MGT 8803 EXAM 200 ACTUAL QUESTIONS AND CORRECT
ANSWERS WITH RATIONALE LATEST 2026 ALREADY
GRADED
MGT 8803 is a core graduate course (Business Fundamentals for Analytics) at
Georgia Tech's Scheller College of Business, designed to provide non-business
students with a foundational understanding of key business disciplines . The
course is structured as a series of modules covering five functional areas:
Accounting, Finance, Supply Chain Management, Marketing, and Business
Strategy . Taught by specialized professors, its primary goal is to introduce
important business concepts to analytics and engineering students, preparing
them to support managers in decision-making by understanding the data and
problems faced by business professionals .
1. A company receives cash from a customer for services that will be provided next
month. Under the accrual basis of accounting, how should this transaction be
recorded?
A) As revenue on the income statement
B) As a liability on the balance sheet
C) As an asset on the balance sheet
D) As an expense on the income statement
Answer: B
Rationale: Under accrual accounting, revenue is recognized when earned, not when
cash is received. Receiving cash for services not yet provided creates a liability
called deferred or unearned revenue.
2. Which financial statement provides a snapshot of a company's financial position
at a specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings
Answer: C
,Rationale: The balance sheet reports a company's assets, liabilities, and equity at a
specific date, unlike the income statement or cash flow statement which cover a
period of time.
3. The matching principle in accounting states that:
A) Assets should be matched with liabilities
B) Revenues should be matched with expenses in the same period
C) Cash inflows should be matched with cash outflows
D) Costs should be matched with their historical value
Answer: B
Rationale: The matching principle requires that expenses be recognized in the same
period as the revenues they helped generate. This is fundamental to accrual
accounting.
4. Which of the following is classified as an operating activity on the Statement of
Cash Flows?
A) Purchase of equipment
B) Issuance of common stock
C) Payment of salaries to employees
D) Repayment of a bank loan
Answer: C
Rationale: Operating activities are the day-to-day functions of a business, such as
selling goods and paying expenses. Salaries are an operating expense. Buying
equipment (A) is investing, issuing stock (B) and repaying loans (D) are financing.
5. A company using the FIFO inventory method during a period of rising prices
will report which of the following compared to LIFO?
A) Higher cost of goods sold
B) Lower net income
C) Higher ending inventory
D) Lower gross profit
Answer: C
Rationale: In rising prices, FIFO assigns the oldest, lower costs to COGS, resulting
in higher ending inventory and higher gross profit than LIFO.
6. Depreciation is a non-cash expense that:
A) Decreases net income but does not affect operating cash flow
B) Increases net income and operating cash flow
C) Decreases both net income and operating cash flow
D) Increases net income but decreases operating cash flow
,Answer: A
Rationale: Depreciation reduces net income but is added back to net income when
calculating operating cash flow, as it does not represent an actual cash outflow.
7. Which of the following is a contra-asset account?
A) Accounts Payable
B) Accumulated Depreciation
C) Retained Earnings
D) Prepaid Rent
Answer: B
Rationale: Contra-asset accounts have a credit balance and reduce the book value
of an asset. Accumulated depreciation reduces the value of property, plant, and
equipment.
8. A company purchases land for $100,000, which is currently worth $150,000.
Under the cost principle, at what amount should the land be reported on the
balance sheet?
A) $100,000
B) $150,000
C) $50,000
D) $125,000
Answer: A
Rationale: The cost principle requires assets to be recorded at their historical cost,
not their current market value.
9. Goodwill is classified on the balance sheet as which type of asset?
A) Current asset
B) Intangible long-term asset
C) Contra-asset
D) Long-term liability
Answer: B
Rationale: Goodwill is an intangible long-term asset that arises when one company
acquires another for a price higher than the fair value of its identifiable net assets.
10. In periods of falling prices, which inventory method would result in the lowest
cost of goods sold?
A) FIFO
B) LIFO
C) Average cost
D) Specific identification
, Answer: A
Rationale: In falling prices, the newer lower-cost inventory is sold first under
FIFO, resulting in a lower COGS.
11. A company declares and pays a cash dividend. Which of the following is the
immediate effect on the company's balance sheet?
A) Assets and liabilities decrease
B) Assets and equity decrease
C) Liabilities and equity increase
D) Assets and liabilities increase
Answer: B
Rationale: Paying a cash dividend reduces cash (an asset) and reduces retained
earnings (part of shareholders' equity).
12. Which of the following is a financing activity?
A) Collecting cash from customers
B) Paying salaries to employees
C) Issuing bonds payable
D) Selling a piece of equipment
Answer: C
Rationale: Financing activities involve cash flows between the company and its
owners and creditors, such as issuing stocks or bonds.
13. The "lower of cost or market" rule is an application of which accounting
principle?
A) Matching principle
B) Revenue recognition principle
C) Conservatism principle
D) Cost principle
Answer: C
Rationale: The conservatism principle guides accountants to choose the solution
that is least likely to overstate assets or income when uncertainty exists. Writing
down inventory to the lower of cost or market is a conservative approach.
14. A company has current assets of $500,000 and current liabilities of $250,000.
What is its current ratio?
