Accounting for Managers
Test Preparation
Course Introduction
Accounting for Managers is designed to equip future business leaders with a comprehensive understanding of fundamental accounting principles and their practical application in managerial decision-making. The course covers key topics such as financial statement analysis, budgeting, cost behavior, performance measurement, and internal control systems. Emphasis is placed on interpreting accounting data, using it to plan and control organizational activities, and making informed strategic choices. Through real-world case studies and problem-solving exercises, students will develop the ability to communicate financial information effectively and evaluate its impact on business operations from a managerial perspective.
Recommended Textbook
Financial And Managerial Accounting Principles International Edition 9th Edition by Crosson
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29 Chapters
4463 Verified Questions
4463 Flashcards
Source URL: https://quizplus.com/study-set/3625 Page 2
Chapter 1: Uses of Accounting Information and the Financial Statements
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170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/72011
Sample Questions
Q1) The group of users of accounting information charged with achieving the goals of the business is its
A) auditors.
B) creditors.
C) management.
D) investors.
Answer: C
Q2) Accounting ratios are useful as management performance measures.
A)True
B)False
Answer: True
Q3) If a corporation has suffered only net losses since its inception,the Retained Earnings account will have a negative balance.
A)True
B)False
Answer: True
Q4) Obtaining funds from a bank is an example of an investing activity. A)True
B)False
Answer: False
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Chapter 2: Analyzing Business Transactions
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194 Verified Questions
194 Flashcards
Source URL: https://quizplus.com/quiz/72010
Sample Questions
Q1) When the columns of the trial balance equal each other,it means that no errors have occurred in recording and posting the transactions.
A)True
B)False
Answer: False
Q2) The Post.Ref.column in the general ledger shows that an amount has been posted when which of the following is placed in it?
A) The journal page number
B) An X
C) A check mark
D) The account number
Answer: A
Q3) The principal purpose of posting is to
A) enter transactions directly into the ledger.
B) help identify errors made in the journal.
C) obtain updated account balances.
D) help determine if the financial statements are ready to be prepared.
Answer: C
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Chapter 3: Measuring Business Income
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245 Verified Questions
245 Flashcards
Source URL: https://quizplus.com/quiz/72008
Sample Questions
Q1) Accounting periods of greater than a year are called interim periods.
A)True
B)False
Answer: False
Q2) The cost of doing business is also known as A) a liability.
B) an expense.
C) revenue.
D) an asset.
Answer: B
Q3) The manipulation of revenues and expenses to achieve a specific outcome is called A) earnings management.
B) the matching rule.
C) adjusting entries.
D) revenue recognition.
Answer: A
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Page 5
Chapter 3: Supplement - Closing Entries and the Work Sheet
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58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/72009
Sample Questions
Q1) The work sheet is a type of accountant's working paper.
A)True
B)False
Q2) A work sheet is useful for all except which of the following?
A) Recording transactions from source documents
B) Recording closing entries
C) Recording adjusting entries
D) Preparing financial statements
Q3) Which of the following accounts probably would have a smaller balance in the Adjusted Trial Balance columns of a work sheet than in the Trial Balance columns?
A) Prepaid Advertising
B) Wages Payable
C) Accumulated Depreciation-Equipment
D) Wages Expense
Q4) The amount extended to the Retained Earnings line in the Balance Sheet column of the work sheet is the amount to be reflected for Retained Earnings on the balance sheet. A)True
B)False
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Chapter 4: Financial Reporting and Analysis
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166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/72007
Sample Questions
Q1) The asset turnover ratio measures
A) how quickly the company uses assets to pay debt.
B) how efficiently assets are used to produce sales.
C) the income produced by selling inventory.
D) how efficiently equity is used to produce revenue.
Q2) It is possible for an asset to be a current asset even though the expected conversion of that asset into cash is to be longer than one year.
A)True
B)False
Q3) On the income statement of a merchandising company,net income is the amount by which net sales exceed operating expenses.
A)True
B)False
Q4) Which of the following is not considered a selling expense?
A) Cost of goods sold
B) Sales salaries expense
C) Freight-out expense
D) Insurance on the sales office
Q5) State the definition of a current asset.
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Chapter 5: The Operating Cycle and Merchandising Operations
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176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/72006
Sample Questions
Q1) The entry to record a sales return from a customer would require a(n)
A) decrease to Sales.
B) increase to Sales.
C) decrease to Sales Returns and Allowances.
D) increase to Sales Returns and Allowances.
Q2) A company would be more likely to know the amount of inventory on hand if it used the periodic inventory system rather than the perpetual inventory system.
