Financial Accounting –
D102 2026 | Study Guide,
Practice Questions,
Answers, Rationales &
Exam Review | Complete
Ethics Study Guide
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
,Which statement best describes the main features of Goods purchased and held for sale
inventories?
Goods used by a company on a long-term basis, usually
more than five years
Goods used by company employees on a daily basis
Goods due from customers who have purchased on
account
Goods purchased and held for sale
What is a classified balance sheet? A balance sheet that distinguishes between current and long-term assets
A balance sheet that separates liabilities from equities
A balance sheet that is for a period of time rather than as
of a point in time
A balance sheet that is not publicly disclosed
A balance sheet that distinguishes between current and
long-term assets
What does owners' equity represent? The difference between total assets and total liabilities
The difference between total assets and total liabilities
The difference between current liabilities and long-term
liabilities
The difference between current assets and long-term
assets
The difference between total liabilities and total owners'
equity
For most companies, when assets or liabilities are The next year
classified as "current" on the balance sheet, it generally
means the related assets or liabilities will be turned into
cash or will be required to be paid, respectively, within
what time frame?
The next month
The next year
The next six months
The next quarter
What is owners' equity? A residual amount representing the net assets available after all obligations have
been satisfied
The sum of operating, investing, and financing cash flows
An economic resource that is owned or controlled by a
company
A residual amount representing the net assets available
after all obligations have been satisfied
An obligation to pay cash, transfer other assets, or provide
services to someone else
Which item is an asset? Accounts receivable
Capital stock
Accounts payable
Retained earnings
Accounts receivable
According to the accounting equation, what is the correct Total Assets - Liabilities
computation of owners' equity?
Total Assets + Liabilities
Cash - Bank Loan Balance
Total Assets - Liabilities
Cash + Bank Loan Balance
,What is an accurate description of accounts payable? Obligation arising from the purchase of inventory on account
Obligation arising from the purchase of inventory on
account
Obligation arising from the sale of office supplies on
account
Obligation arising from the payment of income taxes on
account
Obligation arising from the sale of equipment on account
Bullzai Company's financial records include these Cash, accounts receivable, and inventory
accounts at the end of the year:
Land
Accounts Receivable
Buildings
Inventory
Loans Payable
Accounts Payable
Retained Earnings
Capital Stock
Cash
Which set of items composes a complete listing of Bullzai's
current assets?
Cash, inventory, and capital stock
Cash, retained earnings, and capital stock
Cash, buildings, and land
Cash, accounts receivable, and inventory
What is depreciation expense? The amount of wear and tear on long-lived assets during the year
The amount of uncollectible accounts created by credit
sales during the year
The amount of gross profit divided by sales for the year
The amount of wear and tear on long-lived assets during
the year
The amount of inventory lost, stolen, or sold during the
year
What is an income statement? Report of the revenues and expenses of a company during a period
Report of the assets, liabilities, and equity of a company as
of a point in time
Report of the total of the balances of all of a company's
bank accounts
Report of the revenues and expenses of a company during
a period
Report of the operating, investing, and financing cash
flows of a company during a period
Which item is a revenue item? Sales
Sales
Loan Payable
Cash
Accounts Receivable
, What is an example of an expense that fits under the
heading "selling, general, and administrative expense"?
Wages of company headquarters accounting staff
Purchase cost of inventory items bought from suppliers
Cost paid for the use of someone else's money
Fees earned by providing services
What is interest expense? Interest is the rent paid to use someone else's money
What is income tax expense? Income tax expense is the sum of all the income tax consequences of all
transactions undertaken by a company during a year
Which are components of an income statement? Revenue and expenses
Retained earnings and dividends
Current and noncurrent assets
Short-term and accrued liabilities
Revenue and expenses
What is net income? The amount by which revenues exceed expenses
The total amount of assets reported in the balance sheet
The amount by which revenues exceed expenses
The amount of assets consumed through business
operations
The amount of cash on hand at the end of the year
How is earnings per share (EPS) computed? Net income divided by the number of shares
Net income divided by the number of shares
Total equity divided by sales revenue
Total expenses divided by sales revenue
Net income divided by total sales revenue
What is bad debt expense? Amount of uncollectible accounts created by credit sales during the year
Amount of wear and tear on long-lived assets during the
year
Amount of gross profit divided by sales for the year
Amount of inventory lost, stolen, or sold during the year
Amount of uncollectible accounts created by credit sales
during the year
Which item is an expense item? Cost of Goods Sold
Cash Cost of Goods Sold represents the amount of inventory (an asset) consumed
Accounts Payable through business operations—giving the inventory to the customer in a sales
Sales transaction
Cost of Goods Sold
What is "gross profit"? Sales − Cost of Goods Sold
Total Revenues − Total Expenses The difference between Sales and Cost of Goods Sold represents the difference
Sales − Cost of Goods Sold. between a company's total retail selling prices to customers and those items' total
Total Assets − Total Liabilities wholesale purchase costs from suppliers.
