Corporate Financial Reporting Exam
Bank
Course Introduction
Corporate Financial Reporting is a comprehensive course that explores the principles, standards, and processes involved in the preparation, analysis, and interpretation of financial statements within corporate entities. It covers key topics such as revenue recognition, asset valuation, liabilities, equity, and cash flow statements, emphasizing compliance with international and local accounting standards like IFRS and GAAP. Students will gain a deep understanding of how financial information is communicated to stakeholders, the regulatory environment governing corporate disclosures, and the ethical considerations inherent in financial reporting. Through case studies and real-world examples, the course also focuses on the use of financial statements in decision-making, performance evaluation, and strategic planning.
Recommended Textbook
Introduction to Management Accounting 16th Edition by Charles T. Horngren
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17 Chapters
2438 Verified Questions
2438 Flashcards
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Page 2
Chapter 1: Managerial Accounting,the Business
Organization,and Professional
Ethics
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) When comparing management accounting and financial accounting,which of the following statements is FALSE?
A) Management accounting has a future orientation whereas financial accounting has a past orientation.
B) Management accounting prepares detailed reports whereas financial accounting prepares summary reports.
C) Management accountants are constrained by the principles of reporting promulgated by the Institute of Management Accountants whereas financial accountants are constrained by Generally Accepted Accounting Principles.
D) Behavioral considerations are of primary importance in management accounting, but not in financial accounting.
Answer: C
Q2) Which of the following is NOT a new direction in business process management?
A) JIT philosophy
B) XBRL
C) Six Sigma
D) TQM
Answer: B
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Chapter 2: Introduction to Cost Behavior and Cost Volume
Profit Relationships
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Helium Company has the following information available: \(\begin{array}{ll}
\text { Selling price per unit } & \$ 5.00 \\
\text { Variable cost per unit } & \$ 3.50\\
\text { Total fixed costs }&\$90,000.00\\
\text { Targeted net income }&\$30,000.00 \end{array}\)
How many units must be sold to achieve the targeted net income?
A) 10,000 units
B) 27,000 units
C) 45,000 units
D) 80,000 units
Answer: D
Q2) What happens when the cost-driver activity level increases within the relevant range?
A) Total fixed costs increase.
B) Fixed costs per unit of cost driver decrease.
C) Total variable costs decrease.
D) Variable costs per unit of cost driver decrease.
Answer: B
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Chapter 3: Measurement of Cost Behavior
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Sample Questions
Q1) Three cost drivers are used to estimate the cost of processing insurance claims.The cost drivers are: (1)claim amount,(2)age of vehicle in accident and (3)age of driver in accident.The percentages attributable to the cost drivers are 50% for claim amount,and 15% for each of the other two cost drivers.What is the cost to process Claim #101? The claim amount is $1,000.The age of the vehicle is 5 years.The age of the driver is 20 years.
A) $3.00
B) $3.75
C) $500
D) $503.75
Answer: D
Q2) Regression analysis uses ________ to fit a cost function to all the historical data. A) visual placement
B) engineering analysis
C) statistical analysis
D) activity analysis
Answer: C
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5
Chapter 4: Cost Management Systems and Activity-Based
Costing
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) A merchandising company has Raw Materials Inventory.
A)True
B)False
Q2) Investors need more detailed information about products or services than managers.
A)True
B)False
Q3) Examples using activity-based costing generally show that traditional costing systems ________ high-volume,simple products and ________ low-volume,complex products.
A) undercost; overcost
B) overcost; undercost
C) undercost; undercost
D) overcost; overcost
Q4) In designing an activity-based cost accounting system,what is the first step?
A) Collect data about costs and the physical flow of the cost-driver units.
B) Determine the relationships among cost objects, activities, and resources.
C) Determine the key components of the activity-based cost accounting system.
D) Calculate and interpret the new activity-based cost information.
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Chapter 5: Relevant Information for Decision Making With a
Focus on Pricing Decisions
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136 Flashcards
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Sample Questions
Q1) Surly Company makes small boats.The company produces and sells 5,500 boats per year at a selling price of $160 per boat.Surly Company has excess capacity and is trying to get special orders.A new retailer wants to purchase 1,000 boats for $125 per boat.Surly Company is going to decline the special order because it costs $130 to make a single boat as seen below:
\(\begin{array}{ll}
\text { Direct materials } & \$ 50 \text { per unit } \\
\text { Direct manufacturing labor } & \$ 55 \text { per unit } \\
\text { Variable manufacturing overhead } & \$ 10 \text { per unit } \\
\text { Fixed manufacturing overhead } & \$ 15 \text { per unit } \\
\text { Total } & \$ 130 \text { per unit }
\end{array}\)
Required:
A) Should Surly Company reject the special order from the new retailer? Why?
B) How much will Surly's net income increase with the special offer?
Q2) Predatory pricing occurs when a firm sets ________.