A)True
B)False
Q3) Assuming that net cost of purchases was $58,000 during the year and that ending merchandise inventory was $1,000 less than the beginning merchandise inventory of $12,500,how much was cost of goods sold?
A) $69,500
B) $71,500
C) $59,000
D) $46,500
Q4) Proper control procedures can guarantee the prevention of theft.
A)True
B)False
8
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Chapter 6: Inventories
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Which of the following is an inventory processing system?
A) Perpetual
B) Last-in, first-out
C) Lower-of-cost-or-market
D) Average-cost
Q2) Use the following information to calculate cost of goods sold under each of three methods: (a)FIFO,(b)LIFO,and (c)average-cost.Assume the periodic inventory system is used.(Show your work.)
\(\begin{array}{lrll}
\text { Apr. } & 1 & \text { Beginning inventory }& \text { 90 units@\$40} \\ & 8 & \text { Sales } &\text { 70 units}\\
& 17 & \text { Purchases }& \text { 150 units \$ 4}\\ & 24 & \text { Sales }&\text { 110 units}\\ & 30 & \text { Purchases }&\text { 60 units\$ 44 } \end{array}\)
Q3) During periods of consistently falling prices,the FIFO inventory method will produce the highest possible amount of net income.
A)True
B)False
Q4) What is a LIFO liquidation,and what is its effect on income before income taxes?
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Chapter 7: Cash and Receivables
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Interest on a six-month,7 percent,$2,000 note is calculated by multiplying $2,000 \(\times\) 7/100 \(\times\) 6/12.
A)True
B)False
Q2) The general ledger account for Accounts Receivable shows a debit balance of $25,000.Allowance for Uncollectible Accounts has a credit balance of $1,500.Net sales for the year were $250,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $10,000 of uncollectible accounts receivable. Using the accounts receivable aging method,the entry to record the Uncollectible Accounts Expense is:
A) Uncollectible Accounts Expense 10,750
Allowance for Uncollectible Accounts 10,750
B) Uncollectible Accounts Expense 8,500
Allowance for Uncollectible Accounts 8,500
C) Uncollectible Accounts Expense 10,000
Allowance for Uncollectible Accounts 10,000
D) Uncollectible Accounts Expense 11,500
Allowance for Uncollectible Accounts 11,500
Q3) What is a compensating balance? By whom is it required?
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Page 10
Chapter 8: Current Liabilities and Fair Value Accounting
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/72003
Sample Questions
Q1) Product warranties are an expense of the period in which the product must be repaired or replaced.
A)True
B)False
Q2) A company purchases an asset on a deferred payment plan,ultimately paying $10,000.On the payment date,the company would
A) credit Cash for less than $10,000.
B) debit Interest Expense for the imputed amount.
C) debit the asset account for $10,000.
D) debit Accounts Payable for $10,000.
Q3) The payables turnover is measured A) in days.
B) as a percentage.
C) in dollars.
D) in times.
Q4) Potential vacation pay should be accounted for as a commitment. A)True B)False
Q5) Explain why the cost of employing someone is more than just the wage or salary paid to the employee.
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Chapter 9: Long Term Assets
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242 Verified Questions
242 Flashcards
Source URL: https://quizplus.com/quiz/72002
Sample Questions
Q1) Salvage value is not the same as
A) carrying value.
B) residual value.
C) disposal value.
D) scrap value.
Q2) Inventory is classified as a long-term asset.
A)True
B)False
Q3) Which of the following would not be a basis for estimating the useful life of a piece of equipment?
A) Potential production in units
B) Potential hours of service
C) Historical cost
D) Years of service
Q4) In calculating the depletion of a natural resource,its useful life in years is irrelevant.
A)True
B)False
Q5) Present two arguments in favor of the use of accelerated depreciation.
Q6) What is goodwill and when may it be recorded?
Page 12
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Chapter 10: Long-Term Liabilities
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) Interest on bonds usually is paid annually.
A)True
B)False
Q2) Which of the following is an example of off-balance-sheet financing?
A) Leases
B) Bonds
C) Dividends
D) Notes
Q3) When bonds are sold at face value between interest dates,the result is a debit to the Cash account that
A) equals face value.
B) depends on the circumstances.
C) is less than face value.
D) exceeds face value.
Q4) The total interest cost on thirty-nine,ten-year,6 percent,$1,000 bonds that are issued at 98 is
A) $24,180.
B) $22,620.
C) $23,790.
D) $23,400.
Page 13
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Chapter 11: Contributed Capital
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) The balance in the Additional Paid-in Capital account must be added to the balance of the Common Stock account to compute the amount of legal capital for a corporation with a par value common stock.
