Accounting Principles
Practice Questions
Course Introduction
Accounting Principles introduces the fundamental concepts, procedures, and standards underlying the accounting process. Students will learn how to identify, record, and report financial transactions using generally accepted accounting principles (GAAP). The course covers essential topics such as the accounting cycle, preparation and analysis of financial statements, internal controls, and the ethical considerations of financial reporting. Emphasis is placed on developing an understanding of how accounting information supports business decision-making and the role of accountants in various organizational settings.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis 3rd Australian Edition by Charles Horngren
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21 Chapters
3782 Verified Questions
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Page 2
Chapter 1: Management Accounting in Context
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) ________ is the manner by which companies promote and sell their products or services to customers or prospective customers.
A)Customer service
B)Distribution
C)Research and development
D)Marketing
Answer: D
Q2) The supply chain refers to the sequence of business functions in which customer usefulness is added to products or services.
A)True
B)False
Answer: False
Q3) Cost accounting provides all of the following EXCEPT:
A)pricing information from marketing studies.
B)information for management accounting and financial accounting.
C)financial information regarding the cost of acquiring resources.
D)non-financial information regarding the cost of operational efficiencies.
Answer: A
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Chapter 2: Different Costs for Different Purposes
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324 Verified Questions
324 Flashcards
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Sample Questions
Q1) ________ are commonly divided into many subclassifications.
A)Indirect labour costs
B)Direct material costs
C)Direct labour costs
D)Fixed costs
Answer: A
Q2) What are the inventoriable costs per unit associated with Product ADE108?
A)$48
B)$66
C)$60
D)$83
Answer: D
Q3) Which of the following is a fixed cost for a motor car manufacturing plant?
A)Windows for each car produced
B)Administrative salaries
C)Sales commissions
D)Electricity used by assembly-line machines
Answer: B
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4
Chapter 3: Determining How Costs Behave
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182 Flashcards
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Sample Questions
Q1) The 'high-low method' is more accurate than the 'regression method' of estimating a cost function.
A)True
B)False
Answer: False
Q2) Collecting data on the dependent variable and the cost driver may include:
A)collecting data from different entities over the same period of time.
B)interviews with managers.
C)collecting data over a long period of time.
D)All of these answers are correct.
Answer: D
Q3) The coefficient of determination (r<sup>2</sup>)measures the percentage of variation in Y explained by X (the independent variable).
A)True
B)False
Answer: True
Q4) Economic plausibility is an important criterion for choosing a cost driver.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Costvolumeprofit Analysis
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211 Flashcards
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Sample Questions
Q1) Which of the following items is NOT an assumption of CVP analysis?
A)Proportions of different products will remain constant when multiple products are sold.
B)Total revenues and total costs are linear in relation to output units.
C)Unit selling price and unit fixed costs are known and remain constant.
D)Costs may be separated into separate fixed and variable components.
Q2) Freddie's company has mostly fixed costs and Valerie's company has mostly variable costs.Which company has the greatest risk of a net loss? Explain why.
Q3) Break-even point in units is:
A)1000 burgers.
B)1200 burgers.
C)1600 burgers.
D)None of these answers are correct.
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Chapter 5: Estimating the Cost of Producing Services
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Sample Questions
Q1) The budgeted cost-driver rate measures actual capacity utilisation.
A)True
B)False
Q2) Where managers use cost information about outputs to guide pricing decisions,they are likely to __________ outputs that they have under-costed,resulting in increased demand for these outputs while profit will fall.
A)underprice
B)overprice
C)over-cost
D)under-cost
Q3) Compare job-costing and process-costing systems.
Q4) Actual costing is a costing system that traces budgeted direct costs to the cost object and allocates indirect costs based on the actual cost-driver rate.
A)True
B)False
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Chapter 6: Estimating the Costs of Products and Inventory
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356 Flashcards
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Sample Questions
Q1) Job costing may only be used by:
A)merchandising companies.
B)service companies.
C)manufacturing companies.
D)All of these may use job costing.
Q2) In a job-costing system the cost object is an individual unit,batch,or lot of a distinct product or service.
A)True
B)False
Q3) A company may choose to use budgeted rates to allocate direct labour accounts if direct labour costs are difficult to trace to jobs as they are completed.
A)True
B)False
Q4) Using job costing,the 20X5 actual indirect-cost rate is:
A)$5.00 per machine-hour.
B)$5.14 per machine-hour.
C)$4.00 per machine-hour.
D)$6.00 per machine-hour.
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8
Chapter 7: Target Costing, Managing Activities and Managing Capacity
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) Capacity costs:
A)don't provide a useful planning tool for non-production businesses.
B)cannot be used with activity-based costing.
C)are difficult to estimate.
D)All of these answers are correct.
Q2) What is the estimated life-cycle operating profit for the first two years?
A)$(1 480 000)
B)$11 200 000
C)$(1 400 000)
D)$3 200 000
Q3) If a company chooses practical capacity for planning purposes,it must also use practical capacity for performance evaluation.
