Accounting for Managers Final Exam
Course Introduction
Accounting for Managers is designed to equip future business leaders with essential financial literacy skills, focusing on the interpretation and use of accounting information for effective decision-making. This course covers the fundamentals of financial and managerial accounting, enabling students to analyze financial statements, understand cost behaviors, prepare and manage budgets, and utilize accounting data for planning, control, and performance evaluation. Through real-world case studies and practical exercises, participants learn to critically assess financial information and apply accounting concepts to support strategic and operational business decisions.
Recommended Textbook
Financial Statement Analysis 13th Edition by Charles H. Gibson
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Page 2
Chapter 1: Introduction to Financial Reporting
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Sample Questions
Q1) The comment that "items that are not material may be recorded in the financial statements in the most economical and expedient manner possible" is representative of:
A)matching.
B)conservatism.
C)realization.
D)materiality.
E)None of the answers are correct.
Answer: D
Q2) The 1933 and 1934 U.S.federal securities laws virtually gave the Securities and Exchange Commission (SEC)authority and responsibility for the development of generally accepted accounting principles.
A)True
B)False
Answer: True
Q3) The going concern assumption does not influence the classification of assets and liabilities.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Introduction to Financial Statements and Other Financial Reporting Topics
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Sample Questions
Q1) Sometimes financial statements are presented without an accompanying accountant's report.
A)True
B)False
Answer: True
Q2) The statement of cash flows consists of two sections: cash flows from operating activities and cash flows from financing activities.
A)True
B)False
Answer: False
Q3) The sequence of accounting procedures completed during each accounting period is called the accounting cycle.
A)True
B)False Answer: True
Q4) Most companies consolidate the parent's and subsidiary's accounts summed.
A)True
B)False
Answer: True
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Chapter 3: Balance Sheet
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Sample Questions
Q1) The principal financial statements are the balance sheet,income statement,and statement of cash flows.
A)True
B)False
Answer: True
Q2) Which of the following is a current liability?
A)Prepaid insurance
B)Retained earnings
C)Unearned rent revenue
D)Bonds payable
E)Common stock
Answer: C
Q3) All intangibles are amortized over their useful lives or their legal lives,whichever is shorter.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Income Statement
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Sample Questions
Q1) Which of the following would be classified as an extraordinary item on the income statement?
A)Loss on disposal of a segment of business
B)Cumulative effect of a change in accounting principle
C)A sale of land
D)An error correction that relates to a prior year
E)A loss from a flood in a location that would not be expected to flood
Q2) Which of the following is not a category within accumulated other comprehensive income?
A)Post retirement commitments on health plans
B)Foreign currency translation adjustments
C)Unrealized holding gains and losses on available-for-sale marketable securities
D)Changes to stockholders equity resulting from additional minimum pension liability adjustments
E)Unrealized gains and losses from derivative instruments
Q3) In practice,the income statement is frequently considered to be the least important financial statement.
A)True
B)False
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Page 6
Chapter 5: Basics of Analysis
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Sample Questions
Q1) A given ratio is always computed the same way,no matter what the source.
A)True
B)False
Q2) In financial statement analysis,ratios are:
A)the only type of analysis where industry data are available.
B)absolute numbers converted to a common base.
C)fractions usually expressed in percent or times.
D)the only indication of the financial position of the firm.
E)None of the answers are correct.
Q3) Denver Dynamics has net income of $2,000,000.Oakland Enterprises has net income of $2,500,000.Which of the following best compares the profitability of Denver and Oakland?
A)Oakland Enterprises is 25% more profitable than Denver Dynamics.
B)Oakland Enterprises is more profitable than Denver Dynamics,but the comparison can't be quantified.
C)Oakland Enterprises is only more profitable if it is smaller than Denver Dynamics.
D)Further information is needed for a reasonable comparison.
E)Oakland Enterprises is more profitable if it is a larger firm than Denver Dynamics.
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7
Chapter 6: Liquidity of Short-Term Assets;related
Debt-Paying Ability
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Sample Questions
Q1) Shaffer Company presents the following data for 2012. \(\begin{array}{lr}
\text { Net Sales, } 2012 & \$ 3,007,124 \\
\text { Net Sales, } 2011 & 93,247 \\
\text { Cost of Goods Sold, } 2012 & 2,000,326 \\
\text { Cost of Goods Sold, } 2011 & 1,000,120 \\
\text { Inventory, beginning of } 2012 & 341,165 \\
\text { Inventory, end of } 2012 & 376,526 \end{array}\)
The merchandise inventory turnover for 2012 is:
A)5.6.
B)15.6.
C)7.5.
D)7.7.
E)5.2.