A)True
B)False
Q2) Preferred stock is considered the residual equity of a corporation.
A)True
B)False
Q3) When common stock with a par value is sold for a price that exceeds par value,the Common Stock account is credited only for the par value of the shares sold.
A)True
B)False
Q4) The death of a stockholder results in the dissolution of the corporation.
A)True
B)False
Q5) Treasury stock usually is recorded at par value when purchased.
A)True
B)False
Q6) Define outstanding stock.
Page 14
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Chapter 12: Investments
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163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/71999
Sample Questions
Q1) Rapp Corporation has invested in the stock of two other corporations,Hart Corporation and Hilker Corporation.Rapp does not own a controlling interest or exercise significant influence over either corporation.Rapp's accountant is preparing financial statements and has compiled the following information: \(\begin{array}{crrr}
\text { Stock name } & \text { No. of shares } & \text { Cost } & \text { Market }\\
\text { Hart } & 1,000 & \$ 23,000 & \$ 24,000 \\
\text { Hilker } & 500 & \$ 27,500 & \$ 25,500
\end{array}\) What should be the balance in the Allowance to Adjust Long-Term Investments to Market account,based on the above information?
A) $1,000 credit
B) $2,000 debit
C) $2,000 credit
D) $1,000 debit
Q2) It is not possible for one company to influence the operating policies of another company unless it owns more than a 50 percent interest in that company.
A)True
B)False
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Page 15
Chapter 13: The Corporate Income Statement and the Statement of
Stockholders Equity
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175 Verified Questions
175 Flashcards
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Sample Questions
Q1) Colfax Corporation had a Retained Earnings balance on January 1,2009,of $720,000; declared cash dividends during 2009 in the amount of $112,000,of which $30,000 were not paid until 2010; and reported an ending balance of Retained Earnings of $1,020,000.Based on these facts alone,net income for 2009 for Colfax Corporation must have been
A) $152,000.
B) $312,000.
C) $382,000.
D) $412,000.
Q2) Why must certain income statement items be presented "net of taxes"?
Q3) Extraordinary gains and losses are a component of income from operations.
A)True
B)False
Q4) Which of the following items would appear in the income statement below the others listed?
A) Extraordinary gains and losses
B) Restructurings
C) Discontinued operations
D) Income taxes expense
Page 16
Q5) Distinguish between cash and retained earnings.
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Chapter 14: The Statement of Cash Flows
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Interest Expense (assume that cash payments are equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:
A) Add to net income to arrive at net cash flows from operating activities
B) Subtract from net income to arrive at net cash flows from operating activities
C) Not used to adjust net income to calculate net cash flows from operating activities
Q2) Investors and creditors would find the statement of cash flows least useful in assessing
A) financial position at a point in time.
B) need for additional financing.
C) ability to pay dividends and liabilities.
D) ability to generate positive future cash flows.
Q3) A company sells equipment with a carrying value of $10,000 for $7,000.Where,and for what amounts,would this transaction appear on a statement of cash flows using the indirect method?
Q4) On the lines below,provide the components for the calculation of free cash flow.
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17
Chapter 15: The Changing Business Environment - a Managers Perspective
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131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/71996
Sample Questions
Q1) Management executes a plan by overseeing the daily operations of an organization.
A)True
B)False
Q2) Most management decisions are based on analyses using expected future dollars.
A)True
B)False
Q3) "Hours of inspection" is an example of a nonfinancial performance measure.
A)True
B)False
Q4) In today's competitive business environment,managers
A) need only be concerned with quality.
B) must provide the highest value at the highest cost to customers.
C) must provide the highest value at the lowest cost to customers.
D) need not be concerned with the cost to the customers.
Q5) An advantage of value chain analysis is that it allows a company to focus on what a company does best.
A)True
B)False
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Q6) What steps would a company using TQM take to improve product or service quality?
Chapter 16: Cost Concepts and Cost Allocation
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189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/quiz/71995
Sample Questions
Q1) Which of the following is the formula used to compute a product's unit cost?
A) (Direct Materials + Direct Labor) / Number of Units Produced
B) (Direct Materials + Direct Labor + Overhead) / Number of Units Produced
C) (Direct Labor + Overhead) / Number of Units Produced
D) (Indirect Materials + Indirect Labor + Overhead) / Number of Units Produced
Q2) An example of a period cost is
A) advertising costs.
B) indirect materials.
C) product design costs.
D) direct materials.
Q3) The amount computed for cost of goods manufactured should be the same as the amount transferred from the materials inventory,direct labor,and overhead accounts into the Work in Process Inventory account.
A)True
B)False
Q4) Which of the following account balances is not reported on the balance sheet?
