HBX Accounting Exam | Verified Exam Questions and Answers | Latest
Updated Study Material 2026
Question:
Accounting Equation
Answer:
Assets = Liabilities + Owner's Equity
Question:
Assets
Answer:
resources owned or controlled by an entity that will
produce benefits in the future.
Question:
Be purchased at a cost that is measurable
Produce probable economic benefit in the future
Result from a past event
Be owned or controlled by the entity
Liabilities
Answer:
obligations to pay a third party for resources provided
to an entity.
Question:
It must impose a probable economic obligation on economic resources in the future
The obligation has to be to another entity
The event that created the obligation must have occurred in the past
Owners' equity
Answer:
funds contributed by owners as well as profits
generated by the business
,Question:
Revenue
Answer:
money that a business receives from providing goods
or services to a customer
Question:
Expenses
Answer:
the costs associated with providing goods or services
to a customer
Question:
Matching principle
Answer:
requires that a company match its expenses
to the related revenues in the accounting period to which they relate
Question:
Is Deferred revenue an asset or a liability?
Answer:
Liability
Question:
Is Prepaid expense an asset or a liability?
Answer:
Asset
Question:
Conservatism
Answer:
require that businesses choose measurement
methods that anticipate and record future losses but don't anticipate and record future gains;
meant to keep business managers from using their discretion to report overly favorable financial
results;
, Question:
Relevance
Answer:
information is useful and also capable of influencing
the decision of the users of the financial statement
Question:
Reliability
Answer:
information faithfully represents the underlying
economics; 1) info is valid 2) info is verifiable 3) info is unbiased
Question:
Historical Cost
Answer:
transactions are recorded at the actual price that
existed at the time of the transaction
Question:
Consistency
Answer:
managers make consistent accounting choices and
estimates over time
Question:
Materiality
Answer:
trivial matters don't have to be recorded or reported
in detail in the financial statement
Question:
Entity concept
Answer:
only the business that belongs to the business
should be reported in the financial statement of a firm (example of abuse of this concept is
Enron)
Updated Study Material 2026
Question:
Accounting Equation
Answer:
Assets = Liabilities + Owner's Equity
Question:
Assets
Answer:
resources owned or controlled by an entity that will
produce benefits in the future.
Question:
Be purchased at a cost that is measurable
Produce probable economic benefit in the future
Result from a past event
Be owned or controlled by the entity
Liabilities
Answer:
obligations to pay a third party for resources provided
to an entity.
Question:
It must impose a probable economic obligation on economic resources in the future
The obligation has to be to another entity
The event that created the obligation must have occurred in the past
Owners' equity
Answer:
funds contributed by owners as well as profits
generated by the business
,Question:
Revenue
Answer:
money that a business receives from providing goods
or services to a customer
Question:
Expenses
Answer:
the costs associated with providing goods or services
to a customer
Question:
Matching principle
Answer:
requires that a company match its expenses
to the related revenues in the accounting period to which they relate
Question:
Is Deferred revenue an asset or a liability?
Answer:
Liability
Question:
Is Prepaid expense an asset or a liability?
Answer:
Asset
Question:
Conservatism
Answer:
require that businesses choose measurement
methods that anticipate and record future losses but don't anticipate and record future gains;
meant to keep business managers from using their discretion to report overly favorable financial
results;
, Question:
Relevance
Answer:
information is useful and also capable of influencing
the decision of the users of the financial statement
Question:
Reliability
Answer:
information faithfully represents the underlying
economics; 1) info is valid 2) info is verifiable 3) info is unbiased
Question:
Historical Cost
Answer:
transactions are recorded at the actual price that
existed at the time of the transaction
Question:
Consistency
Answer:
managers make consistent accounting choices and
estimates over time
Question:
Materiality
Answer:
trivial matters don't have to be recorded or reported
in detail in the financial statement
Question:
Entity concept
Answer:
only the business that belongs to the business
should be reported in the financial statement of a firm (example of abuse of this concept is
Enron)
