Business Accounting Exam Preparation Guide
Course Introduction
Business Accounting introduces students to the fundamental principles and practices of accounting within a business context. The course covers essential topics such as the accounting cycle, financial statement preparation and analysis, double-entry bookkeeping, and the interpretation of key financial documents. Students will learn how to record, classify, and summarize financial transactions, as well as grasp the regulatory standards governing accounting practices. With a focus on developing analytical and problem-solving skills, the course equips students to make informed financial decisions and effectively communicate accounting information to stakeholders.
Recommended Textbook
Cornerstones of Managerial Accounting 3rd Edition by Maryanne M. Mowen
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14 Chapters
2120 Verified Questions
2120 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) According to the Rules of Professional conduct of CPA Ontario, what are the five fundamental principles of ethics?
Answer: Professional Behaviour
Integrity and Due Care
Professional Competence
Confidentiality
Objectivity
Q2) The Triple Bottom Line refers to management putting triple the focus on profits.
A)True
B)False
Answer: False
Q3) Because service organizations do not make or sell tangible products, they have no need for managerial accounting.
A)True
B)False
Answer: False
Q4) Explain the term objectivity.
Answer: Objectivity - Members do not allow their professional or business judgment to be comprised by bias, conflict of interest or the undue influence of others.
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Chapter 2: Basic Managerial Accounting Concepts
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) Refer to TechCom Inc. What was the amount of cost of goods manufactured last month?
A) $1,250,000
B) $1,300,000
C) $1,750,000
D) $2,000,000
Answer: D
Q2) What is the formula to calculate gross margin?
A) sales revenue - cost of goods sold
B) sales revenue - selling and administrative expenses
C) total product costs + beginning work-in-process - ending work-in-process
D) cost of goods manufactured + beginning finished goods inventory- ending finished goods inventory
Answer: A
Q3) Cost of goods sold is the total product cost of the units manufactured during a period.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Cost Behaviour
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) Refer to Nova Scotia Accounting Firm. What does $87,100 represent?
A) the intercept
B) the variable rate
C) the dependent variable
D) the independent variable
Answer: A
Q2) Remains the same in total within the relevant range
A)Variable cost
B)Fixed cost
C)Mixed cost
D)Step cost
Answer: B
Q3) Refer to Prince Edward Company. Assume that 400 machine hours are budgeted. What would be the budgeted cost for maintenance next month?
A) $985
B) $2,943
C) $3,928
D) $4,913
Answer: D
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Page 5
Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) Which of the following best describes the break-even point?
A) the point at which total sales equal total cost
B) the point at which fixed costs equal variable costs
C) the point at which total sales are less than total cost
D) the point at which total sales are greater than total cost
Q2) Where is the break-even point on a cost-volume-profit graph?
A) at the intersection of the revenue line and the profit line
B) at the intersection of the revenue line and the total cost line
C) at the intersection of the fixed cost line and the variable cost line
D) at the intersection of the contribution margin line and the fixed cost line
Q3) Break-even point
A)horizontal-axis of cost-volume-profit graph
B)vertical-axis of cost-volume-profit graph
C)slope of revenue line
D)slope of cost line
E)point where the total revenue line and the total cost line intersect
Q4) Most firms would like to earn operating income exactly equal to the income at the break-even point.
A)True
B)False
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Chapter 5: Job-Order Costing
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) A company has two departments that all goods pass through: machining and assembly. Machining overhead is applied based on machine hours, and assembly overhead is applied based on direct labour hours. Data on each department are as follows: \(\begin{array}{lrr}&\text { Machining }&\text { Assembly }\\
\text { Budgeted Overhead } & \$ 75,000 & \$ 40,000 \\
\text { Budgeted Direct Labour Hours } & 5,000 & 10,000 \\
\text { Budgeted Machine Hours } & 25,000 & 1,000 \\
\text { Actual Overhead } & \$ 75,400 & \$ 39,200 \\
\text { Actual Direct Labour Hours } & 5,203 & 9,980 \\
\text { Actual Machine Hours } & 25,040 & 850
\end{array}\) A. Calculate the overhead rate for each department.
B. Calculate each department's applied overhead.
C. Calculate each department's overhead variance. Specify whether it is overapplied or underapplied.
Q2) When is the predetermined overhead rate usually calculated?
A) at the end of the year
B) at the end of each month
C) at the beginning of the year
D) at the beginning of each month
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Chapter 6: Process Costing
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Refer to LuLu, Inc. What would be the total costs to account for?
A) $176,000
B) $240,000
C) $264,000
D) $304,000
Q2) Large manufacturing plants, such as chemical, food, and tire manufacturers, typically use process costing.
A)True
B)False
Q3) Explain the role of the departmental production report in process costing, and name the five steps for completing the departmental production report.
Q4) The costs transferred from a prior process to a subsequent process are referred to as transferred-out costs.
A)True
B)False
Q5) The major benefit of the FIFO costing method is simplicity.
A)True B)False
Q6) Explain how nonuniform inputs and multiple departments affect process costing.
Page 8
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Chapter 7: Activity-Based Costing and Management
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) Which term reflects the identification and removal of activities that fail to add value?