A)True
B)False
Q4) What is the total target cost?
A)$2 484 000
B)$9 200 000
C)$1 000 000
D)$11 500 000
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Chapter 8:
Activity-Based Management and Activity-Based Costing
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230 Verified Questions
230 Flashcards
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Sample Questions
Q1) Design costs are an example of:
A)organisation-sustaining costs.
B)product-sustaining costs.
C)batch-level costs.
D)unit-level costs.
Q2) Which of the following is a challenge to using cost-benefit criteria for allocating costs?
A)Cost systems are being simplified and fewer multiple cost-allocation bases are being used
B)The costs of collecting and processing information keep spiralling upward
C)The costs of designing and implementing complex cost allocations are not readily apparent
D)The benefits of making better-informed pricing decisions are difficult to measure
Q3) Activity-based costing information:
A)may assist in improving product design and efficiency.
B)should be used when services place similar demands on resources.
C)will yield inaccurate cost numbers when products are similar.
D)does not support activity-based management.
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Chapter 9: Pricing and Customer Profitability
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Sample Questions
Q1) What type of costs are not relevant to a decision as to whether or not to close a business-sales distribution channel?
A)Target
B)Variable
C)Full
D)Division-sustaining
Q2) Companies that produce high quality products do not have to pay attention to the actions of their competitors.
A)True
B)False
Q3) All customers are equally important to a company and should receive equal levels of attention.
A)True
B)False
Q4) Price fixing is allowed in Australia.
A)True
B)False
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11
Chapter 10: Decision Making and Relevant Information
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Sample Questions
Q1) The assumption of no ________ or strategic implications is crucial to management's analysis of the one-time-only special order decision.
A)short-run
B)financial
C)long-run
D)qualitative
Q2) Which of the following would NOT be considered in a make-or-buy decision?
A)Potential rental income from space occupied by the production area
B)Unchanged supervisory costs
C)Variable costs of production
D)Fixed costs that will no longer be incurred
Q3) In a make-or-buy decision when there are alternative uses for capacity,the opportunity cost of idle capacity is relevant.
A)True
B)False
Q4) A bottleneck occurs in an operation when the work to be performed exceeds the available capacity to do it.
A)True
B)False
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Chapter 11: Budgeting, Management Control and Responsibility Accounting
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215 Verified Questions
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Sample Questions
Q1) The cash budget is a schedule of expected cash receipts and disbursements that:
A)is prepared immediately after the sales forecast.
B)requires an ageing of accounts receivable and accounts payable.
C)predicts the effect on the cash position at given levels of operations.
D)is a self-liquidating cycle.
Q2) The self-liquidating cycle is the movement from cash to inventories to receivables and back to cash.
A)True
B)False
Q3) ________ includes a budgeted cash flow statement and a budgeted balance sheet.
A)The operating budget
B)The capital expenditures budget
C)An annual report
D)The financial budget
Q4) How much cash will be disbursed in total in March?
A)$48 200
B)$21 000
C)$54 000
D)$38 000
Q5) Describe the benefits to an organisation of preparing an operating budget. Page 13
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Page 14
Chapter 12: Flexible Budgets, Direct Cost Variances and Management Control
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Sample Questions
Q1) The flexible budget will report ________ for variable costs.
A)$175 000
B)$195 000
C)$13 583
D)$154 000
Q2) In order to predict costs,it is important to have standard prices for each: A)input.
B)variance. C)output. D)target.
Q3) The flexible budget will report ________ for the fixed costs.
A)$360 000
B)$450 000
C)$458 000
D)$572 500
Q4) What is the market-share variance?
A)$800 F
B)$1500 U
C)$500 U
D)$1100 F
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Chapter 13: Flexible Budgets, Overhead Cost Variances and Management Control
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Sample Questions
Q1) Explain the meanings of the variable overhead efficiency variance and the variable overhead spending variance.
Q2) ______________ measures evaluate the overall effect of and the trade-offs between different non-financial performance measures.
A)Historic
B)Activity
C)Financial
D)Organisational
Q3) Variable overhead costs are,by definition,a lump sum of costs that remain unchanged in total for a given period despite changes in the level of total activity or volume related to those overhead costs.
A)True
B)False
Q4) Explain why sales-volume variance could be helpful to managers.
Page 16
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Chapter 14: Allocation of Support-Department Costs,
Common Costs and Revenues
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137 Flashcards
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Sample Questions
Q1) If a single-rate cost-allocation method is used,what amount of copying facility costs will be allocated to the Marketing Department? Assume actual usage is used to allocate copying costs.
A)$6000
B)$8400
C)$9000
D)$6800
Q2) What is the name of the method that allocates costs in each cost pool using the same rate per unit?
A)Dual-rate cost-allocation method
B)Reciprocal cost-allocation method
C)Incremental cost-allocation method
D)Single-rate cost allocation method
Q3) Using the direct method,what amount of Maintenance Department costs will be allocated to Department A?
