Accounting for Managers
Test Questions
Course Introduction
Accounting for Managers is designed to equip future business leaders with a thorough understanding of fundamental accounting concepts and their practical applications in managerial decision-making. The course emphasizes the interpretation, analysis, and use of financial and managerial accounting data to plan, control, and evaluate business operations. Topics include financial statement analysis, budgeting, cost behavior and allocation, performance evaluation, and ethical implications in accounting practices. By integrating real-world scenarios and case studies, students develop the skills necessary to effectively communicate financial information, support strategic decisions, and drive organizational success.
Recommended Textbook
Using Financial Accounting Information The Alternative to Debits and Credits 10th Edition by Gary
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Chapter 1: Accounting As a Form of Communication
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Sample Questions
Q1) Which one of the following groups is considered an internal user of financial statements?
A)A bank reviewing a loan application from a corporation
B)The labor union representing employees of a company that is involved in labor negotiations
C)The financial analysts for a brokerage firm who are preparing recommendations for the firm's brokers on companies in a certain industry
D)Factory managers who supervise production line workers
Answer: D
Q2) The three forms of business entities are
A)government,cooperatives,and philanthropic organizations.
B)financing,investing,and operating.
C)sole proprietorships,partnerships,and corporations.
D)wholesalers,manufacturers,and retailers.
Answer: C
Q3) Information must be timely to be relevant.
A)True
B)False
Answer: True
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Chapter 2: Financial Statements and the Annual Report
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Sample Questions
Q1) Read the information about Seikoson.What is Seikoson's profit margin (to the closest tenth of a percent)?
A)2.8%
B)35.5%
C)61.2%
D)14.5%
Answer: B
Q2) Which statement is true concerning an income statement?
A)The income statement shows how much profit the company has earned since it began operations.
B)Net income on the income statement should be equal to the amount of cash on the balance sheet.
C)The income statement summarizes the results of operations for a point in time.
D)None of these are correct.
Answer: D
Q3) An advantage of the current ratio is that it considers the makeup of the current assets.
A)True
B)False
Answer: False
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Chapter 3: Processing Accounting Information
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Sample Questions
Q1) The purchase of office equipment on credit has what effect on the accounting equation?
A)Assets increase and liabilities increase.
B)Liabilities increase and stockholders' equity decreases.
C)Assets decrease and stockholders' equity decreases.
D)Assets decrease and liabilities decrease.
Answer: A
Q2) A list of all asset,liability,stockholders' equity,revenue,and expense accounts,along with their assigned account numbers,that are used by a company,is a(n)
A)account.
B)general journal.
C)general ledger.
D)chart of accounts.
Answer: D
Q3) If an accounting firm provides services on account,____________________ increase and stockholders' equity decreases.
Answer: expenses
Q4) The normal balance of revenue is a(n)____________________. Answer: credit
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Chapter 4: Income Measurement and Accrual Accounting
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Sample Questions
Q1) Motor Repair Shop uses the accrual basis of accounting,and had the following account balances on its financial statements at December 31,2017:
On January 1,there was a $0 balance in the Salaries Payable account.How much cash did Motor Repair pay for salaries during the year?
\[\begin{array} { l r }
\text { Rent Revenue } & \$ 34,000 \\
\text { Accounts Receivable } & 8,200 \\
\text { Utilities Payable } & 1,500 \\
\text { Rent Expense } & 2,100 \\
\text { Unearned Repair Revenue } & 700 \\
\text { Depreciation Expense } & 1,000 \\
\text { Sal aries Expense } & 32,000 \\
\text { Sal aries Payable } & 800 \\
\text { Retained Earnings, January 1 } & 10,000 \\
\text { Dividends } & 500 \\
\text { Interest Revenue } & 4,000
\end{array}\]
Q2) A(n)_________________________ results when cash is paid before the related amount is reported on the income statement.
