Corporate Accounting Exam Practice Tests
Course Introduction
Corporate Accounting examines the principles, procedures, and regulatory framework involved in the accounting of incorporated entities. The course covers key topics such as preparation and presentation of company financial statements, share capital and debenture accounting, amalgamation and reconstruction of companies, and accounting for mergers and acquisitions. Emphasis is placed on understanding statutory requirements, compliance with international and local accounting standards, and analyzing corporate disclosures to assess financial performance and position. Through case studies and practical exercises, students develop the skills necessary to interpret corporate reports and make informed business decisions.
Recommended Textbook Cornerstones of Cost Accounting 1st Edition by Don R. Hansen
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Page 2
Chapter 1: Introduction to Cost Management
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Sample Questions
Q1) The manager has to decide what tasks are needed and how they should be accomplished.This statement describes
A) the organization chart.
B) planning.
C) organizing.
D) none of these.
Answer: B
Q2) Continuous improvement is
A) critical in a dynamic environment.
B) important to finding and maintaining a competitive advantage.
C) an effort to find ways to increase overall efficiency, improve quality, and reduce costs.
D) all of these.
Answer: D
Q3) Which of the following is NOT provided by cost accountants?
A) cost information in accordance with GAAP
B) cost information about processes and activities
C) financial information for external users
D) cost information about products, customers, and services
Answer: C
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Page 3
Chapter 2: Basic Cost Management Concepts
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Sample Questions
Q1) Refer to Figure 2-15.What is the cost of goods sold?
A) $ 36,500
B) $ 29,400
C) $ 28,600
D) $ 29,500
Answer: B
Q2) In a company that supplies garlic bread to pizza restaurants, which of the following would be considered a transforming process?
A) delivered garlic bread
B) baking
C) garlic
D) oil
Answer: B
Q3) Wages paid to a janitor in the factory would be classified as A) direct labor.
B) direct janitor salaries.
C) supervisor salaries.
D) factory overhead.
Answer: D
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Page 4
Chapter 3: Cost Behavior
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Sample Questions
Q1) Boss Company currently leases a delivery van from Check Enterprises for a fee of $250 per month plus $0.40 per mile.Management is evaluating the desirability of switching to a modern, fuel-efficient van, which can be leased from David, Inc., for a fee of $600 per month plus $0.05 per mile.All operating costs and fuel are included in the rental fees.In general, a lease from A) David, Inc., is economically preferable to a lease from Check Enterprises regardless of the monthly use.
B) Check Enterprises is economically preferable below 1,000 miles per month.
C) Check Enterprises is economically preferable to a lease from David, Inc., regardless of the monthly use.
D) Check Enterprises is economically preferable above 1,000 miles per month.
Answer: B
Q2) The direct material cost is $10,000 when 2,000 units are produced.What is the direct material cost for 2,500 units produced?
A) $10,000
B) $ 8,000
C) $15,000
D) $12,500
Answer: D
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Page 5
Chapter 4: Activity-Based Costing
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Sample Questions
Q1) Assume the following: Actual overhead costs equaled estimated overhead.Actual direct labor hours exceeded estimated direct labor hours used to calculate the predetermined overhead rate.If overhead is applied using the predetermined overhead rate, then overhead is
A) overapplied.
B) underapplied.
C) $-0-.
D) indeterminable from the information given.
Q2) Refer to Figure 4-11.What is the allocation rate per labor transaction using ABC?
A) $ 8,000
B) $ 16
C) $29,000
D) $ 40
Q3) The use of unit-based activity drivers to assign costs tends to A) overcost low-volume products.
B) overcost high-volume products.
C) undercost all products.
D) overcost all products.
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Chapter 5: Product and Service Costing: Job-Order System
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102 Flashcards
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Sample Questions
Q1) Normal costing uses which cost in work in process?
A) applied direct materials
B) actual overhead
C) applied overhead
D) budgeted overhead
Q2) A source document
A) is only an external document.
