Accounting and Finance for Managers Exam Bank
Course Introduction
Accounting and Finance for Managers provides an essential foundation in the principles and practices of accounting and financial management tailored for decision-makers and business leaders. The course introduces key concepts such as financial statement analysis, budgeting, management accounting, cost control, investment appraisal, and financial planning. It emphasizes the interpretation and use of financial data to inform strategic and operational decisions, enabling managers to evaluate organizational performance, allocate resources efficiently, and support long-term growth. Through case studies and practical exercises, students develop the skills necessary to communicate financial information and apply financial reasoning to real-world business challenges.
Recommended Textbook
Introduction to Management Accounting 16th Edition by Charles T. Horngren
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Page 2
Chapter 1: Managerial Accounting,the Business
Organization,and Professional Ethics
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Sample Questions
Q1) If an employee observes unethical behavior in an organization,the employee is first obligated to ________.
A) report the behavior to the police
B) report the behavior to his or her supervisor
C) report the behavior to the Securities and Exchange Commission
D) follow the company's policies for unethical behavior
Answer: D
Q2) Specialization by individuals in organizations is being replaced by decision-making by cross-functional teams.
A)True
B)False
Answer: True
Q3) The controller is primarily concerned with a company's financial matters and the treasurer is concerned with a company's operating matters.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Introduction to Cost Behavior and Cost Volume
Profit Relationships
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Sample Questions
Q1) Which of the following costs is a fixed cost?
A) cost of dairy ingredients used to produce ice cream
B) depreciation expense on factory building
C) fuel used by delivery trucks
D) labor wages of workers who mix dairy ingredients to make ice cream
Answer: B
Q2) Benjamin Company has the following information available: \(\begin{array}{ll}
\text { Income tax rate } & 30 \% \\
\text { Selling price per unit } & \$ 5.00 \\
\text { Variable cost per unit } & \$ 3.00\\
\text { Total fixed costs }&\$90,000.00 \end{array}\)
If Benjamin Company wants a targeted after-tax net income of $14,000,how many units must be sold?
A) 45,000
B) 52,000
C) 55,000
D) 60,000
Answer: C
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Chapter 3: Measurement of Cost Behavior
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Sample Questions
Q1) A disadvantage of engineering analysis which is used to estimate cost functions is
A) it fails to produce a cost function
B) it is a costly process
C) it is not acceptable under Generally Accepted Accounting Principles
D) it cannot be used with mixed costs
Answer: B
Q2) Which statement regarding fixed costs is TRUE?
A) Discretionary fixed costs preserve management's flexibility.
B) Committed fixed costs preserve management's flexibility.
C) Both discretionary and committed fixed costs preserve management's flexibility.
D) Discretionary fixed costs limit management's flexibility.
Answer: A
Q3) In a linear cost function estimated by regression analysis,the constant or intercept measures variable cost per unit of the cost driver.
A)True
B)False
Answer: False
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Chapter 4: Cost Management Systems and Activity-Based
Costing
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Sample Questions
Q1) When using a two stage activity-based costing system,which of the following is NOT a legitimate step?
A) Identify a cost pool for each significant activity.
B) Assign the indirect resource cost to the appropriate cost pool.
C) Allocate the costs in each pool to products or services using multiple cost drivers.
D) Select an allocation base for each cost pool.
Q2) The process of collecting costs by some natural classification is called ________.
A) cost accounting
B) cost allocation
C) cost accumulation
D) cost assignment
Q3) Which of the following is NOT an example of indirect production costs?
A) factory supplies
B) depreciation expense on factory building
C) depreciation expense on office equipment in corporate headquarters
D) wages of material handlers in factory
Q4) List and explain five reasons why more firms are adopting activity-based costing systems.
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Chapter 5: Relevant Information for Decision Making With a
Focus on Pricing Decisions
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Q1) On the income statement,the absorption approach separates manufacturing costs from ________.
A) some nonmanufacturing costs
B) all nonmanufacturing costs
C) all variable costs
D) all fixed costs
Q2) If a small price increase causes large volume declines,demand is highly inelastic.
A)True
B)False
Q3) The absorption approach to the income statement emphasizes the distinction between fixed and variable costs.
A)True
B)False
Q4) Precise but irrelevant information is worthless for decision making.
A)True
B)False
Q5) Markup is the amount by which cost exceeds price.
A)True
B)False
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Chapter 6: Relevant Information for Decision Making With a
Focus on Operational Decisions
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Sample Questions
Q1) Sunk cost is used to describe a historical cost or past cost.
A)True
B)False
Q2) Generally,companies use aggregate measures of performance when conducting performance evaluations of managers.
