Accounting Information Systems
Practice Questions
Course Introduction
Accounting Information Systems explores the integration of information technology and accounting processes essential for modern organizations. The course covers the design, implementation, and management of computerized accounting systems, emphasizing the role of information systems in recording, processing, and communicating financial data. Students will learn about system controls, data security, and the analysis of accounting cycles, as well as the impact of emerging technologies such as cloud computing and artificial intelligence. By the end of the course, participants will be equipped to evaluate and utilize accounting software, understand internal controls, and ensure the accuracy and integrity of financial information in an increasingly digital environment.
Recommended Textbook
Cornerstones of Managerial Accounting 3rd Edition by Maryanne M. Mowen
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Value chain analysis is a useful way of examining a firm's competitive advantage.
A)True
B)False
Answer: True
Q2) What is investigating production variances and adjusting the production process an example of?
A) planning
B) delegating C) controlling
D) decision making Answer: C
Q3) Customer value is the difference between what a customer receives and what they give up when buying a product or service.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Refer to Econo Company. Suppose the company sold 10,000 units during July and gross margin totalled $29,800. What would be the sales price per unit?
A) $9.94
B) $10.00
C) $10.09
D) $10.11
Answer: B
Q2) (total manufacturing costs + work-in-process beginning - work-in-process ending)/units produced
A)Per-unit prime cost
B)Per-unit conversion cost
C)Per-unit cost of goods manufactured
Answer: C
Q3) While it is necessary to assign direct costs to cost objects, it is NOT necessary to assign indirect costs.
A)True
B)False
Answer: False
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4
Chapter 3: Cost Behaviour
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Sample Questions
Q1) Refer to Kelowna Company. What is the value of an independent variable used to calculate the cost line when using the high-low method?
A) 4,000
B) 5,430
C) 25,160
D) 27,950
Answer: B
Q2) Suppose the cost formula for monthly depreciation cost in a factory is as follows:
Total cost = $20,000
Which type of cost does this formula represent?
A) a step cost
B) a fixed cost
C) a mixed cost
D) a variable cost
Answer: B
Q3) Computing fixed costs per unit may result in misleading information.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) What is the purpose of doing a cost-volume-profit (CVP) analysis?
A) CVP analysis is effectively used by single-product firms only.
B) CVP analysis provides managers with information used for control only.
C) CVP analysis shows how revenues, expenses, and profits behave as volume changes.
D) CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or costs on volume.
Q2) The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.
A)True
B)False
Q3) What are components of operating leverage?
A) fixed and variable costs
B) manufacturing costs and period costs
C) high-volume and low-volume products
D) revenues earned and manufacturing costs
Q4) How can a multi-product firm determine its break-even point?
Q5) Explain why cost-volume-profit analysis can be useful to managers.
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) Refer to Quillen Company. Allocating S1 costs first, how much of the support department costs will be allocated from Department S2 to the Cutting Department?
A) $0
B) $34,500
C) $138,000
D) $172,500
Q2) Which total cost is included in the unit cost of a job?
A) the total costs of actual overhead
B) the total costs of applied overhead
C) the total costs of materials purchased
D) the total costs of labour worked on the in the factory
Q3) Discuss overapplied and underapplied overhead.
Q4) An approach that assigns actual costs of direct materials, direct labour, and overhead to products
A)Actual cost system
B)Job-order cost system
C)Normal cost system
D)Process-costing system
Q5) What are the three steps of overhead application?
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Chapter 6: Process Costing
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Sample Questions
Q1) Which type of costing system works best with a large number of homogeneous products?
A) parallel costing
B) process costing
C) job-order costing
D) sequential costing
Q2) The weighted average costing method assumes that units in beginning Work-in-Process Inventory are completed first, before any new units are started.
A)True
B)False
Q3) In parallel processing, two subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.
A)True
B)False
Q4) Home builder
A)Process costing
B)Job-order costing
Q5) List the five steps in preparing a production report.
Q6) Describe the differences between sequential and parallel processing.
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) The length of time it takes to produce a unit of output from the time raw materials are received until the good is delivered to Finished Goods Inventory
A)Cycle time
B)Non-value-added
C)Velocity
D)Quality
E)Value-added activities
F)Efficiency
Q2) The consumption ratio is the amount of each activity consumed by all products.
A)True
B)False
Q3) Refer to Sallisaw Savings & Loan. Using activity-based costing, what is the activity rate for issuing monthly statements?
A) $0.50 per statement
B) $0.67 per statement
C) $6.78 per statement
D) $15.00 per statement
Q4) What is the activity based costing hierarchy? Give an example for each.
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) The variable costing income statement for Kilem Company for this year is as follows: \(\begin{array}{crr}
\text { Sales ( } 6,000 \text { units) }&&\$120,000\\
\text { variable expenses: }\\\text { Cost of Goods Sold } & \$ 36,000 & \\
\text { Selling (10\% of sales) } & 12,000 & 48,000 \\
\text { Contribution margin } & & \$ 72,000\\\text { Fixed expenses: }\\
\text { Manufacturing overhead } & \$ 32,000 \\
\text { Administrative } & 14,400 & 38,400\\
\text { Net income }&&\$25,600
\end{array}\) Selected data for this year concerning the operations of the company are as follows: \(\begin{array}{lr}
\text { Beginning inventory } & -0 \text { - units } \\
\text { Units produced } & 8,000 \text { units }\\\\
\text { Manufacturing costs: } & \\
\text { Direct labour } &\$ 3.00 \text { per unit } \\
\text { Direct materials } & 1.40 \text { per unit }\\
\text { Variable manufacturing overhead } & 1.60 \text { per unit }
\end{array}\) Required: Prepare an absorption costing income statement for this year.