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Chapter 5: Inventories and Cost of Goods Sold
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Q1) If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method,then the amount owed to suppliers during the period had decreased.
A)True
B)False
Q2) If ending inventory is understated,then cost of goods sold is overstated.
A)True
B)False
Q3) Refer to the data for Share,Inc.
If the LIFO method is used,how much is cost of goods sold for May?
Q4) How much will Goldman report as cost of goods purchased in its 2017 income statement?
A)$174,600
B)$183,000
C)$180,400
D)None of these choices
Q5) Specific identification relies on matching unit costs with the actual units sold. A)True
B)False
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Chapter 6: Cash and Internal Control
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Sample Questions
Q1) Which of the following statements best describes the term "outstanding check?"
A)A check written by a company and presented to the bank for payment.
B)A check written by a company but not yet presented to the bank for payment.
C)A check written by a customer that has been presented to the bank for payment.
D)A check written by a customer that has not yet been presented to the bank for payment.
Q2) A company policy that requires all prospective employees to be interviewed by the personnel department is an example of an accounting control.
A)True
B)False
Q3) The key to the classification of an amount as cash is that it be available to pay debts within a three-month period of time.
A)True
B)False
Q4) Which of the following is not a cash equivalent?
A)30-day certificate of deposit
B)60-day commercial paper
C)90-day U.S.Treasury bill
D)180-day note issued by a local or state government
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Chapter 7: Receivables and Investments
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Sample Questions
Q1) An increase in accounts receivable is reported on the statement of cash flows under the indirect method as an addition.
A)True
B)False
Q2) Which one of the following is an accurate description of Allowance for Doubtful Accounts?
A)Contra account
B)Liability account
C)Revenue account
D)Expense account
Q3) What is the impact on the cash flow statement from an increase in short-term notes receivable,assuming the indirect method is used?
A)A decrease in the cash flow from operating activities
B)An increase in the cash flow from operating activities
C)An increase in the cash flow from financing activities
D)An increase in the cash flow from investing activities
Q4) Explain the distinction between a note receivable and an account receivable.
Q5) A(n)__________ is a written promise to repay a definite sum of money either upon demand or at a fixed or determinable date in the future.
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Chapter 8: Operating Assets: Property, Plant, and Equipment, and Intangibles
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Sample Questions
Q1) Acquisition cost should not include expenditures unrelated to the acquisition,like repair costs for damages incurred during installation,or costs incurred after the asset was installed and use begun.
A)True
B)False
Q2) Refer to the information for Wexford Co.
By what amount would double-declining-balance depreciation exceed straight-line depreciation over the five-year life of the truck?
A)$0
B)$7,000
C)$37,000
D)$6,000
Q3) Relative to plant assets,how can a company report a net loss for a period and yet still have positive cash flows from operating activities?
Q4) What is the relationship between the book value of a plant asset,the market value of the plant asset,and the salvage value of a plant asset? Explain.
Q5) Explain how the costs associated with operating assets are reported on the balance sheet.
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Chapter 9: Current Liabilities, Contingencies, and the Time Value of Money
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Sample Questions
Q1) If the present and future values are known along with the number of periods,then the __________ can be determined.
Q2) Refer to the data for Valance & Company.
Required
(1)What current liabilities appearing on the balance sheet do not appear in the Operating Activities section of the statement of cash flows? Why?
(2)What current liabilities appear in the Operating Activities category of Valance's statement of cash flows? How does the change for each year affect the cash flows from operating activities for that year?
Q3) A company will have to pay a $50,000 liability in four years.How much must be deposited now into a bank account earning 8% compounded semiannually to fully fund the future payment?
A)$34,000
B)$35,500
C)$36,523
D)$36,550
Q4) The difference between notes payable and accounts payable is __________.
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Chapter 10: Long-Term Liabilities
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Sample Questions
Q1) A friend of yours has asked you whether off-balance-sheet financing means that the amounts are immaterial and therefore are not reported.In a short paragraph,tell him what off-balance-sheet financing is and why firms engage in off-balance-sheet transactions.