A) prices below the average cost for each product
B) prices below the production cost for each product
C) prices below their competitors' prices
D) prices so low that competitors are driven out of the market
Page 7
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Chapter 6: Relevant Information for Decision Making With a
Focus on Operational Decisions
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148 Verified Questions
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Sample Questions
Q1) Krakowski Company manufactures a part for its production cycle.The costs per unit for 10,000 units of the part are as follows:
\(\begin{array}{ll}&\text { Per Unit }\\
\text { Direct materials } & \$ 20.00 \\
\text { Direct labor } & 15.00 \\
\text { Variable factory overhead } & 16.00 \\
\text { Fixed factory overhead } & \underline{10.00} \\
\text { Total costs } & \$ 61.00
\end{array}\)
The fixed factory overhead costs are unavoidable.Winters Company has offered to sell 10,000 units of the same part to Krakowski Company for $55 per unit.Assuming no other use for the facilities,Krakowski Company should ________.
A) make the part to save $40,000
B) make the part to save $60,000
C) buy the part from Winters Company to save $40,000
D) buy the part from Winters Company to save $60,000
Q2) Scarce resources include labor hours.
A)True
B)False
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Chapter 7: Introduction to Budgets and Preparing the Master Budget
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148 Flashcards
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Sample Questions
Q1) Mary Company has the following information: \(\begin{array}{ll}\text { Month }&\text { Budgeted Purchases }\\
\text { January } & \$ 26,800 \\
\text { February } & 29,000 \\
\text { March } & 30,520 \\
\text { April } & 29,480 \\
\text { May } & 27,680
\end{array}\)
Purchases are paid as follows:
10% in the month of purchase
50% one month after purchase
40% two months after purchase
A) $14,740
B) $17,508
C) $26,948
D) $29,716
Q2) "Cooking the books" refers to recording fictitious sales or omitting costs.
A)True
B)False
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Chapter 8: Flexible Budgets and Variance Analysis
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Sample Questions
Q1) Differentiate between a static budget variance and a flexible budget variance.
Q2) Indian Company has the following information available for variable overhead costs.Direct labor hours are the cost driver for variable overhead costs.
\(\begin{array}{ll}
\text { Actual variable overhead costs } & \$ 5,120 \\
\text { Standard variable overhead costs } & \$ 3.00 \text { per hour } \\
\text { Actual direct labor hours } & 2,000 \text { hours } \\
\text { Standard direct labor hours per unit } & 3 \text { hours } \\
\text { Units produced } & 1,000
\end{array}\)
What is the variable overhead spending variance?
A) $880 Favorable
B) $1,000 Unfavorable
C) $3,880 Favorable
D) $3,880 Unfavorable
Q3) In most companies,variances are investigated only if they exceed a minimum dollar amount or percentage deviation from budgeted amounts.
A)True
B)False
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Page 10
Chapter 9: Management Control Systems and Responsibility Accounting
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148 Flashcards
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Sample Questions
Q1) An alternative term for cycle time is ________ time.
A) productivity
B) manufacturing
C) throughput
D) production
Q2) Rework costs for manufactured products are a form of ________ costs.
A) prevention
B) appraisal
C) internal failure
D) external failure
Q3) Managers in profit centers are responsible for controlling ________ and ________.
A) costs; invested capital
B) revenues; invested capital
C) revenues; costs
D) expenses; invested capital
Q4) A key driver of performance is the culture within the organization that fosters continual learning and growth.
A)True
B)False
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Chapter 10: Management Control in Decentralized Organizations
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149 Flashcards
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Sample Questions
Q1) A general rule for transfer pricing is that the transfer price should equal the sum of outlay cost and opportunity cost.
A)True
B)False
Q2) All of the following are disadvantages of decentralization EXCEPT for ________.
A) Local managers make decisions that are not in the organization's best interests.
B) Managers spend time negotiating transfer prices for goods and services transferred between divisions and segments.
C) Local managers duplicate services.
D) Local managers have more authority and greater levels of job satisfaction.
Q3) Multinational companies use transfer prices to minimize worldwide income taxes,________ and ________.
A) tariffs; financial restrictions imposed by U.S. government
B) tariffs; import duties
C) financial restrictions imposed by U.S. government; import duties
D) foreign bribes; import duties
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Chapter 11: Capital Budgeting
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Sample Questions
Q1) A company is considering the acquisition of new equipment to replace old equipment.When using the net present value method,which of the following items is NOT relevant? Ignore taxes.
A) cash outflow for the purchase of new equipment
B) cash installation costs associated with the new equipment
C) disposal value of old equipment replaced with new equipment
D) fixed overhead costs that are the same under both alternatives
Q2) The most widely used capital budgeting models are ________.
A) payback method
B) accounting rate of return
C) return on investment
D) discounted cash flow methods
Q3) The time it will take to recoup in the form of cash inflows the initial dollars invested in an investment project is called the ________.
A) payback period
B) accounting rate of return
C) internal rate of return period
D) recovery period
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13
Chapter 12: Cost Allocation
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Sample Questions
Q1) Service departments in organizations exist to support ________.
