MGT 6201 Accounting Exam 2026/2027 – Questions, Answers & Detailed Rationales

MGT 6201 Accounting Exam 2026/2027 –
Questions, Answers & Detailed
Rationales
TABLE OF CONTENTS
1. Accounting Fundamentals & Financial Statements
2. Accounting Cycle, Adjustments & Internal Controls
3. Cash, Receivables & Inventory
4. Long-Term Assets, Liabilities & Equity
5. Managerial & Cost Accounting
6. Budgeting, CVP & Decision Analysis
7. Financial Analysis & Performance Measurement
8. Advanced, Strategic & Contemporary Accounting


SECTION 1: ACCOUNTING FUNDAMENTALS & FINANCIAL STATEMENTS
Question 1
What is the primary purpose of accounting?
A. To increase sales
B. To provide useful financial information for decision-making
C. To eliminate business risk
D. To prepare marketing campaigns
Answer: B
Rationale: Accounting identifies, records, summarizes, and communicates
financial information. Managers, investors, creditors, regulators, and other
stakeholders use this information to make economic decisions.

,Question 2
Which financial statement reports assets, liabilities, and equity at a specific date?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Answer: C
Rationale: The balance sheet, also called the statement of financial position,
presents the organization's financial position at a specific point in time. It is based
on the accounting equation: Assets = Liabilities + Equity.


Question 3
The fundamental accounting equation is:
A. Assets = Revenue − Expenses
B. Assets = Liabilities + Equity
C. Revenue = Assets + Liabilities
D. Equity = Assets + Revenue
Answer: B
Rationale: The accounting equation establishes the relationship among assets,
liabilities, and owners' equity. Every properly recorded transaction keeps this
equation in balance.


Question 4
Which of the following is an asset?
A. Accounts payable
B. Common stock
C. Cash
D. Sales revenue

,Answer: C
Rationale: Cash is an economic resource controlled by the organization and is
therefore an asset. Accounts payable is a liability, while common stock represents
equity.


Question 5
Which account represents an obligation owed to another party?
A. Asset
B. Liability
C. Revenue
D. Expense
Answer: B
Rationale: Liabilities are present obligations arising from past transactions or
events that are expected to require future economic resources for settlement.


Question 6
Owner's equity represents:
A. Creditors' claims against assets
B. The owners' residual claim on business assets after liabilities
C. Total business expenses
D. Total revenue earned
Answer: B
Rationale: Equity represents the residual interest in assets after deducting
liabilities. In a corporation, equity can include contributed capital and retained
earnings.


Question 7
Which account normally has a debit balance?

, A. Revenue
B. Liability
C. Asset
D. Owner's capital
Answer: C
Rationale: Assets normally have debit balances. Liabilities, equity, and revenues
normally have credit balances, while expenses normally have debit balances.


Question 8
Which account normally has a credit balance?
A. Cash
B. Accounts receivable
C. Expense
D. Accounts payable
Answer: D
Rationale: Accounts payable is a liability and normally carries a credit balance.
Debits increase assets and expenses, whereas credits increase liabilities, equity,
and revenue.


Question 9
Revenue is generally recognized when:
A. Cash is always received
B. The organization has satisfied the applicable revenue-recognition requirements
C. An invoice is printed regardless of performance
D. Management wants higher income
Answer: B
Rationale: Under accrual accounting, revenue is generally recognized when the
entity satisfies its performance obligation or otherwise meets applicable
recognition criteria, rather than simply when cash is collected.