MBA Accounting 2

Question 1

A company's current ratio is calculated as:

Accepted Answer

Current Assets / Current Liabilities

Answer

The current ratio measures short-term liquidity by dividing current assets by current liabilities, indicating a company's ability to meet near-term obligations.

Question 2

Which of the following best describes accrual-basis accounting?

Accepted Answer

Recognizing revenues when earned and expenses when incurred, regardless of cash flow

Answer

Accrual accounting recognizes revenues when they are earned and expenses when they are incurred, independent of when cash actually changes hands.

Question 3

The abbreviation EBITDA stands for:

Accepted Answer

Earnings Before Interest, Taxes, Depreciation, and Amortization

Answer

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, a widely used measure of core operating performance.

Question 4

Which financial ratio measures how efficiently a company collects payments from its credit customers?

Accepted Answer

Accounts Receivable Turnover Ratio

Answer

Accounts Receivable Turnover measures how many times per period a company collects its average accounts receivable balance, indicating collection efficiency.

Question 5

Goodwill appearing on a company's balance sheet represents:

Accepted Answer

The amount paid over the fair value of net identifiable assets in an acquisition

Answer

Goodwill is an intangible asset recorded when a buyer pays more than the fair value of a target's net identifiable assets during a business acquisition.

MBA - Degree Master of Business Administration Practice Test

MBA - Degree Master of Business Administration Practice Test

MBA Accounting 2