HBS Harvard Business School
HBX Core Financial
Accounting 2024 Exam Review
Questions and Answers 100%
Pass | Graded A+
David Mungai [Date] [Course title]
, HBS Harvard Business School HBX
Core Financial Accounting 2024
Exam Review Questions and
Answers 100% Pass | Graded A+
Depreciation methods that recognize more depreciation expense
in the early years and less in the later years. Double-declining
balance is an example of an accelerated depreciation method. -
Answer>> Accelerated Depreciation Methods
Assets = Liabilities + Owners' Equity. This equation is
fundamental and must always be true in double entry accounting.
- Answer>> Accounting Equation
The period of time for which the financial results are reported;
typically either a month or a quarter or a year. - Answer>>
Accounting Period
Liability account used to show the obligation to pay suppliers who
have provided goods or services on credit terms. - Answer>>
Accounts Payable
Accounts Payable Turnover is a ratio that is used to measure how
efficiently a business is paying its vendors. It is calculated by
dividing the credit purchases for the period by the average
accounts payable balance for the period. In the absence of credit
purchases information, we may use cost of goods sold as a
substitute. The ratio represents how many times the accounts
payable turned over during the period. For most ratios in this
course, we use averages when calculating ratios with balance
sheet numbers, but this is not necessary and some may choose
to use beginning or ending balances. - Answer>> Accounts
Payable Turnover
,Asset account used to show the claim to receive cash at some
future date for goods or services that have been supplied to a
customer on credit terms. - Answer>> Accounts Receivable
Accounts Receivable Turnover is a ratio that is used to measure
how efficiently a business is collecting receivables from its
customers. It is calculated by dividing the credit sales for the
period by the average accounts receivable balance for the period.
In the absence of credit sales information, we may use total sales
as a substitute. The ratio represents how many times the
accounts receivable turned over during the period. For most ratios
in this course, we use averages when calculating ratios with
balance sheet numbers, but this is not necessary and some may
choose to use beginning or ending balances. - Answer>>
Accounts Receivable Turnover
A revenue amount that is recorded after the revenue is earned but
before the payment is received or an expense amount that is
recorded after it has been incurred but before the payment has
been made. In either case, for an accrual the exchange of cash is
expected at some future point after the initial revenue or expense
is recognized. - Answer>> Accrual
This is the accounting method taught in this course, followed by
most companies, and required under US GAAP and IFRS. The
method follows the revenue recognition principle, which says that
revenue should be recognized in the period in which it is earned
and realizable, not necessarily when the cash is received and the
matching principle which says that expenses should be
recognized in the period in which the related revenue is
recognized rather than when the related cash is paid. -
Answer>> Accrual Accounting Method
, Liability account used to record amounts at the end of an
accounting period to recognize expenses that were incurred in the
period but for which no invoice has yet been received nor
payment has yet been made. Examples are salaries/wages
payable, accrued rent expense, accrued legal fees. When the
accrual is made, the debit is to the appropriate expense account
(payroll expense, rent expense, legal expense) and the credit is to
the accrued expense account, which is a liability because it
represents an obligation which will need to be paid in the future.
Remember accrued expenses are NOT expenses. - Answer>>
Accrued Expenses
Liability accounts that record expenses that have been
recognized on the income statement but have not yet been paid.
Similar to accrued expenses. - Answer>> Accrued Liability
An accrued expense recorded at the end of a financial period for
amounts of payroll that have been worked but not yet paid. It is a
common type of accrued expense. See also Salaries/Wages
Payable. - Answer>> Accrued Payroll
An asset account that records revenue that has been earned and
recognized on the income statement but not yet paid for by the
customer. At the time of the accrual, we debit the receivable
account and credit the appropriate accrued revenue account.
When the cash transfer ultimately occurs, we debit the cash
account and credit the receivable account. - Answer>> Accrued
Revenue
A contra asset account that includes the cumulative total of all
depreciation expenses recorded to date for specific assets. The
credit balance in this account offsets the debit balance in the
asset account which shows the original value of the asset. When
the original asset value is netted against the accumulated
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