A) 0.5
B) 1.0
C) 2.0
D) 2.5
ANSWERS WITH RATIONALE LATEST 2026 ALREADY
GRADED
MGT 8803 is a core graduate course (Business Fundamentals for Analytics) at
Georgia Tech's Scheller College of Business, designed to provide non-business
students with a foundational understanding of key business disciplines . The
course is structured as a series of modules covering five functional areas:
Accounting, Finance, Supply Chain Management, Marketing, and Business
Strategy . Taught by specialized professors, its primary goal is to introduce
important business concepts to analytics and engineering students, preparing
them to support managers in decision-making by understanding the data and
problems faced by business professionals .
1. A company receives cash from a customer for services that will be provided next
month. Under the accrual basis of accounting, how should this transaction be
recorded?
A) As revenue on the income statement
B) As a liability on the balance sheet
C) As an asset on the balance sheet
D) As an expense on the income statement
Answer: B
Rationale: Under accrual accounting, revenue is recognized when earned, not when
cash is received. Receiving cash for services not yet provided creates a liability
called deferred or unearned revenue.
2. Which financial statement provides a snapshot of a company's financial position
at a specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings
Answer: C
,Rationale: The balance sheet reports a company's assets, liabilities, and equity at a
specific date, unlike the income statement or cash flow statement which cover a
period of time.
3. The matching principle in accounting states that:
A) Assets should be matched with liabilities
B) Revenues should be matched with expenses in the same period
C) Cash inflows should be matched with cash outflows
D) Costs should be matched with their historical value
Answer: B
Rationale: The matching principle requires that expenses be recognized in the same
period as the revenues they helped generate. This is fundamental to accrual
accounting.
4. Which of the following is classified as an operating activity on the Statement of
Cash Flows?
A) Purchase of equipment
B) Issuance of common stock
C) Payment of salaries to employees
D) Repayment of a bank loan
Answer: C
Rationale: Operating activities are the day-to-day functions of a business, such as
selling goods and paying expenses. Salaries are an operating expense. Buying
equipment (A) is investing, issuing stock (B) and repaying loans (D) are financing.
5. A company using the FIFO inventory method during a period of rising prices
will report which of the following compared to LIFO?
A) Higher cost of goods sold
B) Lower net income
C) Higher ending inventory
D) Lower gross profit
Answer: C
Rationale: In rising prices, FIFO assigns the oldest, lower costs to COGS, resulting
in higher ending inventory and higher gross profit than LIFO.
6. Depreciation is a non-cash expense that:
A) Decreases net income but does not affect operating cash flow
B) Increases net income and operating cash flow
C) Decreases both net income and operating cash flow
D) Increases net income but decreases operating cash flow
,Answer: A
Rationale: Depreciation reduces net income but is added back to net income when
calculating operating cash flow, as it does not represent an actual cash outflow.
7. Which of the following is a contra-asset account?
A) Accounts Payable
B) Accumulated Depreciation
C) Retained Earnings
D) Prepaid Rent
Answer: B
Rationale: Contra-asset accounts have a credit balance and reduce the book value
of an asset. Accumulated depreciation reduces the value of property, plant, and
equipment.
8. A company purchases land for $100,000, which is currently worth $150,000.
Under the cost principle, at what amount should the land be reported on the
balance sheet?
A) $100,000
B) $150,000
C) $50,000
D) $125,000
Answer: A
Rationale: The cost principle requires assets to be recorded at their historical cost,
not their current market value.
9. Goodwill is classified on the balance sheet as which type of asset?
A) Current asset
B) Intangible long-term asset
C) Contra-asset
D) Long-term liability
Answer: B
Rationale: Goodwill is an intangible long-term asset that arises when one company
acquires another for a price higher than the fair value of its identifiable net assets.
10. In periods of falling prices, which inventory method would result in the lowest
cost of goods sold?
A) FIFO
B) LIFO
C) Average cost
D) Specific identification
, Answer: A
Rationale: In falling prices, the newer lower-cost inventory is sold first under
FIFO, resulting in a lower COGS.
11. A company declares and pays a cash dividend. Which of the following is the
immediate effect on the company's balance sheet?
A) Assets and liabilities decrease
B) Assets and equity decrease
C) Liabilities and equity increase
D) Assets and liabilities increase
Answer: B
Rationale: Paying a cash dividend reduces cash (an asset) and reduces retained
earnings (part of shareholders' equity).
12. Which of the following is a financing activity?
A) Collecting cash from customers
B) Paying salaries to employees
C) Issuing bonds payable
D) Selling a piece of equipment
Answer: C
Rationale: Financing activities involve cash flows between the company and its
owners and creditors, such as issuing stocks or bonds.
13. The "lower of cost or market" rule is an application of which accounting
principle?
A) Matching principle
B) Revenue recognition principle
C) Conservatism principle
D) Cost principle
Answer: C
Rationale: The conservatism principle guides accountants to choose the solution
that is least likely to overstate assets or income when uncertainty exists. Writing
down inventory to the lower of cost or market is a conservative approach.
14. A company has current assets of $500,000 and current liabilities of $250,000.
What is its current ratio?
A) 0.5
B) 1.0
C) 2.0
D) 2.5