A)True
B)False
Q3) Joint products should be processed beyond the split-off point if ________.
A) sale of the products are guaranteed
B) additional revenue from further processing exceeds additional expenses from further processing
C) additional revenue from further processing exceeds the joint costs
D) the marginal revenue of the joint products before the split-off point exceeds the marginal cost of the joint products
Q4) Heating and air conditioning costs are examples of common costs to the different departments in a retail store.
A)True
B)False
Page 8
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Chapter 7: Introduction to Budgets and Preparing the Master Budget
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Sample Questions
Q1) Mary Company has the following information: \(\begin{array}{ll}\text { Month }&\text { Budgeted Purchases }\\
\text { January } & \$ 26,800 \\
\text { February } & 29,000 \\
\text { March } & 30,520 \\
\text { April } & 29,480 \\
\text { May } & 27,680
\end{array}\)
Purchases are paid as follows:
10% in the month of purchase
50% one month after purchase
40% two months after purchase
A) $14,740
B) $17,508
C) $26,948
D) $29,716
Q2) Managers may lie to increase the resources allocated to their departments. A)True B)False
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Chapter 8: Flexible Budgets and Variance Analysis
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Sample Questions
Q1) A favorable expense variance is when budgeted expenses are less than actual expenses.
A)True
B)False
Q2) ......
Q3) In a manufacturing area of a firm,poor product design and problems with the quality of materials will,more than likely,result in a(n)________ variance or ________ variance.
A) unfavorable material efficiency; unfavorable labor usage
B) favorable material efficiency; unfavorable labor price
C) unfavorable material price; unfavorable labor rate
D) unfavorable material price; unfavorable labor usage
Q4) The variable overhead spending variance combines ________ and ________ effects.
A) price; quantity
B) price; efficiency
C) efficiency; sales activity
D) rate; sales activity
Q5) Perfection standards and ideal standards are different.
A)True
B)False
Page 10
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Chapter 9: Management Control Systems and Responsibility Accounting
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Sample Questions
Q1) ________ are characteristics or attributes that managers must achieve to drive the organization toward its goals.
A) Nonfinancial performance measures
B) Targets
C) Key success factors
D) Objectives
Q2) The financial performance of a segment manager is evaluated by ________.
A) contribution margin of segment
B) contribution margin of segment less fixed costs controllable by others
C) contribution margin of segment less fixed costs controllable by segment manager
D) contribution by segment
Q3) The traditional approach to quality control in the United States was to ________.
A) inspect products upon completion and reject or rework the defective products
B) prevent defects before they occur
C) set tolerance standards of zero defects
D) emphasize customer satisfaction over product quality
Q4) Describe a balanced scorecard and identify the categories of key performance indicators advocated by Kaplan and Norton.
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Chapter 10: Management Control in Decentralized Organizations
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Q1) Julie Company's revenues for the year are $300 and average invested capital for the year is $240.Expenses are currently 50% of revenues.Julie Company's current return on investment is ________.
A) 50%
B) 62.5%
C) 80%
D) 100%
Q2) Performance-based rewards can be monetary or nonmonetary.
A)True
B)False
Q3) ABC Division is in the United States with high income tax rates.ABC Division produces a component for the Spain Division in a low income-tax-rate country.What transfer price should ABC Division set for the component sold to the Spain Division to minimize taxes?
A) ABC Division should set a high transfer price to maximize profits.
B) ABC Division should set a low transfer price to maximize profits.
C) ABC Division should set a high transfer price to minimize taxes.
D) ABC Division should set a low transfer price to minimize taxes.
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Page 12
Chapter 11: Capital Budgeting
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Q1) The use of accelerated depreciation for tax purposes will generally produce a present value of tax savings from depreciation expense that is ________.
A) less than the present value of tax savings provided by straight-line depreciation
B) greater than the present value of tax savings provided by straight-line depreciation
C) the same as the present value of tax savings provided by straight-line depreciation
D) less than the present value of tax savings provided by other depreciation methods
Q2) When using the net present value method,if the net present value of a project is negative,then the ________.
A) the project should be rejected
B) the project should be accepted
C) the project should be recalculated for missing cash inflows
D) none of the above
Q3) Discounted-cash-flow models do not focus on net income.
A)True
B)False
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Chapter 12: Cost Allocation
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Sample Questions
Q1) Service departments in organizations exist to support ________.
A) other service departments and customers only
B) producing departments and suppliers only
C) other service departments, producing departments and customers
D) producing departments and customers only
Q2) The Computer Department in a large company provides services to many departments.The cost driver for costs in the Computer Department is the number of computer hours.When allocating variable costs of the Computer Department to a user department,which of the following formulas is used?
