D196 ACCT 2020
Principles of Financial & Managerial
Accounting
Comprehensive FA Review (Qns & Ans)
2025
1. Which of the following best describes the purpose of financial
accounting?
- A) To provide information for internal decision-making
- B) To prepare budgets and forecasts
- C) To provide financial information to external stakeholders
- D) To manage day-to-day operations
©2024/2025
, - ANS: C) To provide financial information to external
stakeholders
- Rationale: Financial accounting focuses on providing
financial information to external stakeholders such as investors,
creditors, and regulators.
2. What is the primary purpose of managerial accounting?
- A) To prepare financial statements for external users
- B) To provide information for internal decision-making and
control
- C) To comply with regulatory requirements
- D) To calculate taxes owed by the organization
- ANS: B) To provide information for internal decision-
making and control
- Rationale: Managerial accounting provides information to
managers for decision-making, planning, and controlling
operations.
3. Which of the following is NOT a component of the balance
sheet?
- A) Assets
- B) Liabilities
- C) Equity
©2024/2025
, - D) Revenue
- ANS: D) Revenue
- Rationale: The balance sheet includes assets, liabilities, and
equity, but revenue is reported on the income statement.
Fill-in-the-Blank Questions
4. The __________ principle requires that expenses be matched
with the revenues they help to generate.
- ANS: Matching
- Rationale: The matching principle requires that expenses be
recognized in the same period as the revenues they help to
generate.
5. In managerial accounting, the practice of allocating indirect
costs to cost objects is known as __________.
- ANS: Cost allocation
- Rationale: Cost allocation involves assigning indirect costs
to cost objects such as products, services, or departments.
6. The __________ ratio measures a company's ability to meet
its short-term obligations with its most liquid assets.
- ANS: Quick
©2024/2025
Principles of Financial & Managerial
Accounting
Comprehensive FA Review (Qns & Ans)
2025
1. Which of the following best describes the purpose of financial
accounting?
- A) To provide information for internal decision-making
- B) To prepare budgets and forecasts
- C) To provide financial information to external stakeholders
- D) To manage day-to-day operations
©2024/2025
, - ANS: C) To provide financial information to external
stakeholders
- Rationale: Financial accounting focuses on providing
financial information to external stakeholders such as investors,
creditors, and regulators.
2. What is the primary purpose of managerial accounting?
- A) To prepare financial statements for external users
- B) To provide information for internal decision-making and
control
- C) To comply with regulatory requirements
- D) To calculate taxes owed by the organization
- ANS: B) To provide information for internal decision-
making and control
- Rationale: Managerial accounting provides information to
managers for decision-making, planning, and controlling
operations.
3. Which of the following is NOT a component of the balance
sheet?
- A) Assets
- B) Liabilities
- C) Equity
©2024/2025
, - D) Revenue
- ANS: D) Revenue
- Rationale: The balance sheet includes assets, liabilities, and
equity, but revenue is reported on the income statement.
Fill-in-the-Blank Questions
4. The __________ principle requires that expenses be matched
with the revenues they help to generate.
- ANS: Matching
- Rationale: The matching principle requires that expenses be
recognized in the same period as the revenues they help to
generate.
5. In managerial accounting, the practice of allocating indirect
costs to cost objects is known as __________.
- ANS: Cost allocation
- Rationale: Cost allocation involves assigning indirect costs
to cost objects such as products, services, or departments.
6. The __________ ratio measures a company's ability to meet
its short-term obligations with its most liquid assets.
- ANS: Quick
©2024/2025