B) provides transaction data that can be recorded in a database.
C) is only used to record a transaction between an organization and an outside vendor. D) is only an internal document.
Q3) Refer to Figure 5-8.What is the activity rate for purchasing?
A) $ 1.25
B) $ 3.75
C) $ 8
D) $ 40
Q4) Compare and contrast perishability and intangibility in an automobile oil lubrication shop and architectural design firms.
Q5) Why are unit costs important? Why do full-cost unit costs change from accounting period to accounting period.
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Chapter 6: Process Costing
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Sample Questions
Q1) Refer to Figure 6-20.What is CUPORAMA's total cost for Casts in April?
A) $13,750
B) $26,275
C) $28,750
D) $70,000
Q2) If beginning inventory contained 2,000 units of product that were judged to be 40 percent complete as to labor, the equivalent units of production for labor during the current period under the FIFO method for these 2,000 units are
A) 2,000 units.
B) 800 units.
C) 1,200 units.
D) 400 units.
Q3) Refer to Figure 6-19.Takon's equivalent units for conversion using FIFO would be A) 9.
B) 93.
C) 105.
D) 114.
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Chapter 7: Allocating Costs of Support Departments and Joint Products
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Sample Questions
Q1) _______________ are activities or variables within a producing department that provoke the incurrence of support costs.
A) Causal factors
B) Common costs
C) Cost objectives
D) Activity output
Q2) The split-off point can best be defined as
A) the point at which a secondary product is recovered in the course of manufacturing a primary product.
B) the point at which you can get more of one product and less of another product.
C) the point in the production process where no further processing is needed.
D) the point at which joint products become separate and identifiable.
Q3) Refer to Figure 7-7.What is the gross profit for Brights assuming the net realizable value method is used?
A) $36,054
B) $11,446
C) $47,500
D) $62,500
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Chapter 8: Budgeting for Planning and Control
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Sample Questions
Q1) After preparing a finished goods inventory budget for August, what is the total ending inventory cost?
A) $26,100 units.
B) $31,755 units.
C) $69,600 units.
D) $36,540 units.
Q2) Refer to Figure 8-2.Oriental Lamp Company manufactures lamps. How many lamps should be produced in October?
A) 10,000 lamps
B) 14,000 lamps
C) 9,500 lamps
D) 10,500 lamps
Q3) What is the budgeted maintenance cost if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?
A) $15,000
B) $32,000
C) $47,000
D) $79,000
Q4) Discuss the features of an ideal budgetary process.
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Chapter 9: Standard Costing: a Functional-Based Control Approach
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Sample Questions
Q1) What is the material usage variance for Roberts Company?
A) $900 (F)
B) $1,950 (F)
C) $2,850 (F)
D) $900 (U)
Q2) During June, 12,000 pounds of materials were purchased at a cost of $8 per pound.If there was an unfavorable direct materials price variance of $6,000 for June, the standard cost per pound must be
A) $8.50.
B) $8.00.
C) $7.50.
D) $7.00.
Q3) If a company produces fewer units than expected, there will be
A) a favorable budget variance.
B) an unfavorable spending variance.
C) a favorable volume variance.
D) an unfavorable volume variance.
Q4) How are standards developed? What is the difference between ideal and currently attainable standards?
Q5) Compare and contrast mix and yield variances.
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Chapter 10: Decentralization: Responsibility Accounting, Performance
Evaluation, and Transfer Pricing
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Sample Questions
Q1) The manager of an investment center is responsible for A) decisions regarding costs.
B) decisions regarding revenues.
C) decisions to invest in assets.
D) all of these.
Q2) Goal congruence can be defined as
A) an incentive plan arranged so the managers' goals are allied with the shareholders' goals.
B) managers operating the business in the best interest of the shareholders.
C) tying management rewards to shareholder results.
D) all of these are correct.
Q3) Patterson Company had sales of $200,000, net income of $10,000, and an asset base of $300,000.Its margin is A) 66.7%.
