MGT 8803 SUPPLY CHAIN TEST PAPER 2026/2027
QUESTIONS AND SOLUTIONS RATED A+
✔✔Assets - ✔✔resources owned or rights to receive resources
✔✔What are the categories of assets? - ✔✔physical, intangible, legal rights
✔✔What are some common asset accounts? - ✔✔cash. AR, buildings & equipment,
inventory, copyright/patents
✔✔Historical Cost Principle - ✔✔An accounting principle that states that companies
should record assets at their cost.
✔✔Liabilities - ✔✔obligations owed to creditors in form of money or good/services
✔✔What are some common liability accounts? - ✔✔Accounts payable, notes payable,
accrued salaries, deferred revenues
✔✔What is a current asset? - ✔✔Cash plus other assets that are expected to be sold or
converted to cash during the current operating cycle (usually within a year)
✔✔What is a current liability? - ✔✔A liability expected to be paid within 12 months or
less
✔✔What are the two components of owners equity? - ✔✔capital stock (what company
received when selling shares) and retained earnings (accumulated earnings less
dividends)
✔✔statement of stockholders' equity - ✔✔a financial statement that summarizes the
changes in stockholders' equity over an interval of time; net income - dividends +
issuance of cap stock
✔✔Does GAAP permit cash basis accounting? - ✔✔No
✔✔Cash Basis Accounting - ✔✔Reporting income when the cash is received and
expenses when the cash is paid.
✔✔What type of income uses cash basis accounting? - ✔✔individual
✔✔Revenues - ✔✔value for goods sold or services performed
✔✔Expenses - ✔✔The cost of assets consumed or services used in the process of
generating revenues.
, ✔✔Revenue Recognition Principle - ✔✔requires that companies recognize revenue in
the accounting period in which the performance obligation is satisfied (delivery of goods
or performance of services)
✔✔Matching Principle - ✔✔recognize expenses in the same period as the revenues
they help to generate
✔✔What happens to costs that can't be matched to specific revenues? - ✔✔matched
w/future time periods that benefit for the cost (i.e. insurance)
✔✔Income Statement - ✔✔A financial statement showing the revenue and expenses for
a fiscal period (min. of 1 year)
✔✔Can the fiscal period for an income statement change? - ✔✔Yes
✔✔What is net income? - ✔✔Revenues - Expenses
✔✔Gross Margin - ✔✔net sales - cost of goods sold
✔✔Operating income - ✔✔gross margin - operating expenses
✔✔What are the categories of operating expenses? - ✔✔selling, general, and
administrative
✔✔income before taxes - ✔✔Gross Margin +/- operating income
✔✔Do we include sold off divisions in the income statement? - ✔✔No
✔✔EPS - ✔✔net income/# of shares
✔✔Diluted EPS - ✔✔the earnings per share a company would have based on the total
number of shares including the effects of all stock options and convertible bonds
✔✔Statement of Cash Flows - ✔✔A financial statement that provides financial
information about the cash receipts and cash payments of a business for a specific
period of time.
✔✔What are the sections for a statement of cash flows? - ✔✔Operating, investing,
financing activities
✔✔Operating Activities - ✔✔Cash flow activities that include the cash effects of
transactions that create revenues and expenses and thus enter into the determination of
net income.
QUESTIONS AND SOLUTIONS RATED A+
✔✔Assets - ✔✔resources owned or rights to receive resources
✔✔What are the categories of assets? - ✔✔physical, intangible, legal rights
✔✔What are some common asset accounts? - ✔✔cash. AR, buildings & equipment,
inventory, copyright/patents
✔✔Historical Cost Principle - ✔✔An accounting principle that states that companies
should record assets at their cost.
✔✔Liabilities - ✔✔obligations owed to creditors in form of money or good/services
✔✔What are some common liability accounts? - ✔✔Accounts payable, notes payable,
accrued salaries, deferred revenues
✔✔What is a current asset? - ✔✔Cash plus other assets that are expected to be sold or
converted to cash during the current operating cycle (usually within a year)
✔✔What is a current liability? - ✔✔A liability expected to be paid within 12 months or
less
✔✔What are the two components of owners equity? - ✔✔capital stock (what company
received when selling shares) and retained earnings (accumulated earnings less
dividends)
✔✔statement of stockholders' equity - ✔✔a financial statement that summarizes the
changes in stockholders' equity over an interval of time; net income - dividends +
issuance of cap stock
✔✔Does GAAP permit cash basis accounting? - ✔✔No
✔✔Cash Basis Accounting - ✔✔Reporting income when the cash is received and
expenses when the cash is paid.
✔✔What type of income uses cash basis accounting? - ✔✔individual
✔✔Revenues - ✔✔value for goods sold or services performed
✔✔Expenses - ✔✔The cost of assets consumed or services used in the process of
generating revenues.
, ✔✔Revenue Recognition Principle - ✔✔requires that companies recognize revenue in
the accounting period in which the performance obligation is satisfied (delivery of goods
or performance of services)
✔✔Matching Principle - ✔✔recognize expenses in the same period as the revenues
they help to generate
✔✔What happens to costs that can't be matched to specific revenues? - ✔✔matched
w/future time periods that benefit for the cost (i.e. insurance)
✔✔Income Statement - ✔✔A financial statement showing the revenue and expenses for
a fiscal period (min. of 1 year)
✔✔Can the fiscal period for an income statement change? - ✔✔Yes
✔✔What is net income? - ✔✔Revenues - Expenses
✔✔Gross Margin - ✔✔net sales - cost of goods sold
✔✔Operating income - ✔✔gross margin - operating expenses
✔✔What are the categories of operating expenses? - ✔✔selling, general, and
administrative
✔✔income before taxes - ✔✔Gross Margin +/- operating income
✔✔Do we include sold off divisions in the income statement? - ✔✔No
✔✔EPS - ✔✔net income/# of shares
✔✔Diluted EPS - ✔✔the earnings per share a company would have based on the total
number of shares including the effects of all stock options and convertible bonds
✔✔Statement of Cash Flows - ✔✔A financial statement that provides financial
information about the cash receipts and cash payments of a business for a specific
period of time.
✔✔What are the sections for a statement of cash flows? - ✔✔Operating, investing,
financing activities
✔✔Operating Activities - ✔✔Cash flow activities that include the cash effects of
transactions that create revenues and expenses and thus enter into the determination of
net income.
