
process - Ending work in process
Cost of Goods Sold (COGS) - Answers Cost of inventory that has been sold
Contribution Margin - Answers Excess of revenue over variable costs
Contribution Margin per Unit - Answers Selling price - Variable cost per unit
Contribution Margin Ratio - Answers Contribution margin ÷ Sales
Break Even Units - Answers Fixed costs ÷ Contribution margin per unit
Units for Target Profit - Answers (Fixed costs + Target profit) ÷ Contribution margin per unit
Fixed Cost - Answers Total stays constant, cost per unit decreases with volume
Variable Cost - Answers Total changes with activity, cost per unit stays constant
Relevant Cost - Answers Future cost, differs between alternatives
Sunk Cost - Answers Past cost, ignore
Opportunity Cost - Answers Benefit given up, next best alternative
Master Budget - Answers Comprehensive plan including all budgets
Participative Budgeting - Answers Employees involved in budgeting process
Pro Forma Financial Statements - Answers Projected financial statements
Sales Budget - Answers Expected unit sales × selling price
Cash Collections - Answers Collected in current and future periods based on percentages
Internal Controls - Answers Prevent and detect errors, safeguard assets
Temporary Accounts - Answers Revenues, expenses, dividends closed each period
Permanent Accounts - Answers Assets, liabilities, equity carry forward
Inventory System Perpetual - Answers Inventory updated continuously
Inventory System Periodic - Answers Inventory updated at end of period
First In First Out (FIFO) - Answers First items purchased are first assigned to cost of goods sold
Last In First Out (LIFO) - Answers Last items purchased are first assigned to cost of goods sold
Weighted Average - Answers Average cost per unit applied
FIFO Effect - Answers Higher gross margin when prices rise
LIFO Effect - Answers Lower gross margin when prices rise
Inventory Shrinkage - Answers Loss from theft, damage, or error
Accounts Receivable - Answers Money owed to the business by customers
Allowance for Doubtful Accounts - Answers Estimated uncollectible receivables
Net Realizable Value - Answers Amount expected to be collected, accounts receivable minus
allowance
Percent of Sales Method - Answers Calculates bad debt expense using revenue
Percent of Receivables Method - Answers Calculates allowance using accounts receivable
Working Capital - Answers Current assets minus current liabilities
Accounting Equation - Answers Assets = Liabilities + Stockholders Equity, includes common stock and
retained earnings
Stockholders Equity - Answers Owners claim on assets, includes common stock and retained earnings
Transaction Type Asset Source - Answers Assets increase and claims increase
Transaction Type Asset Exchange - Answers One asset increases, another asset decreases
Transaction Type Asset Use - Answers Assets decrease, claims decrease
Transaction Type Claims Exchange - Answers One claim increases, another claim decreases
Managerial Accounting - Answers Uses financial, economic, and nonfinancial data for internal
decisions
Product Cost - Answers Direct materials, direct labor, manufacturing overhead, included in inventory
Period Cost - Answers Selling and administrative expenses, expensed in period
Accrual Accounting - Answers Revenue earned and expenses incurred, regardless of cash
Revenue Recognition - Answers Record revenue when earned
Matching Principle - Answers Match expenses with related revenue
Accounting Cycle - Answers Record, adjust, report, close
Income Statement - Answers Reports revenues and expenses over time
Balance Sheet - Answers Reports assets, liabilities, and equity at a point in time
Raw Materials Used - Answers Beginning raw materials + Purchases - Ending raw materials
Total Manufacturing Cost - Answers Direct materials + Direct labor + Manufacturing overhead
Cost of Goods Manufactured (COGM) - Answers Total manufacturing cost + Beginning work in
process - Ending work in process
Cost of Goods Sold (COGS) - Answers Cost of inventory that has been sold
Contribution Margin - Answers Excess of revenue over variable costs
Contribution Margin per Unit - Answers Selling price - Variable cost per unit
Contribution Margin Ratio - Answers Contribution margin ÷ Sales
Break Even Units - Answers Fixed costs ÷ Contribution margin per unit
Units for Target Profit - Answers (Fixed costs + Target profit) ÷ Contribution margin per unit
Fixed Cost - Answers Total stays constant, cost per unit decreases with volume
Variable Cost - Answers Total changes with activity, cost per unit stays constant
Relevant Cost - Answers Future cost, differs between alternatives
Sunk Cost - Answers Past cost, ignore
Opportunity Cost - Answers Benefit given up, next best alternative
Master Budget - Answers Comprehensive plan including all budgets
Participative Budgeting - Answers Employees involved in budgeting process
Pro Forma Financial Statements - Answers Projected financial statements
Sales Budget - Answers Expected unit sales × selling price
Cash Collections - Answers Collected in current and future periods based on percentages
Internal Controls - Answers Prevent and detect errors, safeguard assets
Temporary Accounts - Answers Revenues, expenses, dividends closed each period
Permanent Accounts - Answers Assets, liabilities, equity carry forward
Inventory System Perpetual - Answers Inventory updated continuously
Inventory System Periodic - Answers Inventory updated at end of period
First In First Out (FIFO) - Answers First items purchased are first assigned to cost of goods sold
Last In First Out (LIFO) - Answers Last items purchased are first assigned to cost of goods sold
Weighted Average - Answers Average cost per unit applied
FIFO Effect - Answers Higher gross margin when prices rise
LIFO Effect - Answers Lower gross margin when prices rise
Inventory Shrinkage - Answers Loss from theft, damage, or error
Accounts Receivable - Answers Money owed to the business by customers
Allowance for Doubtful Accounts - Answers Estimated uncollectible receivables
Net Realizable Value - Answers Amount expected to be collected, accounts receivable minus
allowance
Percent of Sales Method - Answers Calculates bad debt expense using revenue
Percent of Receivables Method - Answers Calculates allowance using accounts receivable
Working Capital - Answers Current assets minus current liabilities
