BU.920.602
Accounting Foundations
Midterms (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following financial statements provides a
snapshot of a company's financial position at a specific point in
time?
- A. Income Statement
- B. Balance Sheet
- C. Statement of Cash Flows
- D. Statement of Retained Earnings
- ANS: B. Balance Sheet
- Rationale: The balance sheet provides a snapshot of a
company's financial position, including assets, liabilities, and
equity, at a specific point in time.
2. What is the primary purpose of the Statement of Cash Flows?
- A. To show the company's profitability
- B. To provide information about the company's cash receipts
and payments
- C. To summarize the company's financial position
- D. To report changes in the company's equity
- ANS: B. To provide information about the company's cash
receipts and payments
©2024/2025
, - Rationale: The Statement of Cash Flows provides
information about the cash inflows and outflows from operating,
investing, and financing activities.
3. Which accounting principle requires that expenses be matched
with revenues in the period in which they are incurred?
- A. Revenue Recognition Principle
- B. Matching Principle
- C. Historical Cost Principle
- D. Full Disclosure Principle
- ANS: B. Matching Principle
- Rationale: The matching principle requires that expenses be
matched with the revenues they help to generate in the same
accounting period.
Fill-in-the-Blank Questions
4. The accounting equation is __________ = Liabilities +
Equity.
- ANS: Assets
- Rationale: The accounting equation states that assets are
equal to liabilities plus equity, forming the foundation of double-
entry bookkeeping.
©2024/2025
, 5. The process of allocating the cost of a tangible fixed asset
over its useful life is called __________.
- ANS: Depreciation
- Rationale: Depreciation is the process of allocating the cost
of a tangible fixed asset over its useful life.
True/False Questions
6. True or False: Accrual accounting recognizes revenues and
expenses when they are earned or incurred, regardless of when
cash is received or paid.
- ANS: True
- Rationale: Accrual accounting recognizes revenues and
expenses when they are earned or incurred, not necessarily when
cash is received or paid.
7. True or False: The historical cost principle requires that assets
be recorded at their current market value.
- ANS: False
- Rationale: The historical cost principle requires that assets
be recorded at their original cost, not their current market value.
©2024/2025
Accounting Foundations
Midterms (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following financial statements provides a
snapshot of a company's financial position at a specific point in
time?
- A. Income Statement
- B. Balance Sheet
- C. Statement of Cash Flows
- D. Statement of Retained Earnings
- ANS: B. Balance Sheet
- Rationale: The balance sheet provides a snapshot of a
company's financial position, including assets, liabilities, and
equity, at a specific point in time.
2. What is the primary purpose of the Statement of Cash Flows?
- A. To show the company's profitability
- B. To provide information about the company's cash receipts
and payments
- C. To summarize the company's financial position
- D. To report changes in the company's equity
- ANS: B. To provide information about the company's cash
receipts and payments
©2024/2025
, - Rationale: The Statement of Cash Flows provides
information about the cash inflows and outflows from operating,
investing, and financing activities.
3. Which accounting principle requires that expenses be matched
with revenues in the period in which they are incurred?
- A. Revenue Recognition Principle
- B. Matching Principle
- C. Historical Cost Principle
- D. Full Disclosure Principle
- ANS: B. Matching Principle
- Rationale: The matching principle requires that expenses be
matched with the revenues they help to generate in the same
accounting period.
Fill-in-the-Blank Questions
4. The accounting equation is __________ = Liabilities +
Equity.
- ANS: Assets
- Rationale: The accounting equation states that assets are
equal to liabilities plus equity, forming the foundation of double-
entry bookkeeping.
©2024/2025
, 5. The process of allocating the cost of a tangible fixed asset
over its useful life is called __________.
- ANS: Depreciation
- Rationale: Depreciation is the process of allocating the cost
of a tangible fixed asset over its useful life.
True/False Questions
6. True or False: Accrual accounting recognizes revenues and
expenses when they are earned or incurred, regardless of when
cash is received or paid.
- ANS: True
- Rationale: Accrual accounting recognizes revenues and
expenses when they are earned or incurred, not necessarily when
cash is received or paid.
7. True or False: The historical cost principle requires that assets
be recorded at their current market value.
- ANS: False
- Rationale: The historical cost principle requires that assets
be recorded at their original cost, not their current market value.
©2024/2025
