Corporate Financial Management
Question Bank
Course Introduction
Corporate Financial Management explores the fundamental principles and techniques used by corporations to manage their finances effectively. This course covers topics such as capital budgeting, financial analysis and planning, risk management, cost of capital, capital structure, and dividend policy. Students learn how to make informed financial decisions that enhance shareholder value, analyze investment opportunities, and understand the impact of financial markets on a firm's performance. Emphasis is placed on both theoretical frameworks and practical applications, preparing students to tackle real-world financial challenges within corporate settings.
Recommended Textbook
Managerial Accounting 3rd Edition by
Karen W. Braun Wendy M Tietz
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15 Chapters
3368 Verified Questions
3368 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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187 Flashcards
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Sample Questions
Q1) Performing duties in accordance with relevant laws, regulations, and technical standards comprise the IMA professional ethics standard of
A)credibility.
B)competence.
C)integrity.
D)confidentiality.
Answer: B
Q2) A wave of accounting scandals around the turn of the 21st century prompted which of the following?
A)XBRL
B)IFRS
C)SOX
D)ISO
Answer: C
Q3) ________ are owners of a company.
A)Customers
B)Shareholders
C)Creditors
D)Managers
Answer: B
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) North Pacific Company used $65,000 of direct materials and incurred $43,000 of direct labor costs during 2011. Indirect labor amounted to $1,700 while indirect materials used totaled $1,800. Other operating costs pertaining to the factory included utilities of $4,300; maintenance of $6,800; supplies of $1,500; depreciation expense of $8,900; and property taxes of $2,400. There was no beginning or ending finished goods inventory, but work in process inventory began the year with a $6,400 balance and ended the year with a $7800 balance.
Required: Prepare a schedule of cost of goods manufactured for South State Company for the year ended December 31.
Answer: 11ea68e5_ab32_e492_935e_f921ccee3774_TB2868_00
Q2) The income statements for both a merchandiser and manufacturer would include which of the following?
A)Operating expenses
B)Direct labor incurred
C)Direct materials used
D)Cost of goods manufactured
Answer: A
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Page 4
Chapter 3: Job Costing
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Sample Questions
Q1) On the line in front of each statement, enter either a D for debit or a C for credit to indicate the normal entry that would be needed for each account named.
____ direct labor was incurred on a job: work in process inventory account
____ indirect labor was incurred: wages payable
____ indirect labor was added to a job: manufacturing overhead account
____ direct labor was incurred: wages payable
Answer: D, C, D, C
Q2) Assigning manufacturing overhead costs and other indirect costs is called A)cost driver.
B)cost allocation.
C)materials requisition.
D)predetermined manufacturing overhead rate.
Answer: B
Q3) The predetermined manufacturing overhead rate is calculated by multiplying the total estimated manufacturing overhead costs by the total estimated amount of the allocation base.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) All of the following describe an ABC system except
A)ABC systems may only be used by service companies.
B)ABC systems can create more accurate product costs.
C)ABC systems are more complex and costly than traditional costing systems.
D)ABC systems are used in both manufacturing and nonmanufacturing companies.
Q2) Lean companies typically emphasize quality.
A)True
B)False
Q3) Lean thinking typically focuses on strengthening supply-chain management.
A)True
B)False
Q4) Which term below best describes the quality cost category for "lost profits from lost sales"?
A)Prevention costs
B)Appraisal costs
C)External failure costs
D)Internal failure costs
Q5) Waste activities is another name for non-value-added activities.
A)True
B)False
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Chapter 5: Process Costing
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Sample Questions
Q1) Product cost reports are done only for the final department in process costing.
A)True
B)False
Q2) The mixing department has 44,000 equivalent units of direct materials and 25,000 equivalent units of conversion costs. The direct materials cost $33,000, and the conversion costs are $10,000. Assuming no beginning inventory, the total cost per equivalent unit is
A)$0.98.
B)$0.40.
C)$1.15.
D)$0.75.
Q3) The journal entry to record the ultimate completion of the units would include a credit to Finished Goods Inventory.
A)True
B)False
Q4) In a process costing system, the number of WIP inventories
A)equals the number of production departments.
B)equals the number of products produced.
C)equals the number used in a job cost system.
D)cannot equal the number of parts used in the product.
Page 7
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Absorption costing is required to be used for
A)federal income tax reports.
B)external financial reports, but not income taxes.
C)neither external financial reports nor income tax reports.
D)both external financial reports and income tax reports.
Q2) Total fixed costs for Purple Figs Company are $52,000. Total costs, both fixed and variable are $160,000 if 80,000 units are produced. The fixed cost per unit at 80,000 units would be
A)$1.35/unit.
B)$0.65/unit.
C)$2.00/unit.
D)$2.65/unit.
Q3) How is operating income affected if the number of units sold exceeds the number of units produced?
A)Operating income would be higher under a variable costing income statement.
B)Operating income would be lower under a variable costing income statement.
C)Operating income would be higher under an absorption costing income statement.
D)Operating income would be the same under both a variable costing and absorption costing income statement.
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Page 8
Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Madden Enterprises sells two products, Silver models and Gold models. Madden Enterprises predicts that it will sell 6,000 Silver models and 4,000 Gold models in the next period. The unit contribution margins for Silver models and Gold models are $75 and $150, respectively. What is the weighted-average unit contribution margin?
A)$0.01
B)$37.50
C)$105.00
D)$525.00
Q2) Fave Motion Pictures sells movie tickets for $10 per movie patron. Variable costs are $7.50 per movie patron and fixed costs are $50,000 per month. The company's relevant range extends to 35,000 movie patrons per month. What is Fave Motion Pictures' projected operating income if 25,000 movie patrons see movies during a month?
