Accounting for Managers Review Questions
Course Introduction
Accounting for Managers is designed to equip future business leaders with the essential concepts and tools of accounting relevant to managerial decision-making. The course covers foundational topics such as financial statement analysis, budgeting, cost behavior, and performance measurement, enabling students to interpret financial data and apply accounting information in a strategic context. Emphasis is placed on the use of accounting for planning, controlling, and evaluating business operations, ensuring that managers can effectively contribute to the financial health and success of their organizations.
Recommended Textbook
Financial Accounting An Integrated Approach 6th Australia Edition by Trotman
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Page 2
Chapter 1: Introduction to Financial Accounting
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Sample Questions
Q1) Which financial statement assumption relates to the procedure where a $200 paper shredder with a five-year useful life is treated as an expense?
A) Monetary
B) Accounting period
C) Materiality
D) Historical cost
Answer: C
Q2) During 2016,a company makes credit sales of $600 000,of which $350 000 is collected at year-end.It pays $220 000 in expenses and owes $20 000 for electricity used during 2016.What would the profit be if cash accounting rather than accrual accounting were used?
A) $130 000.
B) $110 000.
C) $380 000.
D) $730 000.
Answer: A
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Chapter 2: Measuring and Evaluating Financial Position and
Financial Performance
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Sample Questions
Q1) The balance of retained profits at the beginning of a period was $1000 and at the end of the period it was $850.A dividend of $50 was declared and paid.What was the net profit/loss for the period?
A) Net loss $100
B) Net profit $100
C) Net loss $200
D) Net profit $200
Answer: A
Q2) If the last wages bill for the year is paid on 28 June and $6000 is owing at 30 June in unpaid wages,then:
A) the $6000 would appear as accrued wages payable in the balance sheet but it would not be included in the expenses for the year.
B) the $6000 would appear as accrued wages payable in the balance sheet and would be included in the expenses for the year.
C) the $6000 would not be included in either the balance sheet or the profit and loss statement.
D) the $6000 would appear as an expense in the profit and loss statement. Answer: B
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Chapter 3: The Double-Entry System
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Sample Questions
Q1) During the accounting period there were no share issues,liabilities increased by $45 000,assets increased by $90 000 and net profit was $115 000.Therefore,dividends declared must have been:
A) $15 000.
B) $45 000.
C) $60 000.
D) $70 000.
Answer: D
Q2) An account was paid for stationery purchased in the previous accounting period.
A) A liability increased and another liability decreased.
B) An asset decreased and a liability decreased.
C) An asset increased and revenue increased.
D) An asset decreased and an expense increased.
Answer: B
Q3) If goods are purchased on credit for resale,the accountant:
A) debits inventory and credits debtors.
B) debits creditors and credits inventory.
C) debits inventory and credits shareholders' equity.
D) debits inventory and credits creditors.
Answer: D
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Chapter 4: Record-Keeping
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Sample Questions
Q1) What does transaction (2)represent?
A) Sale of inventory on credit
B) Sale of inventory for cash
C) Purchase of inventory on credit
D) Purchase of inventory for cash
Q2) Which of the following is NOT an accounting transaction?
A) A payment is made by cheque to Telstra.
B) The company is awarded a contract to build a bridge,with construction to commence in 12 months' time.
C) A creditor charges interest for late payment.
D) The payroll department issues a cheque to pay an employee.
Q3) Which of the following is an internal transaction?
A) Payment of dividends to shareholders
B) Loan to a director
C) Depreciation of equipment
D) Purchase of machinery on credit
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6
Chapter 5: Accrual Accounting Adjustments
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Sample Questions
Q1) Which of the following would be recorded as an asset?
A) Prepayments
B) Accrued expenses
C) Unearned revenue
D) All would be recorded as assets
Q2) Which of the following will appear on Data Ltd's balance sheet at 30 June 2016?
A) Prepaid insurance $480.
B) Prepaid insurance $400.
C) Prepaid insurance $80.
D) Insurance expense $80.
Q3) Which of the following cash flows involve revenues or expenses?
A) Payment of dividend
B) Cash purchase of building
C) Issue of shares for cash
D) None of the answers provided
Q4) What was the net book value of the machine at 31 December 2016?