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10
Chapter 9: Budgeting, Production, Cash, and Master Budget
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Sample Questions
Q1) What is characteristic of the master budget?
A) The master budget can reflect seasonal effects.
B) Monthly budgets are derived by dividing the master budget by 12.
C) Fixed costs on the master budget cannot change from one month to another.
D) Variable costs on the master budget cannot change from one month to another.
Q2) Refer to BoomBoom Company. What is the expected volume of production in February?
A) 20,000 units
B) 23,750 units
C) 24,250 units
D) 25,000 units
Q3) BCB Company budgeted production of 250,000 units for June, 240,000 units for July, and 350,000 units for August. Each unit requires 0.35 direct labour hours. How many direct labour hours are budgeted for August?
A) 5,000
B) 50,000
C) 52,500
D) 122,500
Q4) Describe some problems with participative budgeting.
Q5) What are the advantages of budgeting?
Page 11
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Refer to Cakers Express. Assuming the company found that it had a favourable materials price variance of $1,000, what is the flour's standard cost per kilogram?
A) $0.95 /kg
B) $1.00 /kg
C) $1.95 /kg
D) $2.05 /kg
Q2) The unit standard quantity of inputs is an essential component in the computation of total amount of inputs allowed for the actual output and efficiency variances.
A)True
B)False
Q3) The materials price variance is computed using the actual quantity of materials used, and the materials usage variance is computed using the actual quantity of materials purchased.
A)True
B)False
Q4) Kaizen means continuous improvement.
A)True
B)False
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Refer to Just Bags. What can be concluded when comparing the static budget to the actual outcomes?
A) The variances are all unfavourable.
B) The manager had less direct labour hours.
C) A static budget should be used for assessing efficiency.
D) The comparison is useful for assessing managerial efficiency.
Q2) Activity-based budgeting classifies costs as direct or indirect with respect to the activity output measure.
A)True
B)False
Q3) Fixed overhead was budgeted at $250,000, and 25,000 direct labour hours were budgeted. Suppose the fixed overhead volume variance was $10,000 favourable and the fixed overhead spending variance was $6,000 unfavourable. How much fixed overhead was applied?
A) $194,000
B) $202,000
C) $206,000
D) $260,000
Q4) How does activity flexible budgeting differ from functional-based flexible budgeting?
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) Black Sea Company has two divisions, the Old Division and the New Division. Last year, the Old Division earned operating income of $66,000 using average operating assets of $550,000. Last year, the New Division earned $260,000 of operating income using average operating assets of $2,000,000. Minimum required rate of return for Black Sea is 9%.
Required:
A. For the Old Division, residual income is __________________.
B. For the New Division, residual income is __________________. Now assume that the minimum required rate of return for Black Sea is 12%.
C. For the Old Division, residual income is __________________.
D. For the New Division, residual income is __________________.
Q2) In which of the following responsibility centres is a manager responsible for revenues, cost, and investment?
A) a cost centre
B) a profit centre
C) a revenue centre
D) an investment centre
Q3) The market price is always the best transfer pricing policy.
A)True
B)False
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Roberts Company produces two types of gears, Gear A and Gear B, with unit contribution margins of $6 and $8, respectively. Each gear must spend time on a special machine. The firm owns five machines that together provide 12,000 hours of machine time per year. Gear A requires 12 minutes of machine time; Gear B requires 24 minutes of machine time.
Required:
A. Calculate the contribution margin per hour of machine time for Gear a.Calcualte the contribution margin per hour of machine time for Gear B.
B. If Roberts faces only the production constraint (12,000 hours of machine time), how many units of Gear A should be produced? And how many units of Gear B? Calculate the total contribution margin from this product mix.
C. Now suppose that Robert cannot sell more than 45,000 units of each type of gear. How many units of Gear A should be produced? And how many units of Gear B? Calculate the total contribution margin from this product mix.
Q2) Resources that are acquired in advance of usage are flexible resources.
A)True B)False
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Page 15
Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) The Picture Company is considering the purchase of a new machine for $68,754. The machine would generate an annual cash flow of $21,000 for five years. At the end of five years, the machine would have no salvage value. The company's cost of capital is 12%. The company uses straight-line depreciation. What is the internal rate of return for the machine?
A) 12%
B) 14%
C) 16%
D) 18%
Q2) The internal rate of return is the least widely used of the capital investment techniques.
A)True
B)False
Q3) Refer to Eagle Investments. What is the payback period for Project A?
A) 2.0 years
B) 2.5 years
C) 3.0 years
D) 3.5 years
Q4) What are some reasons why companies use the payback period model in capital investment decision making?
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