A) activity selection
B) activity reduction
C) activity elimination
D) activity stabilization
Q2) Which of the following is NOT a component of process value analysis?
A) velocity
B) driver analysis
C) activity analysis
D) performance measurement
Q3) What type of analysis is concerned with identifying the root causes of activity costs?
A) driver analysis
B) direct analysis
C) causal analysis
D) activity analysis
Q4) Zero defects means that most products conform to specifications.
A)True
B)False
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Page 9
Chapter 8: Absorption and Variable Costing, and Inventory Management
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Economic order quantity
A)The costs of not having a product available when demanded by a customer
B)The costs of carrying inventory
C)Approach that maintains goods should be pulled through the system by present demand
D)The number of units in the order quantity that minimizes the total cost
E)The costs of placing and receiving an order
Q2) Ordering costs
A)The costs of not having a product available when demanded by a customer
B)The costs of carrying inventory
C)Approach that maintains goods should be pulled through the system by present demand
D)The number of units in the order quantity that minimizes the total cost
E)The costs of placing and receiving an order
Q3) Which of the following reflects the primary difference between variable and absorption costing?
A) inclusion of fixed selling expenses in period costs
B) inclusion of fixed selling expenses in product costs
C) inclusion of fixed manufacturing overhead in product costs
Page 10
D) inclusion of variable manufacturing overhead in period costs
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) Refer to Garden Company. What are the total cash disbursements expected during the month of July?
A) $55,600
B) $60,100
C) $161,600
D) $167,600
Q2) Refer to BoomBoom Company. What is the amount of expected sales revenue for February?
A) $45
B) $20,000
C) $900,000
D) $1,125,000
Q3) The cash budget includes the beginning balance of cash, cash receipts, cash disbursements, and the ending balance of cash.
A)True
B)False
Q4) The master budget is composed of operating budgets and financial budgets.
A)True
B)False
Q5) What are the advantages of budgeting?
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Chapter 10: Standard Costing: a Managerial Control Tool
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Refer to Serenity Equestrian Corporation. What is the labour efficiency variance?
A) $3,750 U
B) $3,750 F
C) $4,000 U
D) $4,000 F
Q2) How do standard cost systems enhance operational control?
A) through actual costs, which indicate the price received for units sold
B) through standard costs, which indicate the desired cost of a unit of input
C) through efficiency variances, which indicate the need for corrective action
D) through price variances, which indicate the need for better spending control
Q3) Which variance is the difference between the actual cost of the input and its planned cost?
A) the price variance
B) the usage variance
C) the efficiency variance
D) the total budget variance
Q4) Operating personnel can easily achieve standards set by engineering studies.
A)True
B)False
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Chapter 11: Flexible Budgets and Overhead Analysis
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) What is characteristic of activity-based budgeting?
A) It creates a budget after the fact.
B) It builds a budget for each function.
C) It identifies only the overhead activity.
D) It classifies costs as variable or fixed with respect to the activity output measure.
Q2) Responsibility for variable overhead spending and efficiency variances is generally assigned to the purchasing manager.
A)True
B)False
Q3) Using activity-based budgeting, assessing variances according to fixed and variable components provides insight into the source of variances.
A)True
B)False
Q4) When overhead is applied on the basis of direct labour hours, the variable overhead changes in proportion to changes in the direct labour hours used.
A)True
B)False
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Chapter 12: Performance Evaluation and Decentralization
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Refer to Borraw Company. What are the average operating assets for Division A?
A) $5,000
B) $25,000
C) $125,000
D) $208,333
Q2) Suppose the selling division is operating at less than full capacity. Where would the floor of the bargaining range most probably be set at?
A) the market price
B) the full manufacturing cost
C) the variable cost of manufacturing
D) the average price of all products sold by the selling division
Q3) In which of the following responsibility centres is a manager responsible for both revenues and costs?
A) a cost centre
B) a profit centre
C) a revenue centre
D) an investment centre
Q4) In terms of a Balanced Scorecard, define Strategy?
Q5) What are the advantages and disadvantages of return on investment (ROI)?
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Chapter 13: Short-Run Decision Making: Relevant Costing
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) Many companies start with cost to determine price since revenue must cover cost for the firm to make a profit.
A)True B)False
Q2) Target costing is a method of determining the price of a product or service based on the cost that the business has to pay.
A)True B)False
Q3) Target costing can be used most effectively in the design and development stage of the product life cycle.
A)True
B)False
Q4) A segment margin is always greater than or equal to zero. A)True
B)False
Q5) In short-run decision making, the alternative with the lowest overall cost should always be chosen.
A)True B)False
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Chapter 14: Capital Investment Decisions
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) Suppose the cash flows of a project are received evenly over the life of the project. What formula is used to calculate the payback period?
A) original investment / annual cash flow
B) original investment × annual cash flow
C) original investment + annual cash flow
D) original investment - annual cash flow
Q2) Because of the postaudit, managers are more likely to make capital investment decisions in the best interests of the firm.
A)True
B)False
Q3) Refer to Ostead Company. What is the net present value of the investment?
A) $2,775
B) $81,830
C) $118,170
D) $202,775
Q4) Mutually exclusive projects are projects that, if accepted, preclude the acceptance of all other competing projects.
A)True
B)False
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