A) Materials Inventory
B) Manufacturing Patents
C) Cost of Goods Sold
D) Work in Process Inventory
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Chapter 17: Costing Systems- Job Order Costing
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77 Verified Questions
77 Flashcards
Source URL: https://quizplus.com/quiz/71994
Sample Questions
Q1) The Work in Process Inventory account for Corbett Company for the month ended June 30 appears below.
\[\begin{array}{l}
\text { Work in Process Inventory }\\
\begin{array} { l r | l r }
\hline \text { Beginging Balance } & 0 & \text { Completed } & 135,800 \\
\text { Direct Materials } & 38,200 & & \\
\text { Direct Labor } & 48,000 & \\
\text { Overhead } & 86,400 & \end{array}
\end{array}\]
Overhead is applied based on direct labor dollars.Direct material costs for the one job remaining in work in process on June 30 was $12,300.
a. What was the overhead rate used to apply overhead to jobs?
b. Determine the amount of direct labor charged to the one remaining job.
Q2) A zero balance in Finished Goods Inventory at the start of the period means all previously completed products have been shipped.
A)True
B)False
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Page 20
Chapter 18: Costing Systems- Process Costing
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129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/71993
Sample Questions
Q1) Jackson Electronics,Inc.,manufactures a variety of microelectronic component parts and utilizes a process costing system.The following information was provided by the accounting department as of July 31,2010:
a. Units started during the month of July totaled 118,200.
b. Units partially complete as of July 31 equaled 7,400.
c. Ending work in process inventory as of July 31, 2010, was 70 percent complete.
d. Direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process.
e. Units in process on July 1, 2010 - 8,200 units.
Using the information provided, compute the equivalent units of production for direct materials and conversion costs for July using the average costing method.
Q2) Regardless of beginning inventory levels,the unit costs are determined by dividing the equivalent units by the total costs of the period.
A)True
B)False
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Chapter 19: Value-Based Systems- Abm and Lean
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149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/71992
Sample Questions
Q1) Distinguish between push-through and pull-through production methods.How does pull-through production meet the requirements of a just-in-time operating environment?
Q2) When using a just-in-time system,what qualities should be used to evaluate a supplier?
Q3) The time a product spends waiting to be worked on is called storage time.
A)True
B)False
Q4) Engineering design is an activity vital to the success of any motor vehicle manufacturer.Identify the level at which engineering design would be classified in the cost hierarchy used with ABC for a maker of unique luxury automobiles.
A) Unit-level activity
B) Batch-level activity
C) Product-level activity
D) Facility-level activity
Q5) Unit level,batch level,and service level are examples of cost drivers.
A)True
B)False
Q6) Why is process value analysis not part of the general ledger accounting system?
Page 22
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Chapter 20: Cost Behavior Analysis
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) Practical capacity and normal capacity are synonymous terms.
A)True
B)False
Q2) The new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $31,680. The breakeven point in sales dollars is
A) $63,360.
B) $42,240.
C) $73,920.
D) $52,800.
Q3) A contribution margin income statement is formatted to emphasize cost behavior rather than organizational functions.
A)True
B)False
Q4) Unit fixed costs vary inversely with activity or volume.
A)True B)False
Q5) Cost behavior analysis is not useful to a service business.
A)True
B)False
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Chapter 21: The Budgeting Process
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Sample Questions
Q1) After management has set short-term goals,the budgeting process typically starts with
A) a clearly defined timetable of events.
B) input only from the accounting personnel.
C) the naming of an efficient coordinator or director.
D) a set of procedures or instructions.
Q2) Operating budgets are plans used in daily operations.
A)True
B)False
Q3) Given that the cost of goods manufactured is $504,000 and the dollar values of the beginning and ending finished goods inventory are $130,000 and $90,000,respectively,what is the cost of goods sold?
A) $544,000
B) $634,000
C) $414,000
D) $464,000
Q4) A sales forecast is expressed in units and dollars.
A)True
B)False
Q5) Describe three benefits budgeting provides to an organization's success.
Page 24
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Chapter 22: Performance Management and Evaluation
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Sample Questions
Q1) One of the overall goals of the Pancake House Restaurant is customer satisfaction.In the light of that goal,match the internal business processes perspective with the appropriate objective.
A) Customer satisfaction means that the chefs engage in culinary continuing education.
B) Customer satisfaction means that customers receive their food within 10 minutes of placing an order.
C) Customer satisfaction means that the customer appreciation program is successful.
D) Customer satisfaction means that the restaurant is profitable.
Q2) A flexible budget is derived by multiplying actual unit output by the standard unit costs.