B) 150.0%.
C) 3.3%.
D) 5.0%.
Q4) What problems do owners face in encouraging goal congruence of managers? What is a stock option? How can stock options encourage goal congruence?
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Chapter 11: Strategic Cost Management
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Sample Questions
Q1) Plant layout, quality management systems, and providing capacity are examples of A) executional activities.
B) structural activities.
C) operational activities.
D) both a and b.
Q2) The president of Chris Company feels that the $36 profit per unit must be maintained.What is the target price per unit?
A) $225
B) $195
C) $189
D) $159
Q3) The ___________________ approach to quality control strives for zero defects.
A) acceptable quality level
B) total quality control
C) traditional
D) both a and c
Q4) Explain the difference between acceptable quality level and total quality control.
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Chapter 12: Activity-Based Management
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Sample Questions
Q1) The non-value-added costs would be
A) $-0-.
B) $30,000.
C) $75,000.
D) $80,000.
Q2) An example of activity reduction would be
A) improving cycle time so the need for expediting is eliminated.
B) redesigning products to lead to a reduced cost set of activities.
C) designing a new product that uses components already used by another product.
D) reducing demand for customer complaint handling by improving product quality.
Q3) Which of the following is a reason for managerial activity to be considered a value-added activity?
A) It is an enabling resource for operational activities that bring about a change of state.
B) Managing activities brings order by changing the state from uncoordinated activities to coordinated activities.
C) Both are reasons for classifying managerial activities as value-added activity.
D) Neither is a reason for classifying managerial activities as value-added activity.
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14
Chapter 13: The Balanced Scorecard: Strategic-Based Control
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Sample Questions
Q1) A testable strategy is defined as
A) a strategy that can be implemented.
B) a set of profit goals.
C) a set of linked objectives aimed at an overall goal.
D) a strategy that is verifiable.
Q2) Lead measures are critical to strategy because
A) they are based on actual activity.
B) they are an independent part of the system.
C) there should be a causal linkage with strategy.
D) they are outcome measures.
Q3) Balanced scorecard is designed to bring about organizational change.Which of the following is NOT a means of alignment?
A) Employees must share ownership of objectives, measures, targets, and initiatives.
B) Incentives must be structured to support strategy.
C) Resources must be allocated to support strategy.
D) All of these.
Q4) Why does the Balanced Scorecard differ from company to company? Whose responsibility is the implementation?
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Q5) Compare and contrast activity-based measures and strategic-based measures.
Chapter 14: Quality and Environmental Cost Management
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Sample Questions
Q1) Within the robust view of strategy, describe the management strategy to reduce quality costs recommended by the American Society for Quality Control.
Q2) Refer to Figure 14-4.For the current year, appraisal costs are what percentage of sales?
A) 1.40%
B) 1.00%
C) 0.14%
D) 0.40%
Q3) Quality training programs are classified as
A) external failure costs.
B) internal failure costs.
C) appraisal costs.
D) prevention costs.
Q4) Refer to Figure 14-8.What is the fines cost per unit for toxic releases of Product A1?
A) $0.020
B) $0.004
C) $0.050
D) $0.040
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Chapter 15: Lean Accounting and Productivity Measurement
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Sample Questions
Q1) Discuss the advantages and disadvantages of partial productivity measures.
Q2) With multiple products in a value stream, unit cost will increase if
A) more units are shipped than produced.
B) more units are produced than shipped.
C) average conversion cost is used instead of total average cost.
D) none of these.
Q3) By how much did profits change as a result of changes in productivity related to materials?
A) $1,650.00 decrease
B) $1,650.00 increase
C) $937.50 decrease
D) $937.50 increase
Q4) By how much did profits change as a result of changes in productivity related to materials?
A) $600 decrease
B) $600 increase
C) $100 decrease
D) $100 increase
Q6) Discuss the linkage between quality and productivity. Page 17
Q5) Describe the objectives and characteristics of a Lean Manufacturing system.