Q2) Current assets are assets that (1)are in the form of cash, (2)will be realized in cash,or (3)conserve the use of cash within the operating cycle of a business or for one year,whichever is shorter.
A)True
B)False
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Chapter 7: Long-Term Debt-Paying Ability
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Q1) Equity earnings are excluded from earnings for the times interest earned coverage.
A)True
B)False
Q2) The balance sheet pension liability considers the projected benefit obligation.
A)True
B)False
Q3) A times interest earned ratio indicates that:
A)preferred stock has no maturity date.
B)the debt will never become due.
C)the firm will be able to repay the principal when due.
D)the principal can be refinanced.
E)none of the answers are correct.
Q4) In general,the profitability of a firm is not considered to be important in determining the short-term,debt-paying ability of the firm.
A)True
B)False
Q5) Repayment of a long-term bank loan would decrease the debt ratio.
A)True
B)False
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Chapter 8: Profitability
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Sample Questions
Q1) Sales to fixed assets will have the least meaning if assets are relatively new.
A)True
B)False
Q2) Common size
A)Full or partial statements expressed in percentages of a given base.
B)Requires full financial statements on a quarterly basis.
C)All statement figures are expressed as a percentage of a base figure from that year's statement.
D)A breakdown by major lines of business,only required in SEC reporting.
E)A breakdown by major lines of business.
F)All statement figures are expressed as a percentage of base-year figures.
G)Requires estimation of some expense items.
H)A comparison of financial data over time.
I)Visual aids to understanding financial data.
Q3) In order to compute gross profit margin,the income statement must be in single-step format.
A)True
B)False
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10
Chapter 9: For the Investor
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Sample Questions
Q1) Stock options do not require a cash outlay from the company,while stock appreciation rights often do require a cash outlay.
A)True
B)False
Q2) A disadvantage of interest expense over dividends is its tax deductibility.
A)True
B)False
Q3) Total earnings from securities include both dividends and price appreciation.
A)True
B)False
Q4) A firm might have a low dividend payout ratio if it were planning a major expansion.
A)True
B)False
Q5) The earnings per share is computed for:
A)common stock.
B)non-redeemable preferred.
C)redeemable preferred.
D)common stock and non-redeemable preferred stock.
E)common stock and fully diluted preferred stock.
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Chapter 10: Statement of Cash Flows
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Sample Questions
Q1) Only cash flow transactions are presented in the statement of cash flows,including supporting schedules.
A)True
B)False
Q2) Conroy Company had sales of $50,000,increase in accounts payable of $4,000,decrease in accounts receivable of $3,000,tax expense of $5,000,and an increase in taxes payable of $1,000.What was the cash outflow for taxes?
A)$54,000
B)$4,000
C)$6,000
D)$53,000
E)$45,000
Q3) Which of the following accounts will not be considered when computing cash flow from operations?
A)Accounts receivable
B)Inventories
C)Equipment
D)Accounts payable
E)Taxes payable
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Page 12
Chapter 11: Expanded Analysis
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Sample Questions
Q1) In general,controllers rate profitability ratios to have a higher significance than debt ratios.
A)True
B)False
Q2) Which of the following ratios is a primary measure of liquidity according to the corporate controller survey?
A)Earnings per Share
B)Debt/Equity Ratio
C)Return on Equity after Tax
D)Current Ratio
E)None of the answers are correct
Q3) Which of the following depreciation methods is considered to be the least conservative?
A)Sum-of-the-Years' Digits
B)Declining-Balance Method
C)Straight-Line
D)each method is equally conservative
E)Sum-of-the-Years' Digits and Declining-Balance Method are equally conservative
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13
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Sample Questions
Q1) For a regulated electric utility,the account allowance for equity funds used during construction represents the cost of borrowed funds that are used for construction.
A)True
B)False
Q2) Generally accepted accounting principles for insurance companies developed much sooner than statutory accounting practices.
A)True
B)False
Q3) The provision for loan losses for a bank is the same as the allowance for doubtful accounts.
A)True
B)False
Q4) The principal asset of a bank is property and equipment.
A)True
B)False
Q5) Interest margin is the spread between interest income and net income for a bank. A)True
B)False
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Chapter 13: Personal Financial Statements and Accounting
for Governments and Not-For-Profit Organizations
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Q1) Which of the following would not be a source of information for personal financial statements?
A)Broker's statements
B)Income tax returns
C)Safe deposit box
D)Checkbook
E)All of the answers would be a source of information.
Q2) The principal of these funds must remain intact.Typically,revenues earned may be distributed.
A)Appropriations
B)Debt service
C)Capital projects
D)Special assessments
E)Internal services
F)Enterprises
G)Proprietary funds
H)General fund
I)Fiduciary funds
J)Encumbrances
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