A)$62,500
B)$12,500
C)$250,000
D)$200,000
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) Relevant information is expected future data that will not differ among alternatives.
A)True
B)False
Q2) A "constraint" is best described by which of the following?
A)The distribution of all products to be sold
B)A factor that restricts production or sales of a product
C)Benefits foregone by choosing a particular alternative course of action
D)Expected future costs that differ among alternatives
Q3) Which of the following best describes "target costing"?
A)An approach to pricing that begins with revenue at market price and subtracts desired profit to arrive at target total cost
B)A factor that restricts production or sales of a product
C)All costs incurred along the value chain in connection with the product or service
D)An approach to pricing that begins with the product's total cost and adds desired profit
Q4) One cost that is irrelevant in decision making is a sunk cost.
A)True
B)False
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Chapter 9: The Master Budget
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Sample Questions
Q1) Budget committee is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.
A)True
B)False
Q2) Which of the following types of companies use a sales budget?
A)Manufacturing
B)Merchandising
C)Service
D)All of the above
Q3) Which of the following types of companies use a "cost of goods sold, inventory, and purchases" budget?
A)Merchandising
B)Manufacturing
C)Service
D)All of the above
Q4) The financial budgets project the collection and payment of cash, as well as forecast the company's budgeted balance sheet.
A)True
B)False
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Chapter 10: Performance Evaluation
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207 Flashcards
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Sample Questions
Q1) The ________ from the balanced scorecard focuses on determining if customers are satisfied.
A)internal business perspective
B)learning and growth perspective
C)customer perspective
D)financial perspective
Q2) For the most recent year, Robin Company reports operating income of $650,000. Robin's sales margin is 10%, and capital turnover is 2.0. What is Robin's return on investment (ROI)?
A)5%
B)1%
C)100%
D)20%
Q3) Company growth rates (compared to industry growth rates)would be an example of measuring which perspective?
A)Financial
B)Customer
C)Internal business
D)Learning and growth
Q4) List and describe reasons why a company might choose to decentralize.
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) Price and quantity variances are a way to motivate employees.
A)True
B)False
Q2) The variable overhead efficiency variance tells management how efficiently manufacturing overhead was used during the period.
A)True
B)False
Q3) A rate variance for direct labor measures how well a company keeps unit prices of labor inputs within standards.
A)True
B)False
Q4) Chemical Supply Incorporated budgeted two and one half hours of direct labor per unit at $11.75 per hour to produce 650 units of product. The 650 units were completed using 1,750 hours of direct labor at $12.50 per hour. What is the direct labor rate variance?
A)$1,219 favorable
B)$1,313 favorable
C)$1,219 unfavorable
D)$1,313 unfavorable
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Chapter 12: Capital Investment Decisions and the Time Value of Money
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Sample Questions
Q1) The internal rate of return is used as the discount rate when calculating the net present value of a project.
A)True
B)False
Q2) Sicily, Inc.., is considering investing $250,000 in a machine that will last 4 years with no residual value. The new machine will generate annual operating income of $55,000 per year for 4 years. What is the accounting rate of return?
Q3) One disadvantage of the payback method is that it does not consider the time value of money.
A)True
B)False
Q4) The "decision model that computes the difference between the present value of the investment's net cash inflows, using a desired rate of return, and the cost of the initial investment" is best described by which of the following terms?
A)Accounting rate of return
B)Discount rate
C)Net present value
D)Internal rate of return
Page 14
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) All of the following are cash outflows from an operating activity except
A)payment of interest on a loan.
B)payment for purchasing inventory.
C)payments to the government for taxes.
D)owner withdrawal from the company.
Q2) On the statement of cash flows, which of the following section includes activities that increase and decrease long-term liabilities and owners' equity?
A)Operating section
B)Financing section
C)Investing section
D)None of the above
Q3) All of the following would be done when calculating the change in cash from operating activities under the indirect method except
A)deduct the purchase of equipment.
B)add an increase in accrued interest payable.
C)add a decrease in merchandise inventory.
D)deduct a decrease in accounts payable.
Q4) Identify and describe the three sections of the statement of cash flows.
Q5) List three ways that owners and investors use the statement of cash flows.
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Rate of return on net sales is a measure of a company's profitability.
A)True
B)False
Q2) In performing a vertical analysis of a balance sheet, which of the following is generally used as the base amount?
A)Total liabilities
B)Net assets
C)Total assets
D)Total stockholder's equity
Q3) Which of the following is the formula to compute times-interest-earned?
A)Total liabilities/total assets
B)Interest expense/income from operations
C)Income from operations/interest expense
D)Total assets/total liabilities
Q4) Which of the following is the formula for computing the price-earnings ratio?
A)Market price per share of common stock/ earnings per share
B)Annual dividend per share of common stock/ market price per share
C)(Net income- preferred dividends)/ number of shares of outstanding common stock
D)Total stockholder's equity/ number of shares of outstanding common stock
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Chapter 15: Sustainability
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Sample Questions
Q1) There are several reasons an organization might pursue sustainable initiatives. "A national hotel chain instituted a paper-saving program that reduced the cost of office paper purchased by 20% annually." This situation is an example of which type of reason to implement sustainable initiatives?
A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy
Q2) For maximum impact, a firm should initially focus on pollution control and cleanup measures.
A)True
B)False
Q3) Which of the following items represent physical information in an environmental management accounting system?
A)Total electricity used
B)Cost of electricity used to run plant
C)Cost of materials used in lab to neutralize toxins
D)Cost of shipping containers to customers
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