Q2) For 2017,Wasabi Company has accounting revenues of $6,000.However,because of temporary differences between tax and accounting,$1,000 of this is not subject to tax.If expenses are $3,000 for both tax and accounting,and the tax rate is 40%,what is the amount of tax payable to the IRS?
A)$400
B)$800
C)$1,200
D)$1,600
Q3) IFRS typically use a more "rule-based" approach than U.S.GAAP.
A)True
B)False
Q4) When bonds are issued by a company,the accounting entry shows an
A)increase in liabilities and a decrease in stockholders' equity.
B)increase in liabilities and an increase in stockholders' equity.
C)increase in assets and an increase in liabilities.
D)increase in assets and an increase in stockholders' equity.
Page 12
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Chapter 11: Stockholders Equity
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Sample Questions
Q1) Tarr,a sole proprietorship,had the following balances and transactions during 2017: beginning capital,$40,000;contribution of cash to the business by the owner,$15,000;revenue,$60,000;expenses,$35,000;withdrawal by the owner,$5,000.What is the amount of the ending capital balance?
A)$40,000
B)$60,000
C)$75,000
D)$85,000
Q2) Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?
A)The payment of dividends is at the discretion of the board of directors.
B)The payment of interest on bonds payable is required by law.
C)Interest accrues,whereas dividends do not accrue.
D)The declaration of dividends reduces the amount of income taxes the corporation must pay.
Q3) A 2-for-1 stock split increases the par value per share.
A)True
B)False
Q4) The annual dividend amount divided by the annual net income is the __________.
Q5) What is meant by the balance in the Retained Earnings account?
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Chapter 12: The Statement of Cash Flows
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Q1) Each of the following transactions would be classified as either an investing or a financing activity except when
A)investments in stock are purchased.
B)a bank loan is obtained.
C)stock is issued to acquire land.
D)dividends are paid.
Q2) Cash flows from issuing and repurchasing stock or issuing and repaying (retiring)debt are classified as
A)operating activities.
B)investing activities.
C)financing activities.
D)borrowing activities.
Q3) If the balance of prepaid insurance was the same on January 1,2017,and December 31,2017,then the insurance expense would __________ the cash payments made for insurance during the year.
Q4) The cash flow adequacy ratio can only be calculated if a company uses the direct method to report cash flows from operating activities.
A)True
B)False
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Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) Since inflation is an important consideration in analyzing financial statements,the FASB requires the submission of all financial statements in an inflation-adjusted format to the SEC.
A)True
B)False
Q2) Refer to the data for Mother Nature Supplies.
Which of the following would result from a horizontal analysis of its balance sheet?
A)Accounts receivable increased $22,000,or 57.9%,during 2018.
B)Accounts receivable is five times larger than merchandise inventory in 2018.
C)Accounts receivable is 13.3% of total assets for 2018.
D)Merchandise inventory is 2.7% of total assets for 2018.
Q3) Refer to the data for Fawnsworth Industries.
Based on this information,what is Fawnsworth's number of days' sales in receivables (assuming a 360-day year)?
A)32.4 days
B)36.0 days
C)28.8 days
D)25.2 days
Q4) Why is liquidity important for businesses?
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Chapter 14: International Financial Reporting Standards
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Q1) IFRS are now mandatory in all member states of the economic and political organization known as the European Union.
A)True
B)False
Q2) The International Accounting Standards Committee was established in 1973 to develop worldwide standards.Which group replaced it in 2001?
A)FASB
B)IFRS
C)IIA
D)IASB
Q3) Which of the following countries do not use a common law system?
A)United States
B)Germany
C)United Kingdom
D)United States and United Kingdom
Q4) How does the application of the lower-of-cost-or-market rule differ between U.S.GAAP and IFRS?
Q5) How would you describe the current role of the IASB in setting accounting standards?
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