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Page 18
Chapter 16: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Which of the following assumptions does NOT pertain to cost-profit-volume analysis?
A) Sales price per unit remains constant.
B) The sales mix is constant.
C) Inventories in a manufacturing entity may go up or down.
D) Fixed expenses are constant at all volumes of activities within the relevant range.
Q2) A profit-volume graph
A) measures profit or loss on the horizontal axis.
B) illustrates total revenues, total cost, and profits at various sales volumes.
C) is not subject to the same limiting assumptions as cost-volume-profit graphs.
D) illustrates the relationship between volume and profits.
Q3) Refer to Figure 16-1.What is the net income for Kringel?
A) $500,000
B) $200,000
C) $250,000
D) $50,000
Q4) In the Cost-Volume-Profit analysis, what are two ways management can deal with risk and uncertainty?
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Page 19
Chapter 17: Activity Resource Usage Model and Tactical
Decision Making
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Sample Questions
Q1) What is the effect on profits if Miller Company buys from the Tennessee firm?
A) decrease of $19,000
B) increase of $19,000
C) increase of $38,000
D) decrease of $6,000
Q2) For flexible resources, which of the following statements is true?
A) A change in resource spending will only occur if the demand for a resource drops permanently and exceeds demand enough so the activity capacity will be reduced.
B) Often, resources are acquired in advance for multiple periods and are therefore irrelevant.
C) Decisions often affect multi-period capabilities.
D) If the demand for an activity changes across alternatives, then resource spending will change and the cost of the activity will be relevant to the decision.
Q3) Future costs that differ across alternatives describe
A) relevant costs.
B) target cost.
C) full costs.
D) activity-based costs.
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Chapter 18: Pricing and Profitability Analysis
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Sample Questions
Q1) What is the segment margin for Division B?
A) $155,000
B) $105,000
C) $55,000
D) $20,000
Q2) Which of the following markets is characterized by the following: many firms in the industry, a somewhat unique product, fairly easy entry into the industry, and spending for differentiation of the product?
A) perfectly competitive market
B) monopolistic competition
C) monopoly
D) oligopoly
Q3) Refer to Figure 18-1.What customer type has the least total cost per case ?
A) local pharmacies
B) drugstore chains
C) supermarket chains
D) gas station chains
Q4) Discuss the limitation of profit measurement.
Q5) Compare and contrast the various pricing policies used by companies.
Q6) What are some of the pricing practices regulated by law?
Page 21
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Chapter 19: Capital Investment
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Sample Questions
Q1) Springer Company is considering the purchase of a new machine for $80,000.The machine would generate an annual cash flow before depreciation and taxes of $28,778 for five years.At the end of five years, the machine would have no salvage value.The company's cost of capital is 12 percent.The company uses straight-line depreciation with no mid-year convention and has a 40 percent tax rate. What is the net present value for the machine?
A) $5,318
B) $-0-
C) $85,318
D) $23,744
Q2) The present value of $4,000 to be received each year for three years and earning a 10 percent return (rounded) is
A) $11,120.
B) $9,948.
C) $9,822.
D) $9,200.
Q3) Explain what a capital investment decision is.In your answer, distinguish between independent and mutually exclusive capital investment decisions.
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Chapter 20: Inventory Management: Economic Order
Quantity, Jit, and the Theory of Constraints
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Sample Questions
Q1) Margaret Company has an economic order quantity for item B of 100 units.The annual demand for the product is 1,400 units, and the unit carrying cost per year is $7.The company operates 200 days a year, the lead time for the item is ten days, and the safety stock is 100 units. What is the reorder point?
A) 70 units
B) 170 units
C) 1000 units
D) 100 units
Q2) Waterhouse Company decreased the size of inventory order quantities that had previously been determined using the EOQ model.If demand remains the same, what is the impact on the number of orders made during the year?
A) increase
B) no change
C) decrease
D) cannot be determined
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