A)$78 000
B)$48 000
C)$64 000
D)$96 000
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Chapter 15: Strategy Formation, Strategic Control and the Balanced Scorecard
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Sample Questions
Q1) The balanced scorecard reduces managers' emphasis on short-run __________ performance (such as quarterly earnings)because the key strategic non-financial and operational indicators (such as product quality and customer satisfaction)measure changes that a company is making for the long run.
A)financial
B)organisational
C)non-financial
D)environmental
Q2) Engineered costs:
A)are from physically observable activities.
B)have processes that are sketchy or unavailable.
C)possess a high level of uncertainty.
D)are non-repetitive.
Q3) Which of the following needs to happen in order to deal with unused capacity effectively?
A)May downsize.
B)May retain some unused capacity for future growth.
C)Should consider it a waste of resources and eliminate all unused capacity.
D)Both A and B are correct.
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Chapter 16: Quality, Time and the Balanced Scorecard
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Sample Questions
Q1) Observations outside control limits serve as inputs for Pareto diagrams.
A)True
B)False
Q2) When considering customer needs and wants,only financial measures can be used because they are easily measured.
A)True
B)False
Q3) The average waiting time is the average amount of time an order will wait at the company's shipping office before it is sent to the customer.
A)True
B)False
Q4) Management has offered to allow the prevention changes if all changes take place as anticipated and the amounts netted are less than the cost of the equipment.What is the net impact of all the changes created by the preventive changes?
A)$(121 500)
B)$69 000
C)$(136 950)
D)$(33 750)
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Chapter 17: Inventory Management, Just-In-Time and Simplified Costing Methods
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Sample Questions
Q1) The 'flush' in backflush refers to the fact that there are no variances in a backflush costing system using standard costs.
A)True
B)False
Q2) The costs of expediting an order from a supplier in response to a stockout include the additional ordering costs,plus any associated transportation costs.
A)True
B)False
Q3) How many deliveries will be required at the economic order quantity (EOQ)?
A)5.1 deliveries
B)8.2 deliveries
C)1.0 delivery
D)18.5 deliveries
Q4) All of the following are potential financial benefits of just-in-time EXCEPT:
A)lower investments in plant space for inventories.
B)lower investments in inventories.
C)reducing the risk of obsolescence of products.
D)reducing manufacturing lead time.
20
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Chapter 18: Capital Budgeting and Cost Analysis
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Sample Questions
Q1) Book & Bible Bookstore desires to buy a new coding machine to help control book inventories.The machine sells for $36 586 and requires working capital of $4000.Its estimated useful life is five years and will have a salvage value of $4000.Recovery of working capital will be $4000 at the end of its useful life.Annual cash savings from the purchase of the machine will be $10 000.
Required:
a.Compute the net present value at a 14% required rate of return.
b.Compute the internal rate of return.
c.Determine the discounted payback period of the investment.
Q2) The very last step in the final stage in the capital budgeting process is to make the investment identified previously.
A)True
B)False
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Chapter 19: Management Control Systems, Transfer Pricing and
Multinational Considerations
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Sample Questions
Q1) Which on the following is a benefit of using a market-based transfer price?
A)Profits of the division receiving the products are sacrificed for the overall good of the corporation.
B)Economic viability and profitability of each division can be evaluated individually.
C)Profits of the transferring division are sacrificed for the overall good of the corporation.
D)None of these answers are correct.
Q2) What is the market-based transfer price per compressor from the Compressor Division to the Assembly Division?
A)$54.50
B)$34.00
C)$69.50
D)$77
Q3) What is a disadvantage of a negotiated transfer price?
A)negotiations usually require much time and energy
B)negotiated transfer price preserves divisional autonomy
C)each division manager must put forth effort to increase division operating profit
D)Both B and C are correct.
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Page 22
Chapter 20: Performance Measurement, Compensation
and Multinational Considerations
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Sample Questions
Q1) 'Return on investment' is also called the 'imputed cost' of the investment.
A)True
B)False
Q2) What is the Coaxial Cables Division's investment turnover ratio?
A)2.00
B)2.50
C)3.33
D)0.80
Q3) What is the value of the operating assets belonging to the Jetski Division?
A)$2 250 000
B)$1 750 000
C)$2 000 000
D)$3 750 000
Q4) Designing an accounting based performance measure requires six steps.List each step.For three of the steps,describe a question that must be resolved as part of the implementation process.
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Chapter 21: Measuring and Reporting Sustainability
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Sample Questions
Q1) Environmental management accounting provides only non-financial measures of environmental-related performance.
A)True
B)False
Q2) A 'cap and trade' approach to greenhouse gas control is a 'stick' rather than a 'carrot' approach.
A)True
B)False
Q3) One of the consequences of the existence of externalised costs is that the market place,as it currently operates,does not achieve the optimal outcomes for society as a whole.
A)True
B)False
Q4) The term 'dynamic complexity' in sustainable decision-making refers to the way in which the factors in the decision change and respond to each other.
A)True
B)False
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