Accounting for Managers
Exam Questions
Course Introduction
Accounting for Managers is designed to equip future leaders with a comprehensive understanding of accounting concepts crucial for effective decision-making within organizations. The course covers the fundamentals of financial and management accounting, focusing on the interpretation and analysis of financial statements, budgeting, cost control, and performance evaluation. Emphasis is placed on how accounting information can be leveraged for strategic planning, operational efficiency, and value creation. Real-world case studies and practical exercises encourage students to apply accounting principles in managerial contexts, fostering the analytical skills necessary to guide organizations toward their financial and operational objectives.
Recommended Textbook
Financial and Managerial Accounting 11th Edition by Carl S. Warren
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2679 Verified Questions
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Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) Collins Landscape Company purchased various landscaping supplies on account to be used for landscape designs for its customers. How will this business transaction affect the accounting equation?
Answer: Increase Assets (Supplies) and increase Liabilities (Accounts Payable)
Q2) There are four transactions that affect stockholders' equity.
(a) What are the two types of transactions that increase stockholders' equity?
(b) What are the two types of transactions that decrease stockholders' equity?
Answer: (a) Issue of capital stock and revenues
(b) Dividends and expenses
Q3) Which one of the following is the authoritative body in the United States having the primary responsibility for developing accounting principles?
A) FASB
B) IRS
C) SEC
D) AICPA
Answer: A
Q4) Give the major disadvantage of disregarding the cost concept and constantly revaluing assets based on appraisals and opinions.
Answer: Accounting reports would become unstable and unreliable.
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Chapter 2: Analyzing Transactions
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Sample Questions
Q1) If the two totals of a trial balance are not equal, it could be due to
A) failure to record a transaction
B) recording the same erroneous amount for both the debit and the credit parts of a transaction
C) an error in determining the account balances, such as a balance being incorrectly computed
D) recording the same transaction more than once
Answer: C
Q2) Journal entries can have more than two accounts as long as the debits equal the credits.
A)True
B)False
Answer: True
Q3) Prepare a journal entry on March 27 for the payment of $8,000 in dividends.
Answer: 11ea9299_7dce_128e_85c7_01882ae826fa_TB6235_00
Q4) Retained earnings will be reduced by the amount in the dividends account.
A)True
B)False
Answer: True
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Chapter 3: The Adjusting Process
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Sample Questions
Q1) Which of the following is an example of a prepaid expense?
A) Supplies
B) Accounts Receivable
C) Unearned Subscriptions
D) Unearned Fees
Answer: A
Q2) At the end of the current year, $3,700 fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.
Answer: 11ea9299_7dc3_63e5_85c7_f35e03c8b119_TB6235_00
Q3) The general term employed to indicate an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is
A) capital
B) deferral
C) accrual
D) inventory
Answer: C
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Page 5
Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) Which of the accounts below would be closed by posting a debit to the account?
A) Unearned Revenue
B) Fees Earned
C) Dividends
D) Miscellaneous Expense
Q2) Which of the following account groups are all considered nominal accounts?
A) Cash, Retained Earnings, Wages Payable
B) Prepaid Insurance, Property, Plant & Equipment, Fees Earned
C) Capital Stock, Dividends, Income Summary
D) Rent Revenue, Fees Earned, Miscellaneous Expense
Q3) Accrued taxes payable are generally reported on the balance sheet as a current liability.
A)True B)False
Q4) Office Equipment is an example of a current asset account. A)True B)False
Q5) Closing entries are entered directly on to the work sheet. A)True
B)False
6
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Chapter 5: Accounting for Merchandising Businesses
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Sample Questions
Q1) The seller records the sales tax as part of the sales amount.
A)True
B)False
Q2) When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.
A)True
B)False
Q3) In many retail businesses, inventory is the largest current asset.
A)True
B)False
Q4) The form of the balance sheet in which assets, liabilities, and stockholders' equity are presented in a downward sequence is called the report form.
A)True
B)False
Q5) Sales Discounts is a revenue account with a credit balance.
A)True
B)False
Q6) Based upon the following data, determine the cost of merchandise sold for August.
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Chapter 6: Inventories
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Sample Questions
Q1) The selection of an inventory costing method has no significant impact on the financial statements.
A)True
B)False
Q2) Ending inventory is made up of the oldest purchases when a company uses
A) first-in, first-out
B) last-in, first-out
C) average cost
D) retail method
Q3) If the cost of an item of inventory is $50 and the current replacement cost is $57, the amount included in inventory according to the lower of cost or market is
A) $7
B) $50
C) $57
D) $107
Q4) Safeguarding inventory from damage or theft is a primary objective for the control of inventory. If you were running a clothing store, name three specific controls you would implement to guard inventory from theft.
Q5) List three different security measures taken by stores to safeguard inventory.
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Chapter 7: Sarbanes-Oxley, Internal Control, and Cash
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Sample Questions
Q1) When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished.
A)True
B)False
Q2) A $150 petty cash fund has cash of $28 and receipts of $110. The journal entry to replenish the account would include a
A) credit to Petty Cash for $82.
B) debit to Cash for $110.
C) debit to Cash Over and Short for $12.
