FINANCE PRACTICE EXAM - HBS CORE
QUESTIONS AND ANSWERS. VERIFIED
2025/2026.
US GAAP: Put either into financing, operating, or investing activities:
Purchase of a building for cash $300,000
Sale of used plant equipment for cash $10,000
Sale of inventory for cash $18,000
Payment of wages to employees $25,000
Purchase of inventory for cash $10,000
Sale of land for cash $140,000
Repayment of a bank loan (principal) $15,000
Payment of utilities $5,000 - ANS Operating:
Sale of inventory for cash (SOURCE)
Payment of wages to employees (USE)
Purchase of inventory for cash (USE)
Payment of Utilities (USE)
Financing:
Repayment of a bank loan (USE)
Purchase of a building for cash (USE)
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Sale of land for cash (SOURCE)
Sale of used plant equipment for cash (SOURCE)
Investing:
Nothing?
As of Dec. 31, 2013, a company had current assets of $600,000 and current liabilities of
$300,000. Sales of the company are expected to increase by 10 percent for each of the next two
years. If all current assets and current liability accounts increase proportionately with sales,
what would be the projected current ratio of the company on Dec. 31, 2015?
1.65
2.00
2.20
2.40 - ANS 2.00
Current Assets/Current Liabilities = Answer
A project has an initial cost of $18,000. The estimated net cash flows of the project are as
follows:
Year 1: $4000
Year 2: $4000
Year 3: $6000
Year 4: $8000
Year 5: $8000
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, What's the payback period?
3.0 Years
3.5 Years
3.75 Years
4.0 Years - ANS 3.5 Years
In between years 3 and 4 will the total amount put in "even out" the amount gained back (net
zero).
Below are some of the accounts that Company F has on their books:
Cash/Cash Equiv: $2000
Insurance Expense: $250
Accounts Payable: $800
Prepaid Rent: $400
Accounts Receivable: $750
Deferred Rev: $1,650
Inventory: $925
Which of the amounts below is the correct total of liabilities?
$2,450
$800
$1,650
$2,700 - ANS $2,450
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND ANSWERS. VERIFIED
2025/2026.
US GAAP: Put either into financing, operating, or investing activities:
Purchase of a building for cash $300,000
Sale of used plant equipment for cash $10,000
Sale of inventory for cash $18,000
Payment of wages to employees $25,000
Purchase of inventory for cash $10,000
Sale of land for cash $140,000
Repayment of a bank loan (principal) $15,000
Payment of utilities $5,000 - ANS Operating:
Sale of inventory for cash (SOURCE)
Payment of wages to employees (USE)
Purchase of inventory for cash (USE)
Payment of Utilities (USE)
Financing:
Repayment of a bank loan (USE)
Purchase of a building for cash (USE)
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Sale of land for cash (SOURCE)
Sale of used plant equipment for cash (SOURCE)
Investing:
Nothing?
As of Dec. 31, 2013, a company had current assets of $600,000 and current liabilities of
$300,000. Sales of the company are expected to increase by 10 percent for each of the next two
years. If all current assets and current liability accounts increase proportionately with sales,
what would be the projected current ratio of the company on Dec. 31, 2015?
1.65
2.00
2.20
2.40 - ANS 2.00
Current Assets/Current Liabilities = Answer
A project has an initial cost of $18,000. The estimated net cash flows of the project are as
follows:
Year 1: $4000
Year 2: $4000
Year 3: $6000
Year 4: $8000
Year 5: $8000
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, What's the payback period?
3.0 Years
3.5 Years
3.75 Years
4.0 Years - ANS 3.5 Years
In between years 3 and 4 will the total amount put in "even out" the amount gained back (net
zero).
Below are some of the accounts that Company F has on their books:
Cash/Cash Equiv: $2000
Insurance Expense: $250
Accounts Payable: $800
Prepaid Rent: $400
Accounts Receivable: $750
Deferred Rev: $1,650
Inventory: $925
Which of the amounts below is the correct total of liabilities?
$2,450
$800
$1,650
$2,700 - ANS $2,450
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