A)True
B)False
Q3) To succeed,an organization must add value for all of its stakeholders in the long term only.
A)True
B)False
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Chapter 23: Standard Costing and Variance Analysis
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Sample Questions
Q1) When a manufacturing company employs standard costs,all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of standard or predetermined costs rather than in terms of actual costs incurred.
A)True
B)False
Q2) Using the standard costs of $5 per pound for a 10 pound bag of chocolate and the following actual cost and usage data,compute the direct materials variance. \(\begin{array}{ll}
\text { Direct materials purchased and used } & 99,000 \text { pounds } \\
\text { Price paid for direct materials } & \$ 4.00 \text { per pound } \\ \text { Number of good units produced } & 9,000 \text { units } \end{array}\)
A) $45,000 (F)
B) $45,000 (U)
C) $54,000 (F)
D) $99,000 (F)
Q3) The final step in variance analysis is determining the cause of the variance.
A)True
B)False
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Page 26
Chapter 24: Short Run Decision Analysis
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Sample Questions
Q1) Which of the following typically would be considered an incremental cost?
A) Conversion cost
B) Direct product cost
C) Period cost
D) Factory overhead cost
Q2) When resources like direct material,labor or time are scarce,the goal is to minimize the contribution margin per unit of scarce resource.
A)True
B)False
Q3) In choosing among alternatives,managers are guided by historical cost information.
A)True
B)False
Q4) Special orders should only be considered if unused capacity exists. A)True
B)False
Q5) Managers rely strictly on financial information when faced with decisions. A)True B)False
Q6) What are the two steps in the analysis for a sales mix decision?
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Chapter 25: Capital Investment Analysis
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Sample Questions
Q1) A project is accepted under the net present value method when A) the percentage return is greater than a predetermined minimum percentage.
B) total net cash inflows exceed the purchase price of the asset.
C) the purchase price of the asset is less than the present value of net cash inflows.
D) the present value of net cash inflows exceeds a predetermined minimum amount.
Q2) The undepreciated portion of the original cost of a fixed asset is the A) carrying value.
B) depreciation expense.
C) residual value.
D) accumulated depreciation.
Q3) Cost of capital of a company will be determined in four steps.
A)True
B)False
Q4) The method of project selection that brings the time value of money into capital investment analysis is the
A) rate of return on initial investment.
B) net present value method.
C) payback method.
D) accounting rate-of-return method.
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Chapter 26: Pricing Decisions, incltarget Costing and Transfer Pricing
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Sample Questions
Q1) Target costing is a useful pricing tool because it allows the company to critically analyze the potential for success of a product before committing resources to its production.
A)True
B)False
Q2) To stay in business,a company must have a selling price that is
A) acceptable to the customer.
B) able to recover the variable costs of production.
C) the highest in the marketplace.
D) equal to or lower than the company's costs per unit.
Q3) A pricing method based on product cost is
A) cost of goods sold pricing.
B) net income pricing.
C) gross margin pricing.
D) inventory pricing.
Q4) An external issue to be considered when setting a price is
A) the quality of competing products or services.
B) the quality of materials and labor.
C) a price geared toward a minimum return on investment.
D) the total costs of the product or service.
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Chapter 27: Quality Management and Measurement
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Sample Questions
Q1) A management information system can be designed to support many different types of management philosophies.
A)True
B)False
Q2) Cost control concerns have largely been replaced with concern for nonfinancial measures in JIT settings.
A)True
B)False
Q3) The Malcolm Baldrige Quality Award was created by the U.S.Congress.
A)True
B)False
Q4) Information captured by a management information system allows managers to do all of the following except
A) determine accurate product or service costs.
B) improve processes.
C) provide timely feedback.
D) satisfy all customer inquiries.
Q5) Traditional management information systems focus on financial reporting. A)True
B)False
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Chapter 28: Financial Analysis of Performance
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164 Verified Questions
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Sample Questions
Q1) Eva Gomez is considering investing money in the common stock of Casa Corporation.She has obtained the annual report of the company and calculated the ratios presented in your text.Eva knows that her calculations are accurate,but does not know if the ratios indicate favorable or unfavorable things about the company.What three standards of comparison are available to Eva? What would each of the standards tell her about her ratios?
Q2) Past performance is rarely a good indicator of future performance.
A)True
B)False
Q3) One of the best places to look for early signals of change in a company's profitability is the
A) annual report sent to the SEC.
B) year-end financial statements.
C) interim financial statements.
D) annual report sent to stockholders.
Q4) One of the main parts of an annual report of a publicly held corporation is the fiveto ten-year projection.
A)True B)False
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