A) actual computer hours used × (total budgeted variable costs of Computer Department / total budgeted computer hours of Computer Department)
B) budgeted computer hours to be used × (total budgeted variable costs of Computer Department/ total budgeted computer hours of Computer Department)
C) actual computer hours used × (total actual variable costs of Computer Department/ total actual computer hours of Computer Department)
D) budgeted computer hours to be used × (total actual variable costs of Computer Department/ total budgeted computer hours of Computer Department)
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Page 14
Chapter 13: Accounting for Overhead Costs
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Q1) Stanley Company applies overhead based on machine hours.The following data was available:
\[\begin{array} { l l }
\text { Budgeted factory overhead costs}&\$280,000 \\
\text {Budgeted machine hours }&\$20,000 \\
\text {Actual factory overhead costs }&\$292,000 \\
\text {Actual machine hours }&\$19,050 \\
\text {Cost of goods sold }&\$560,000 \\
\text { Direct materials inventory, ending balance }&\$ 60,000\\
\text {Work-in-process inventory, ending balance }&\$190,000 \\
\text { Finished goods inventory, ending balance}&\$ 250,000\\ \end{array}\]
Required:
A) Compute the budgeted factory overhead rate.
B) Compute the underapplied or overapplied factory overhead.
C) Under the immediate write-off approach to overhead variances, how would you dispose of the overhead variance?
D) If the immediate write-off approach to overhead variances is not used, how would you dispose of the overhead variance?
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15
Chapter 14: Job-Order Costing and Process-Costing Systems
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Sample Questions
Q1) The manufacturing costs of the Assembly Department for the month of July are as follows:
\(\begin{array} { l }
\text { Direct materials added}&\$220,000 \\
\text { Direct labor costs added}&\$ 190,000\\
\text {Factory overhead costs applied }&\$140,000 \\ \end{array}\)
The company uses a process costing system.At July 31,the cost of the goods completed and transferred to the Finishing Department was $563,000.
Required:
A) Prepare summary journal entries for the use of direct materials, direct labor and factory overhead.
B) Prepare a journal entry for the transfer of completed goods.
Q2) Managers need to know program costs to make ongoing decisions such as which programs to emphasize or deemphasize and the pricing of programs.
A)True B)False
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Chapter 15: Basic Accounting: Concepts, techniques, and Conventions
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Sample Questions
Q1) The excess of revenues over expenses is called a net profit.
A)True
B)False
Q2) Nicholson Company sold inventory costing $1,000 for $3,000 on account.Nicholson Company operates under the accrual basis.What effect will the transaction have on the liabilities and owners' equity of the company?
A) liabilities will decrease by $2,000
B) liabilities will increase by $2,000
C) owners' equity will increase by $2,000
D) owners' equity will increase by $3,000
Q3) An example of an implicit transaction is cash received on account. A)True
B)False
Q4) When a company purchases inventory for cash,the net effect on the amount of total assets is zero.
A)True B)False
Q5) Accounting information only helps assess past financial performance.
A)True
B)False
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Chapter 16: Understanding Corporate Annual Reports: Basic Financial Statements
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Q1) Details about Property,Plant and Equipment,such as the age of plant assets and the types of plant assets,are typically reported ________.
A) on the balance sheet
B) on the income statement
C) on the statement of cash flows
D) in a footnote
Q2) The Allowance for Bad Debts account is added to the Accounts Receivable account on the balance sheet.
A)True
B)False
Q3) Which of the following events do NOT affect cash flows from operating activities? Assume the direct method is used.
A) cash sale of merchandise inventory
B) cash purchase of equipment
C) cash purchase of inventory
D) cash paid for employees' wages
Q4) The account Unearned Revenue is a revenue account.
A)True
B)False
18
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Chapter 17: Understanding and Analyzing Consolidated Financial Statements
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Q1) Robert Company acquired 40% of the voting stock of Boulder Company for $40 million.At the end of Year 1,Boulder Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Robert Company's investment in Boulder Company is $44 million.What accounts on Robert Company's books would be affected by the net income of Boulder Company?
A) none
B) Investments increase $15 million and Investment Revenue increases $15 million
C) Cash increases $15 million and Investment Revenue increases $15 million
D) Investments increase $6 million and Investment Revenue increases $6 million
Q2) Randall Company acquired 40% of the voting stock of Boulder Company for $40 million.At the end of Year 1,Boulder Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Randall Company's investment in Boulder Company is $44 million.What accounts on Randall Company's books would be affected by the dividends of Boulder Company?
A) none
B) Cash increase $2 million and Investment Revenue increases $2 million
C) Cash increase $5 million and Investment Revenue increases $5 million
D) Cash increase $2 million and Investments decrease $2 million
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