D) credit to Cash for $110
Q3) When a clerk enters a sale and the customer can see the amount displayed and is given a cash receipt, this is an example of a preventive control.
A)True B)False
Q4) In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.
A)True
B)False
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Chapter 8: Receivables
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Sample Questions
Q1) Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet.
A)True
B)False
Q2) Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables:
Feb 20 Received $500 from Andrew Warren and wrote off the remainder owed of $2,500 as uncollectible.
May 10 Reinstated the account of Andrew Warren and received $2,500 cash in full payment.
Q3) A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable
A) total current assets are reduced
B) total expenses for the period are increased
C) total current assets are reduced and total expenses are increased
D) there is no effect on total current assets or total expenses
Q4) Discuss the similarities and differences between accounts receivables, notes receivables and other receivables.
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Page 10
Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) A characteristic of a fixed asset is that it is
A) intangible
B) used in the operations of a business
C) held for sale in the ordinary course of the business
D) a long term investment
Q2) A gain can be realized when a fixed asset is discarded.
A)True
B)False
Q3) On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $30,000. What is the amount of the gain or loss on this transaction?
A) Gain of $30,000
B) Loss of $30,000
C) No gain or loss
D) Cannot be determined
Q4) A machine costing $57,000 with a 6-year life and $3,000 residual value was purchased January 2, 2011. Compute the yearly depreciation expense using straight-line depreciation.
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Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) When a borrower receives the face amount of a discounted note less interest, this amount is known as:
A) the note proceeds
B) the note discount
C) the note deferred interest
D) the note principal
Q2) The summary of the payroll for the monthly pay period ending July 15 indicated the following:
\(\begin{array}{ll}
\$ 125,000 & \text { Saless salaries } \\
32,300 & \text { Federal income tax withheld } \\
35,000 & \text { Office salaries } \\
7,370 & \text { Medical insurance withheld } \\
10,200 & \text { Social security tax withheld } \\
2,550 & \text { Medicare tax withheld }
\end{array}\) Journalize the entries to record (a) the payroll and (b) the employer's payroll tax expense for the month. The state unemployment tax rate is 3.1%, and the federal unemployment tax rate is 0.8%. Only $25,000 of salaries are subject to unemployment taxes.
Q3) List five internal controls that relate directly to payroll.
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Chapter 11: Corporations: Organization, Stock Transactions, and Dividends
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Sample Questions
Q1) A disadvantage of the corporate form of business entity is
A) mutual agency for stockholders
B) unlimited liability for stockholders
C) corporations are subject to more governmental regulations
D) the ease of transfer of ownership
Q2) The excess of issue price over par of common stock is termed a(n)
A) discount
B) income
C) deficit
D) premium
Q3) The amount of capital paid in by the stockholders of the corporation is called legal capital.
A)True
B)False
Q4) The primary purpose of a stock split is to
A) increase paid-in capital
B) reduce the market price of the stock per share
C) increase the market price of the stock per share
D) increase retained earnings
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Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) The balance in Discount on Bonds Payable
A) should be reported on the balance sheet as an asset because it has a debit balance
B) should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the interest method
C) would be added to the related bonds payable to determine the carrying amount of the bonds
D) would be subtracted from the related bonds payable on the balance sheet
Q2) The higher the times interest earned ratio, the better the creditors' protection.
A)True
B)False
Q3) The Reagan Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2011, at 95. The journal entry to record the issuance will show a
A) credit to Discount on Bonds Payable for $50,000.
B) debit to Cash of $1,000,000.
C) credit to Bonds Payable for $1,000,000.
D) credit to Cash for $950,000.
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Page 14
Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
A) $12,750 gain
B) $600 gain
C) $600 loss
D) $9,250 loss
Q2) The investor carrying an investment by the equity method records cash dividends received as an increase in the carrying amount of the investment.
A)True
B)False
Q3) Which of the following is not a reason to invest excess cash in temporary investments?
A) earn interest revenue
B) influence the operations of another company
C) receive dividends
D) realize gains from the increase in market value of the securities
Q4) Define (1) debt securities and (2) equity securities. Include their similarities and differences in your discussion.
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity and dividends.
A)True
B)False
Q2) Cash flow per share is
A) required to be reported on the balance sheet
B) required to be reported on the income statement
C) required to be reported on the statement of cash flows
D) not required to be reported on any statement
Q3) Financing activities include
A) lending money.
B) acquiring investments.
C) issuing debt.
D) acquiring long-lived assets.
Q4) Cash flows from investing activities, as part of the statement of cash flows, include receipts from the issuance of bonds payable.
A)True B)False
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) Which of the following below generally is the most useful in analyzing companies of different sizes
A) comparative statements
B) common-sized financial statements
C) price-level accounting
D) audit report
Q2) Under which of the following cases may a percentage change be computed?
A) There is no amount in the base year.
B) There is a negative amount in the base year and a negative amount in the subsequent year.
C) The trend of the amounts is decreasing but all amounts are positive.
D) There is a negative amount in the base year and a positive amount in the subsequent year.
Q3) Define solvency and profitability. How are they alike?
Q4) Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are
A) a substitute for sound judgment.
B) useful analytical measures.
C) enough information for analysis, industry information is not needed.
D) unnecessary for analysis, but reaction is better.
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