Accounting for Managers Practice Questions
Course Introduction
Accounting for Managers introduces the fundamental principles and practices of accounting with a focus on their application in managerial decision-making. The course covers the interpretation and analysis of financial statements, budgeting, cost analysis, and performance measurement, providing managers with the tools to understand both internal and external financial reports. Emphasis is placed on using accounting information for planning, controlling, and evaluating business operations, enabling students to make informed strategic decisions. Through practical examples and case studies, students learn how accounting impacts organizational effectiveness and supports managerial responsibilities across various business functions.
Recommended Textbook MANAGERIAL ACCOUNTING Version 1.0 by
Kurt Heisinger and Joe Hoyle
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878 Verified Questions
878 Flashcards
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Chapter 1: What Is Managerial Accounting
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Sample Questions
Q1) The managerial accountant typically reports to the:
A)controller.
B)chief executive officer.
C)financial accountant.
D)tax accountant.
E)None of the above.
Answer: A
Q2) Period costs are also called manufacturing costs.
A)True
B)False
Answer: False
Q3) The treasurer is typically in charge of all finance and accounting functions within an organization.
A)True
B)False
Answer: False
Q4) Board of directors
Answer: B
Q5) Treasurer
Answer: H
Page 3
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Chapter 2: How Is Job Costing Used to Track Production Costs
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Sample Questions
Q1) The entry to record the requisition of indirect materials in a job cost system includes a:
A)debit to Work in Process Inventory.
B)debit to Manufacturing Overhead.
C)credit to Accounts Payable.
D)credit to Work in Process Inventory.
E)None of the answer choices is correct.
Answer: B
Q2) A movie production company would likely use a job costing system to track revenues and costs.
A)True
B)False
Answer: True
Q3) The entry to record depreciation on the factory building should include a:
A)debit to Work in Process Inventory.
B)debit to Manufacturing Overhead.
C)debit to Cost of Goods Sold.
D)credit to Work in Process Inventory.
E)None of the answer choices is correct.
Answer: B
4
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Chapter 3: How Does an Organization Use Activity-Based
Costing to Allocate Overhead Costs
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Sample Questions
Q1) Companies with one product that requires very little variation in production may not benefit from an ABC system as much as companies with multiple products and complex production processes.
A)True
B)False
Answer: True
Q2) A collection of overhead costs,typically organized by department or activity,is called a:
A)cost objective.
B)cost driver.
C)cost pool.
D)cost hierarchy.
E)None of the answer choices is correct.
Answer: C
Q3) Activity-based costing and activity-based management are two terms used to describe the same concept.
A)True
B)False
Answer: False
Page 5
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Chapter 4: How Is Process Costing Used to Track
Production Costs
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Sample Questions
Q1) Refer to Exhibit 4-2.What is the cost per gallon for the mixing process?
A)$5.88
B)$0.50
C)$0.48
D)$0.54
E)None of the answer choices is correct.
Q2) Everlast Inc.had 12,000 units in WIP Inventory at December 1 that were 70% complete with respect to direct labor and overhead.During December,40,000 units were completed.On December 31,the 14,000 units in WIP Inventory were 30% complete as to direct labor and overhead.Direct materials are added at the beginning of the process.How many units were started during December?
A)42,000
B)66,000
C)38,000
D)32,000
E)None of the answer choices is correct.
Q3) A process costing system is used by companies that produce similar or identical units of product.
A)True
B)False
Page 6
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Chapter 5: How Do Organizations Identify Cost Behavior
Patterns
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Sample Questions
Q1) Regression analysis is one of the most accurate methods for estimating costs,because its estimates are based on the data set as a whole.
A)True
B)False
Q2) All of the following are steps for using the scattergraph method except:
A)estimating the total fixed costs.
B)visually fitting a line to the data points,with at least one data point touching the line.
C)identifying the high and low activity data points.
D)plotting the data points for each period on a graph.
E)None of the answer choices is correct.
Q3) Cost estimates made using activity levels outside the relevant range:
A)Are more accurate.
B)May result in poor decisions.
C)Mean that cost behavior patterns are accurate at all levels of activity.
D)Mean the cost estimates will be relevant.
E)None of the answer choices is correct.
Q4) Total fixed costs change with changes in volume of activity.
A)True
B)False
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Chapter 6: How Is Cost-Volume-Profit Analysis Used for Decision Making
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Sample Questions
Q1) Which of the following companies would most likely have a high operating leverage?
A)A landscaping company.
B)An accounting company.
C)A plumbing company.
D)A company manufacturing microprocessors.
E)None of these have high operating leverage.
Q2) A decrease in variable costs will reduce the margin of safety.
A)True
B)False
Q3) Refer to Exhibit 6-3.What is the contribution margin per unit for each product?
A)Mountain bikes: $1,400;Cruising bikes: $1,000
B)Mountain bikes: $560;Cruising bikes: $600
C)Mountain bikes: $800;Cruising bikes: $500
D)Mountain bikes: $600;Cruising bikes: $500
E)None of the answer choices is correct.
Q4) An advantage of using absorption costing is that it prevents managers from increasing production solely for the purpose of inflating profit.
A)True
B)False
Page 8
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Chapter 7: How Are Relevant Revenues and Costs Used to
Make Decisions
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Sample Questions
Q1) Refer to Exhibit 7-2.What amount of additional profit or loss will be incurred if the order is accepted?
