Accounting for Managers Practice Questions
Course Introduction
Accounting for Managers introduces non-accounting professionals to the fundamental concepts and tools of financial and managerial accounting. The course emphasizes the interpretation and use of accounting information for managerial decision-making, planning, and control. Topics include financial statement analysis, cost behavior, budgeting, performance evaluation, and the use of accounting data in strategic decisions. Through case studies and practical exercises, students develop the skills necessary to effectively communicate with accounting professionals and utilize accounting information to support organizational goals.
Recommended Textbook
Corporate Financial Accounting 13th Edition by Carl Warren
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15 Chapters
2586 Verified Questions
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Page 2
Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) Which of the following is not a business transaction?
A)make a sales offer
B)sell goods for cash
C)receive cash for services to be rendered later
D)pay for supplies
Answer: A
Q2) Darnell Company purchased $88,000 of computer equipment from Joseph Company.Darnell Company paid for the equipment using cash that had been obtained from the initial investment by Donnie Darnell.
Which entity or entities Darnell Company,Joseph Company,and Donnie Darnell should record the transaction involving the computer equipment on their accounting records?
Answer: Darnell Company and Joseph Company
Q3) The balance sheet represents the accounting equation.
A)True
B)False
Answer: True
Q4) Determine the total assets at the end of the current year for Scott Industries.
Answer: $110,000 $30,000 Cash + $14,000 Accounts receivable + $64,000 Equipment + $2,000 Prepaid rent = $110,000
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Chapter 2: Analyzing Transactions
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Sample Questions
Q1) Which of the following statements is not true about liabilities?
A)Liabilities are debts owed to outsiders.
B)Account titles of liabilities often include the term "payable."
C)Cash received before a service is performed creates a liability.
D)Liabilities do not include wages owed to employees of the company.
Answer: D
Q2) Which of the following accounts is a stockholders' equity account?
A)Cash
B)Accounts Payable
C)Prepaid Insurance
D)Common Stock
Answer: D
Q3) The payment for the monthly rent will require which of the following entries?
A)debit Cash and debit Rent Expense
B)credit Cash and credit Rent Expense
C)debit Rent Expense and credit Cash
D)credit Rent Expense and debit Cash
Answer: C
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4
Chapter 3: The Adjusting Process
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Sample Questions
Q1) Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.
A)True
B)False
Answer: True
Q2) The updating of accounts is called the adjusting process.
A)True
B)False
Answer: True
Q3) Which of the accounting steps in the accounting process below would be completed last?
A)preparing the adjusted trial balance
B)posting
C)preparing the financial statements
D)journalizing
Answer: C
Q4) Adjusting journal entries are dated on the last day of the period.
A)True
B)False
Answer: True
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Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) The trial balance may be listed on the work sheet instead of being prepared separately.
A)True
B)False
Q2) The entry to close Income Summary would be
A)debit Common Stock,$50,000; credit Income Summary,$50,000
B)debit Income Summary,$155,000; credit Common Stock,$155,000
C)debit Income Summary,$50,000; credit Retained Earnings,$50,000
D)debit Common Stock,$9,000; credit Income Summary,$9,000
Q3) On the income statement,miscellaneous expenses are usually presented as the last item without regard to the dollar amount.
A)True
B)False
Q4) If end-of-period spreadsheets are not considered part of the formal accounting records,then why are they used?
Q5) The post-closing trial balance will generally have fewer accounts than the trial balance.
A)True
B)False
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Chapter 5: Accounting for Merchandising Businesses
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Sample Questions
Q1) Merchandise is ordered on November 10; the merchandise is shipped by the seller and the invoice is prepared,dated,and mailed by the seller on November 13; the merchandise is received by the buyer on November 18; the entry is made in the buyer's accounts on November 20.The credit period begins with what date?
A)November 10
B)November 13
C)November 18
D)November 20
Q2) ?If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,the terms are
A)n/30
B)FOB shipping point
C)FOB destination
D)consigned
Q3) 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
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Chapter 6: Inventories
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Sample Questions
Q1) One negative effect of carrying too much inventory is risk that customers will change their buying habits.
A)True
B)False
Q2) It's not unusual for large companies to use different inventory costing methods for different segments of its inventory.
A)True
B)False
Q3) In valuing merchandise for inventory purposes,net realizable value is the estimated selling price less any direct costs of disposal.
A)True
B)False
Q4) What is the amount of cost of merchandise sold for the year according to the LIFO method?
A)$1,380
B)$1,375
C)$1,510
D)$1,250
Q5) List three different security measures taken to safeguard inventory.
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Chapter 7: Sarbanes-Oxley,internal Control,and Cash
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Sample Questions
Q1) A check outstanding for two consecutive months will appear only on the first month's bank reconciliation.
A)True
B)False
Q2) The ratio of cash to monthly cash expenses includes both cash and cash equivalents in the numerator.
A)True
B)False
Q3) A voucher system is an example of an internal control procedure over cash payments.
A)True
B)False
Q4) Which of the following items that appeared on the bank reconciliation did not require a journal entry?
A)bank service charges
B)deposits in transit
C)NSF checks
D)a check for $630,recorded in the check register for $360
Q5) Why would a bank require a company to maintain a compensating balance?
Page 9
Q6) List the principal advantages of electronic funds transfers.
