HBX Financial Accounting Exam | Verified Exam Questions and Answers
| Latest Updated Study Material 2026
Question:
Return on equity (ROE)
Answer:
= NET INCOME / OWNER'S EQUITY
Question:
Dupont Framework ----- ROE
Answer:
= PROFITABILITY x
EFFICIENCY x LEVERAGE
Question:
ASSETS (Formula) =
Answer:
--- LIABILITIES + OWNER'S EQUITY
Question:
Owners' Equity (Formula) =
Answer:
--- Assets - Liabilities.
Question:
Essentially, owners' equity is the difference between what a business has and what a business
owes to others
The Matching Principle
Answer:
---- Requires that a company match its
expenses to the related revenues in the accounting period to which they relate
Question:
FASB : Financial Accounting Standards Board
,Answer:
---- Accounting
standards used by many countries throughout the world
Question:
GAAP: Generally Accepted Accounting Principles
Answer:
---- Accounting
standards used primarily within the United States
Question:
Conservatism Principle
Answer:
--- Requires that you record expenses or
losses when they are probable but only record gains or revenue when they are realized (turned
into cash or cash equivalents or good receivables).
Question:
Conservatism Principle
Answer:
--- Anticipate and record "FUTURE
LOSSES" but don't anticipate and record future gains.
Question:
Relevance Principle
Answer:
Information useful and also capable of
influencing the decision of the user of the financial statement.
Question:
Reliability Principle
Answer:
Information faithfully represents the
underlying economics information.
, Question:
VALID - VERIFIABLE - UNBIASED
(knowing the source)
Historical cost Principle
Answer:
Transactions are recorded at the actual
price or cost that existed at the time the transaction occurred.
Question:
Accrual Accounting characteristics
Answer:
Records revenue and
expenses when they are incurred regardless of when cash is exchanged.
Question:
Revenue recognized when the merchandise is delivered.
Recognize revenue when they're earned and realizable, not necessarily when we receive cash.
Accrual Accounting concept
Answer:
means that transactions are
recorded in the period to which they relate, regardless of when cash is exchanged.
Question:
Cash - Accounting Methods
Answer:
Transactions are recorded when
cash change hands.
Question:
Consistency Principle
Answer:
Doing things in the same way from one
period to the next.
| Latest Updated Study Material 2026
Question:
Return on equity (ROE)
Answer:
= NET INCOME / OWNER'S EQUITY
Question:
Dupont Framework ----- ROE
Answer:
= PROFITABILITY x
EFFICIENCY x LEVERAGE
Question:
ASSETS (Formula) =
Answer:
--- LIABILITIES + OWNER'S EQUITY
Question:
Owners' Equity (Formula) =
Answer:
--- Assets - Liabilities.
Question:
Essentially, owners' equity is the difference between what a business has and what a business
owes to others
The Matching Principle
Answer:
---- Requires that a company match its
expenses to the related revenues in the accounting period to which they relate
Question:
FASB : Financial Accounting Standards Board
,Answer:
---- Accounting
standards used by many countries throughout the world
Question:
GAAP: Generally Accepted Accounting Principles
Answer:
---- Accounting
standards used primarily within the United States
Question:
Conservatism Principle
Answer:
--- Requires that you record expenses or
losses when they are probable but only record gains or revenue when they are realized (turned
into cash or cash equivalents or good receivables).
Question:
Conservatism Principle
Answer:
--- Anticipate and record "FUTURE
LOSSES" but don't anticipate and record future gains.
Question:
Relevance Principle
Answer:
Information useful and also capable of
influencing the decision of the user of the financial statement.
Question:
Reliability Principle
Answer:
Information faithfully represents the
underlying economics information.
, Question:
VALID - VERIFIABLE - UNBIASED
(knowing the source)
Historical cost Principle
Answer:
Transactions are recorded at the actual
price or cost that existed at the time the transaction occurred.
Question:
Accrual Accounting characteristics
Answer:
Records revenue and
expenses when they are incurred regardless of when cash is exchanged.
Question:
Revenue recognized when the merchandise is delivered.
Recognize revenue when they're earned and realizable, not necessarily when we receive cash.
Accrual Accounting concept
Answer:
means that transactions are
recorded in the period to which they relate, regardless of when cash is exchanged.
Question:
Cash - Accounting Methods
Answer:
Transactions are recorded when
cash change hands.
Question:
Consistency Principle
Answer:
Doing things in the same way from one
period to the next.