Accounts Receivable − Accounts Payable
D102 2026 | Study Guide,
Practice Questions,
Answers, Rationales &
Exam Review | Complete
Ethics Study Guide
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
,Which statement best describes the main features of Goods purchased and held for sale
inventories?
Goods used by a company on a long-term basis, usually
more than five years
Goods used by company employees on a daily basis
Goods due from customers who have purchased on
account
Goods purchased and held for sale
What is a classified balance sheet? A balance sheet that distinguishes between current and long-term assets
A balance sheet that separates liabilities from equities
A balance sheet that is for a period of time rather than as
of a point in time
A balance sheet that is not publicly disclosed
A balance sheet that distinguishes between current and
long-term assets
What does owners' equity represent? The difference between total assets and total liabilities
The difference between total assets and total liabilities
The difference between current liabilities and long-term
liabilities
The difference between current assets and long-term
assets
The difference between total liabilities and total owners'
equity
For most companies, when assets or liabilities are The next year
classified as "current" on the balance sheet, it generally
means the related assets or liabilities will be turned into
cash or will be required to be paid, respectively, within
what time frame?
The next month
The next year
The next six months
The next quarter
What is owners' equity? A residual amount representing the net assets available after all obligations have
been satisfied
The sum of operating, investing, and financing cash flows
An economic resource that is owned or controlled by a
company
A residual amount representing the net assets available
after all obligations have been satisfied
An obligation to pay cash, transfer other assets, or provide
services to someone else
Which item is an asset? Accounts receivable
Capital stock
Accounts payable
Retained earnings
Accounts receivable
According to the accounting equation, what is the correct Total Assets - Liabilities
computation of owners' equity?
Total Assets + Liabilities
Cash - Bank Loan Balance
Total Assets - Liabilities
Cash + Bank Loan Balance
,What is an accurate description of accounts payable? Obligation arising from the purchase of inventory on account
Obligation arising from the purchase of inventory on
account
Obligation arising from the sale of office supplies on
account
Obligation arising from the payment of income taxes on
account
Obligation arising from the sale of equipment on account
Bullzai Company's financial records include these Cash, accounts receivable, and inventory
accounts at the end of the year:
Land
Accounts Receivable
Buildings
Inventory
Loans Payable
Accounts Payable
Retained Earnings
Capital Stock
Cash
Which set of items composes a complete listing of Bullzai's
current assets?
Cash, inventory, and capital stock
Cash, retained earnings, and capital stock
Cash, buildings, and land
Cash, accounts receivable, and inventory
What is depreciation expense? The amount of wear and tear on long-lived assets during the year
The amount of uncollectible accounts created by credit
sales during the year
The amount of gross profit divided by sales for the year
The amount of wear and tear on long-lived assets during
the year
The amount of inventory lost, stolen, or sold during the
year
What is an income statement? Report of the revenues and expenses of a company during a period
Report of the assets, liabilities, and equity of a company as
of a point in time
Report of the total of the balances of all of a company's
bank accounts
Report of the revenues and expenses of a company during
a period
Report of the operating, investing, and financing cash
flows of a company during a period
Which item is a revenue item? Sales
Sales
Loan Payable
Cash
Accounts Receivable
, What is an example of an expense that fits under the
heading "selling, general, and administrative expense"?
Wages of company headquarters accounting staff
Purchase cost of inventory items bought from suppliers
Cost paid for the use of someone else's money
Fees earned by providing services
What is interest expense? Interest is the rent paid to use someone else's money
What is income tax expense? Income tax expense is the sum of all the income tax consequences of all
transactions undertaken by a company during a year
Which are components of an income statement? Revenue and expenses
Retained earnings and dividends
Current and noncurrent assets
Short-term and accrued liabilities
Revenue and expenses
What is net income? The amount by which revenues exceed expenses
The total amount of assets reported in the balance sheet
The amount by which revenues exceed expenses
The amount of assets consumed through business
operations
The amount of cash on hand at the end of the year
How is earnings per share (EPS) computed? Net income divided by the number of shares
Net income divided by the number of shares
Total equity divided by sales revenue
Total expenses divided by sales revenue
Net income divided by total sales revenue
What is bad debt expense? Amount of uncollectible accounts created by credit sales during the year
Amount of wear and tear on long-lived assets during the
year
Amount of gross profit divided by sales for the year
Amount of inventory lost, stolen, or sold during the year
Amount of uncollectible accounts created by credit sales
during the year
Which item is an expense item? Cost of Goods Sold
Cash Cost of Goods Sold represents the amount of inventory (an asset) consumed
Accounts Payable through business operations—giving the inventory to the customer in a sales
Sales transaction
Cost of Goods Sold
What is "gross profit"? Sales − Cost of Goods Sold
Total Revenues − Total Expenses The difference between Sales and Cost of Goods Sold represents the difference
Sales − Cost of Goods Sold. between a company's total retail selling prices to customers and those items' total
Total Assets − Total Liabilities wholesale purchase costs from suppliers.
Accounts Receivable − Accounts Payable
