HORNGREN FINANCIAL MANAGERIAL
ACCOUNTING TEST BANK 2026
QUESTIONS WITH SOLUTIONS GRADED A+
⩥ What is an account in accounting? Answer: A detailed record of all
increases and decreases that have occurred in an account during a
specified period.
⩥ What does 'Assets' include? Answer: Cash, Accounts Receivable,
Notes Receivable, Prepaid Expenses, Land, Buildings, and Equipment.
⩥ What is Accounts Receivable? Answer: A customer's promise to pay
in the future for services or goods sold.
⩥ What is Notes Receivable? Answer: A written promise that a customer
will pay a fixed amount of money and interest by a certain date.
⩥ What are Prepaid Expenses? Answer: Payments of expenses in
advance, considered assets because they provide future benefits.
⩥ What are Liabilities? Answer: Obligations of the business to pay debts
in the future.
,⩥ What is Accounts Payable? Answer: A promise made by the business
to pay a debt in the future, arising from a credit purchase.
⩥ What is Notes Payable? Answer: A written promise made by the
business to pay a debt, usually involving interest, in the future.
⩥ What is Accrued Liability? Answer: An amount owed but not paid,
such as Taxes Payable or Salaries Payable.
⩥ What is Unearned Revenue? Answer: Cash received from a customer
for services not yet provided.
⩥ What does Equity represent? Answer: The net contributions of
stockholders in the business.
⩥ What are Dividends? Answer: Distributions of cash or other assets to
stockholders, which decrease equity.
⩥ What are Revenues? Answer: Earnings from delivering goods or
services to customers, which increase equity.
⩥ What are Expenses? Answer: Costs incurred in selling goods or
services, which decrease equity.
, ⩥ What is a Chart of Accounts? Answer: An organized list of a
company's accounts.
⩥ What is Double-Entry Accounting? Answer: A system that records the
dual effects of each transaction, involving at least two accounts.
⩥ What is a T-account? Answer: A simplified form of the ledger used to
record increases and decreases in accounts.
⩥ How is an increase in the Cash account recorded? Answer: By
recording a debit to Cash.
⩥ How is a decrease in the Cash account recorded? Answer: By
recording a credit to Cash.
⩥ What is the purpose of a ledger? Answer: To hold all the accounts of a
business, the changes in those accounts, and their balances.
⩥ How can a chart of accounts be used? Answer: To process
transactions, analyze data, compare periods, identify errors, and track
changes.
⩥ What is the relationship between debits and credits in accounting?
Answer: Debits increase asset and expense accounts, while credits
increase liability, equity, and revenue accounts.
ACCOUNTING TEST BANK 2026
QUESTIONS WITH SOLUTIONS GRADED A+
⩥ What is an account in accounting? Answer: A detailed record of all
increases and decreases that have occurred in an account during a
specified period.
⩥ What does 'Assets' include? Answer: Cash, Accounts Receivable,
Notes Receivable, Prepaid Expenses, Land, Buildings, and Equipment.
⩥ What is Accounts Receivable? Answer: A customer's promise to pay
in the future for services or goods sold.
⩥ What is Notes Receivable? Answer: A written promise that a customer
will pay a fixed amount of money and interest by a certain date.
⩥ What are Prepaid Expenses? Answer: Payments of expenses in
advance, considered assets because they provide future benefits.
⩥ What are Liabilities? Answer: Obligations of the business to pay debts
in the future.
,⩥ What is Accounts Payable? Answer: A promise made by the business
to pay a debt in the future, arising from a credit purchase.
⩥ What is Notes Payable? Answer: A written promise made by the
business to pay a debt, usually involving interest, in the future.
⩥ What is Accrued Liability? Answer: An amount owed but not paid,
such as Taxes Payable or Salaries Payable.
⩥ What is Unearned Revenue? Answer: Cash received from a customer
for services not yet provided.
⩥ What does Equity represent? Answer: The net contributions of
stockholders in the business.
⩥ What are Dividends? Answer: Distributions of cash or other assets to
stockholders, which decrease equity.
⩥ What are Revenues? Answer: Earnings from delivering goods or
services to customers, which increase equity.
⩥ What are Expenses? Answer: Costs incurred in selling goods or
services, which decrease equity.
, ⩥ What is a Chart of Accounts? Answer: An organized list of a
company's accounts.
⩥ What is Double-Entry Accounting? Answer: A system that records the
dual effects of each transaction, involving at least two accounts.
⩥ What is a T-account? Answer: A simplified form of the ledger used to
record increases and decreases in accounts.
⩥ How is an increase in the Cash account recorded? Answer: By
recording a debit to Cash.
⩥ How is a decrease in the Cash account recorded? Answer: By
recording a credit to Cash.
⩥ What is the purpose of a ledger? Answer: To hold all the accounts of a
business, the changes in those accounts, and their balances.
⩥ How can a chart of accounts be used? Answer: To process
transactions, analyze data, compare periods, identify errors, and track
changes.
⩥ What is the relationship between debits and credits in accounting?
Answer: Debits increase asset and expense accounts, while credits
increase liability, equity, and revenue accounts.