A) $13 000
B) $16 000
C) $21 000
D) None of the answers provided
Page 7
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Chapter 6: Financial Reporting Principles, accounting
Standards and Auditing
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Sample Questions
Q1) Identify the accounting concept or principle that relates to the statement in the following question: If a particular item is,by reason of its nature or its size,significant to a proper understanding of the situation,it should be separately stated.
A) Relevance
B) Faithful representation
C) Materiality
D) Comparability
Q2) A security's price may NOT vary because:
A) the whole share market is going up.
B) of information specific to that security.
C) of information specific to the company issuing the security.
D) of consistent financial policies.
Q3) Use of the same accounting methods over time facilitates:
A) disclosure.
B) relevance.
C) comparability.
D) faithful representation.
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Page 8
Chapter 7: Internal Control and Cash
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Sample Questions
Q1) What was the final bank balance in Simon Ltd's ledger at 31 October?
A) $10800 Dr
B) $10800 Cr
C) $17200 Dr
D) $17200 Cr
Q2) What was the final bank balance in Alison Ltd's ledger at 31 December?
A) $5400 Dr
B) $5400 Cr
C) $8600 Dr
D) $8600 Cr
Q3) In preparing the monthly bank reconciliation,Jon Ltd ascertains that there is a direct credit from a customer for $500 and an interest on overdraft charge of $760.Outstanding cheques total $9400 and there is a deposit in transit for $2900.It will be necessary to make journal entries for:
A) the outstanding cheques of $9400 and the deposit in transit of $2900.
B) the direct credit for $500 and the interest charge of $760.
C) only the interest on overdraft charge of $760.
D) the direct credit for $500,the interest charge of $760 and outstanding cheques of $9400.
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Page 9
Chapter 8: Accounts Receivable and Further
Record-Keeping
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Sample Questions
Q1) What was the balance of the debtors control account at 31 January 2016?
A) $8400
B) $4100
C) $3900
D) $4400
Q2) What was the balance of the creditors control account at 31 January 2016?
A) $5800
B) $4600
C) $3800
D) $7400
Q3) What was the balance of the debtors control account at 30 June 2016?
A) $3000
B) $7000
C) $10 000
D) $14 000
Q4) Which of these items is the source document for the sales journal?
A) Purchase order
B) Invoice from supplier
C) Duplicate of invoice sent to customer
D) Copy of receipt sent to customer
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Chapter 9: Inventory
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Sample Questions
Q1) Which of the following is NOT an advantage of the perpetual inventory system over the periodic inventory system?
A) The perpetual inventory system discloses inventory shortages.
B) The perpetual inventory system is less costly to maintain.
C) The perpetual inventory system provides a continuous record of cost of goods sold.
D) The perpetual inventory system provides better control of the asset inventory.
Q2) Which of the following is NOT an advantage of the perpetual over the periodic inventory method?
A) A continuous record of inventory on hand is furnished.
B) Inventory theft may be detected.
C) Recording is simplified.
D) The perpetual inventory system provides a continuous record of cost of goods sold.
Q3) What was Epsilon Pty Ltd's cost of goods sold for the year?
A) $47 500
B) $57 500
C) $60 000
D) $62 500
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11
Chapter 10: Noncurrent Assets
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Sample Questions
Q1) Using the straight-line method,what is the amount of depreciation for the first full year?
A) $37 500
B) $42 500
C) $41 250
D) $40 000
Q2) When the accumulated depreciation is deducted from the long-term asset account,the figure is known as the:
A) market value.
B) replacement value.
C) net book value.
D) realisable value.
Q3) It was sold on 1 July 2016.If the machine was sold for $60 000,what was the gain or loss on disposal?
A) Loss of $20 000
B) Loss of $40 000
C) Gain of $60 000
D) Gain of $20 000
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Chapter 11: Liabilities
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Sample Questions
Q1) XYZ Ltd provides a service on credit,charging $2000 + $200 GST.The journal entry would include:
A) Dr Accounts receivable $2000.
B) Cr Sales $2000.
C) Dr GST Payable $200.
D) Cr Sales $2200.
Q2) When a liability increases which of the following is correct?
A) An expense may increase.
B) An asset may decrease.
C) Shareholders' equity may increase.