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Chapter 8: Receivables
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Sample Questions
Q1) The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivables are uncollectible.The Allowance for Doubtful Accounts has a debit balance of $110.The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:
A)$110
B)$640
C)$530
D)$750
Q2) The direct writeoff method records bad debt expense when an account is determined to be uncollectible.
A)True
B)False
Q3) Discount Mart utilizes the allowance method of accounting for uncollectible receivables.On December 12 the company receives a $550 check from Chad Thomas in settlement of Thomas's $1,100 outstanding accounts receivable.Due to Thomas's failing health he is closing his company and is expecting to make no further payments to Discount Mart.Journalize this declaration.
Q4) List at least three indicators that a receivable may be uncollectible.
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Page 10
Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) As a company records depreciation expense for a period of time,a corresponding cash inflow from investing activities is reported on the statement of cash flows.
A)True
B)False
Q2) Residual value is also known as all of the following except
A)net book value
B)salvage value
C)scrap value
D)trade-in value
Q3) A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years.It is also expected to have a useful operating life of 13,350 copies.Assuming that it will have a residual value of $75,determine the depreciation for the first year by the a.straight-line method
b.double-declining-balance method
c.units-of-output method 4,500 copies were made the first year
Q4) Losses on the discarding of fixed assets are reported in the income statement.
A)True
B)False
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Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) According to a summary of the payroll of Scotland Company,$450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax.Federal income tax withheld was $98,000.Also,$15,000 was subject to state 4.2% and federal 0.8% unemployment taxes.The journal entry to record accrued salaries would include a
A)debit to Salary Payable of $450,000
B)credit to Salary Payable of $500,000
C)debit to Salary Expense of $500,000
D)credit to Salary Expense of $450,000
Q2) The current portion of long-term debt should
A)be classified as a long-term liability
B)not be separated from the long-term portion of debt
C)be paid immediately
D)be reclassified as a current liability
Q3) An interest-beating note is a loan in which the lender deducts interest from the amount loaned before the money is advanced to the borrower.
A)True
B)False
Q4) List five internal controls that relate directly to payroll.
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Page 12
Chapter 11: Corporations: Organization,stock
Transactions,and Dividends
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Sample Questions
Q1) On January 1,Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $20.00 per share.On February 1,Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1,would include a
A)credit to Treasury Stock for $90,000
B)debit to Treasury Stock for $90,000
C)debit to a loss account for $112,500
D)credit to a gain account for $112,500
Q2) How is treasury stock shown on the balance sheet?
A)as an asset
B)as a decrease in stockholders' equity
C)as an increase in stockholders' equity
D)treasury stock is not shown on the balance sheet
Q3) A stock split results in a transfer at market value from retained earnings to paid-in capital.
A)True
B)False
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Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) A $375,000 bond issue on which there is an unamortized discount of $40,000 is redeemed for $320,000.Journalize the redemption of the bonds.
Q2) If the amount of a bond premium on an issued 11%,4-year,$100,000 bond is $12,928,the annual interest expense is $5,500.
A)True
B)False
Q3) There is a loss on redemption of bonds when bonds are redeemed above carrying value.
A)True
B)False
Q4) The interest expense recorded on an interest payment date is increased
A)only if the market rate of interest is less than the stated rate of interest on that date
B)by the amortization of premium on bonds payable
C)by the amortization of discount on bonds payable
D)only if the bonds were sold at face value
Q5) A $500,000 bond issue on which there is an unamortized discount of $20,000 is redeemed for $475,000.Journalize the redemption of the bonds.
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Page 14
Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) Which of the following statements is not a reason a company may purchase another company's stock?
A)earning a return on excess cash
B)sustain the other company's stock price
C)gaining control of another company's operations
D)developing or maintaining business relationships
Q2) 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
Q3) The dividend yield is measured as
A)Dividends per share of common stock/Market price per share of common stock
B)Dividends per share of preferred stock/Market price per share of common stock
C)Dividends per share of common stock × Market price per share of preferred stock
D)Dividends per share of preferred stock × Market price per share of preferred stock
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15
Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) A ten-year bond was issued at par for $250,000 cash.This transaction should be shown on a statement of cash flows under A)investing activities
B)financing activities
C)noncash investing and financing activities
D)operating activities
Q2) Under the direct method of reporting cash flows from operations,the primary source of cash is cash received from customers.
A)True
B)False
Q3) To arrive at cash flows from operations,it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.
A)True
B)False
Q4) The statement of cash flows reports a firm's major sources of cash receipts and major uses of cash for a period of time.
A)True
B)False
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Page 16
Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) If net income is $250,000 and interest expense is $30,000 for Year 2,what are the earnings per share on common stock for Year 2?
A)$4.16
B)$4.32
C)$4.02
D)$2.49
Q2) A change from one acceptable accounting method to another is reported
A)on the statement of retained earnings,as a correction to the beginning balance
B)on the income statement,below income from continuing operations
C)on the income statement,above income from continuing operations
D)through a retroactive restatement of prior-period earnings
Q3) Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000.It had 50,000 shares of common stock outstanding during the entire year.Richards Corporation's common stock is selling for $35 per share.The price-earnings ratio is
A)7 times
B)14 times
C)2 times
D)5 times
Q4) Define solvency and profitability.How are they alike?
Page 17
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