A)$300,000
B)$67,500
C)($127,500)
D)($22,500)
E)None of the answer choices is correct.
Q2) Using activity-based costing information with differential analysis can lead to better decisions.
A)True
B)False
Q3) Paradise Inc.estimates that it can sell 50,000 of its calculators for $50 each.Assuming a total target profit of $1,000,000,how much is the target cost per calculator?
A)$22.00
B)$30.00
C)$20.00
D)$50.00
E)There is not enough information to answer this question.
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Chapter 8: How Is Capital Budgeting Used to Make Decisions
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Sample Questions
Q1) Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7 years and has $240,000 of cash outflows for the same period (before income taxes).The cost of the asset is $700,000 and it will be depreciated using straight-line depreciation over the 7 year life.The asset has no salvage value.Lanyard's tax rate is 40%.The cost of capital is 18%.
What is the annual after-tax cash flow associated with this investment?
A)$176,000
B)$260,000
C)$216,000
D)$256,000
E)None of the answer choices is correct.
Q2) A depreciation tax shield is the tax savings resulting from depreciation expense.
A)True
B)False
Q3) When evaluating long-term investment proposals,firms that pay income taxes can ignore the impact these taxes have on cash flows.
A)True
B)False
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Chapter 9: How Are Operating Budgets Created
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Sample Questions
Q1) In the budgeting process,the dollar amount for goods sold during the month but not collected is called:
A)accounts receivable.
B)inventory.
C)accounts payable.
D)cash.
E)None of the answer choices is correct.
Q2) The budgeted balance sheet shows an estimate of the organization's profit for a given budget period.
A)True
B)False
Q3) Which of the following best describes the selling and administrative budget?
A)A series of budget schedules outlining the organization's plans for the upcoming period.
B)An estimate of cash expenditures for long-term assets.
C)An estimate of all operating costs other than production costs.
D)A budget that is based on sales projections plus an estimate of desired ending finished goods inventory less beginning finished goods inventory.
E)None of the answer choices is correct.
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Chapter 10: How Do Managers Evaluate Performance Using Cost Variance Analysis
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Sample Questions
Q1) If Ever Green Corporation has an unfavorable fixed overhead spending variance,which of the following would most likely be the reason for this variance?
A)Actual fixed overhead was less than predicted.
B)More units were actually produced than predicted.
C)Actual fixed overhead was more than predicted.
D)Fewer units were actually produced than predicted.
E)None of the answer choices is correct.
Q2) Baxter Company incurred labor costs of $10,800 in June (payable in July)for work requiring 1,100 standard hours at a standard rate of $10 per hour;1,200 actual direct labor hours were worked.Based on this information,what was the labor efficiency variance?
A)$200 favorable.
B)$1,200 favorable.
C)$1,000 favorable.
D)$1,000 unfavorable.
E)None of the answer choices is correct.
Q3) The cause of one variance might influence another variance.
A)True
B)False
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Chapter 11: How Do Managers Evaluate Performance in
Decentralized Organizations
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Sample Questions
Q1) All of the following statements are true about return on investment (ROI)except:
A)Breaking out ROI into two ratios provides information that helps division managers identify areas for improvement.
B)ROI can be improved by decreasing the operating profit margin.
C)ROI can be calculated using the gross book value method.
D)ROI can be improved by increasing asset turnover.
E)None of the answer choices is correct.
Q2) Return on investment (ROI)can be calculated several different ways depending on the company.
A)True
B)False
Q3) All of the following are false about transfer pricing except:
A)using negotiated transfer pricing is always the best approach.
B)the cost approach can base the transfer price on either the variable cost or full absorption cost.
C)using the cost approach is always the best approach.
D)companies should always use the selling division's variable cost as the transfer price.
E)None of the answer choices is correct.
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Chapter 12: How Is the Statement of Cash Flows Prepared and Used
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Sample Questions
Q1) During Benson Company's most recent fiscal year,beginning plant assets,net of depreciation,totaled $150,000,and ending plant assets totaled $187,500.Depreciation expense of $10,500 and a loss on sale of equipment of $1,125 was reported on the income statement.The company purchased plant assets for $60,050 during the year.How much will be reported as cash received from the sale of equipment in the investing activities
A)$22,550
B)$10,925
C)$21,425
D)$36,375
E)None of the answer choices is correct.
Q2) When using the indirect method to prepare the statement of cash flows,the financing activities
A)True
B)False
Q3) Free cash flow provides information regarding how much cash generated from daily operations is remaining after investing in fixed assets.
A)True
B)False
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Chapter 13: How Do Managers Use Financial and
Nonfinancial Performance Measures
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Sample Questions
Q1) Refer to Exhibit 13-1.What is the gross margin ratio for 2013 (rounded to the nearest tenth of a percent)?
A)10.6
B)63.5%
C)27.3%
D)38.8 %
E)None of the answer choices is correct.
Q2) A common-size analysis converts each line of financial statement data to an easily comparable amount measured in percent form.
A)True
B)False
Q3) Return on assets is a market valuation measure.
A)True
B)False
Q4) All of the following measures focus on long-term solvency except:
A)inventory turnover ratio.
B)times interest earned.
C)debt to assets.
D)debt to equity.
E)None of the answer choices is correct.
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