D) Revenue may increase.
Q3) When a business collects GST from customers,it records:
A) a contra asset.
B) a liability.
C) an expense.
D) an asset.
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Chapter 12: Completing the Balance Sheet
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Sample Questions
Q1) If Yu Ltd used the equity basis,what would be the balance sheet value of its investment in Ping Ltd at 31 December 2016?
A) $780 000
B) $1 130 000
C) $1 250 000
D) $900 000
Q2) Investments appear on the balance sheet under the heading of: A) assets.
B) liabilities.
C) retained profits.
D) shareholders' equity.
Q3) Springtown Ltd issued 10 000 ordinary shares for $2.50 each,payable $1 on application,50 cents on allotment and $1 in calls as required.The journal entries to record the allotment of 10 000 shares would include a:
A) credit to cash,$5000.
B) debit to allotment,$10 000.
C) credit to share capital,$25 000.
D) credit to share capital,$5000.
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14
Chapter 13: Revenue and Expense Recognition: Additional Concepts
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Sample Questions
Q1) What difference would there be to the total profit for the two years if the completion of production method were used?
A) Profit would be $200 000 higher.
B) Profit would be $420 000 higher.
C) Profit would be $420 000 lower.
D) There would be no difference.
Q2) How much profit was earned during the second year if the percentage of completion method was used?
A) $300 000
B) $750 000
C) $1 050 000
D) $0
Q3) If revenue increased by 30 per cent,with no effect on expenses other than income tax,what would be the effect on net after tax profit?
A) It would increase by $6600.
B) It would decrease by $6600.
C) It would increase by $4620.
D) It would decrease by $4620.
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Chapter 14: The Statement of Cash Flows
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Sample Questions
Q1) Which of the following is NOT an investing cash flow?
A) Proceeds from the sale of equipment
B) Purchase of shares on the stock market
C) Purchase of another company
D) Repayment of debentures
Q2) Which of the following is NOT a financing cash flow?
A) Dividends received
B) Issue of shares
C) Borrowing $10 000 from the bank
D) Share buybacks
Q3) Which of the following does NOT involve a cash flow in 2016?
A) Payment in 2016 of insurance for 2017
B) Purchase of inventory in 2016,to be paid in 2017
C) Borrowing from the bank in 2016,to be repaid in 2018
D) Cash sales in 2016
Q4) What was the value of plant purchased?
A) $20 000
B) $70 000
C) $88 000
D) $120 000
Page 16
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) What was the number of days' inventory on hand?
A) 73 days
B) 69.5 days
C) 64 days
D) 50 days
Q2) The company changed accounting methods by deciding to capitalise rather than expense a research and development outlay.This will:
A) increase ROE,but have no effect on ROA and CR.
B) increase ROA,ROE and CR.
C) increase ROA and ROE,but have no effect on CR.
D) have no effect on ROA,ROE or CR.
Q3) What is the effect of the loan on working capital?
A) There is no effect.
B) There is an increase of $75 000.
C) There is a decrease of $75 000.
D) It cannot be determined from the above information.
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Chapter 16: Accounting Policy Choices
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Sample Questions
Q1) Which of the following would be increased by an accounting policy change involving transfer from retained profits to general reserve?
A) Shareholders' equity
B) Liabilities
C) Net profit
D) None of the answers provided
Q2) Which of the following would be decreased by an accounting policy change involving writing off obsolete inventories?
A) Expense
B) Revenue
C) Liabilities
D) Net profit
Q3) Which of the following is NOT an area in which companies typically make policy accounting choices?
A) When to recognise revenue
B) The method of depreciation to use
C) How to value inventories
D) Dividend policy
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Chapter 17: Sustainability Reporting
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Sample Questions
Q1) Which of the following is NOT an example of capital that reflects on an organisation's impact and wealth?
A) Human capital
B) Working capital
C) Social capital
D) Natural capital
Q2) Integrated reporting:
A) includes a sustainability report regarding energy reduction and greenhouse emissions in an organisation's annual report.
B) is an additional report to be prepared by organisations as required by accounting standards.
C) reflects the commercial,social and environmental setting in which the organisation operates.
D) is additional information regarding energy emissions included in the direct report of an organisation's annual statement.
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