A) other service departments and customers only
B) producing departments and suppliers only
C) other service departments, producing departments and customers
D) producing departments and customers only
Q2) Budgeted cost rates are used for allocating variable costs of service departments to user departments because ________.
A) it provides service departments a greater incentive to be efficient
B) it protects user departments from inefficiencies in service departments
C) it protects managers in service departments from inflation
D) A and B
Q3) Customers with a high cost to serve have ________.
A) large order quantity
B) few order changes
C) standard delivery requirements
D) frequent returns
Q4) Companies must assign all value chain costs to products for internal financial reports.
A)True
B)False
Page 14
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Chapter 13: Accounting for Overhead Costs
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Sample Questions
Q1) Variable costing is also called ________.
A) functional costing
B) indirect costing
C) absorption costing
D) the contribution approach
Q2) The proration method of disposing of overhead variances assigns the variance in proportion to the sizes of the ending account balances of ________.
A) work-in-process inventory, finished goods inventory and direct materials inventory
B) work-in-process inventory, direct materials inventory and cost of goods sold
C) work-in-process inventory and direct materials inventory
D) work-in-process inventory, finished goods inventory and cost of goods sold
Q3) In determining product costs,variable costing and absorption costing differ in the treatment of ________.
A) variable overhead costs
B) variable selling costs
C) fixed selling costs
D) fixed overhead costs
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Chapter 14: Job-Order Costing and Process-Costing Systems
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Sample Questions
Q1) The manufacturing costs of the Assembly Department for the month of July are as follows:
\(\begin{array} { l }
\text { Direct materials added}&\$220,000 \\
\text { Direct labor costs added}&\$ 190,000\\
\text {Factory overhead costs applied }&\$140,000 \\ \end{array}\)
The company uses a process costing system.At July 31,the cost of the goods completed and transferred to the Finishing Department was $563,000.
Required:
A) Prepare summary journal entries for the use of direct materials, direct labor and factory overhead.
B) Prepare a journal entry for the transfer of completed goods.
Q2) In job-order costing,time cards record the materials used in particular jobs.
A)True
B)False
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Chapter 15: Basic Accounting: Concepts, techniques, and Conventions
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Sample Questions
Q1) The following information was extracted from the accounting records of Vogel Company:
\[\begin{array} { l l }
\text { beginning Paid-in Capital } & \$ 90,000 \\
\text {beginning Retained Earnings } & \$ 300,000 \\
\text { beginning Assets } & \$ 455,006 \\
\text { Contributicns by owners } & \$ 0 \\
\text { Revenues } & \$ 200,000 \\
\text { Expenses } & \$ 155,000
\end{array}\]
At the beginning of the period,what is the total amount of liabilities?
A) $65,000
B) $100,000
C) $155,000
D) $245,000
Q2) Information is relevant if it has ________ and ________.
A) verifiability; comparability
B) timeliness; materiality
C) predictive value; confirmatory value
D) reliability; feedback value
Page 17
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Chapter 16: Understanding Corporate Annual Reports:
Basic Financial Statements
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Sample Questions
Q1) What is Other Comprehensive Income?
A) unrealized gains and loss that are reported on the Statement of Retained Earnings
B) unrealized gains and losses that are reported on the traditional Income Statement
C) unrealized gains and losses that are reported on the Balance Sheet
D) unrealized gains and losses that are not reported on the financial statements
Q2) On a classified balance sheet,the Equipment account is reduced by ________.
A) Allowance for Bad Debts
B) Allowance for Doubtful Accounts
C) Accumulated Depreciation
D) Depreciation Expense
Q3) The indirect method of preparing the statement of cash flows is the most popular method in the United States.
A)True
B)False
Q4) In a period of inflation,LIFO results in a higher net income than FIFO.
A)True
B)False
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Chapter 17: Understanding and Analyzing Consolidated Financial Statements
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Sample Questions
Q1) A parent company purchases 100 percent of the outstanding common stock in a subsidiary.What happens to the subsidiary the day after the purchase? Which of the following statements is FALSE?
A) The purchase by the parent company does not affect the subsidiary's books.
B) The subsidiary ceases to exist.
C) The subsidiary continues as a separate legal entity.
D) The subsidiary has its own set of books.
Q2) Van Dover Company purchased common stock in Sanchez Company.During the current year,Sanchez Company earned $4,000,000 and paid dividends of $1,000,000.Assume that Van Dover Company owns 30% of the outstanding shares of Sanchez Company.Sanchez Company's dividend will affect Van Dover Company by
A) increasing cash and stockholders' equity by $300,000
B) increasing investments and stockholders' equity by $300,000
C) increasing cash and decreasing investments by $300,000
D) increasing cash and increasing investments by $300,000
Q3) An efficient capital market is one in which an order to trade can be placed and executed in a short period of time.
A)True
B)False
Page 19
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