Financial Accounting for Managers
Question Bank
Course Introduction
Financial Accounting for Managers provides an essential introduction to the principles and practices of financial accounting, emphasizing its significance in effective managerial decision-making. This course covers the interpretation and analysis of financial statements, an understanding of accounting concepts and standards, and the application of financial information to assess organizational performance. Through real-world case studies and practical exercises, students develop the skills to evaluate financial data, communicate findings to stakeholders, and integrate financial considerations into strategic planning and management processes.
Recommended Textbook
Managerial Accounting 11th Canadian Edition by Ray Garrison
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Chapter 1: Managerial Accounting and the Business Environment
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Sample Questions
Q1) Upon which of the following does managerial accounting place considerable weight?
A) Generally accepted accounting principles.
B) The financial history of the entity.
C) Ensuring that all transactions are properly recorded.
D) Detailed segment reports about departments, products, and customers.
Answer: D
Q2) For internal uses,managers are more concerned with receiving information that achieves which of the following standards?
A) Completely objective and verifiable.
B) Completely accurate and precise.
C) Relevant, flexible, and timely.
D) Relevant, completely accurate, and precise.
Answer: C
Q3) Managerial accounting is not mandatory.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Cost Terms,concepts,and Classifications
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Sample Questions
Q1) If CD Company sells 43,000 units,what is the total expected cost (Do not round your intermediate calculations)?
A) $146,000.
B) $166,625.
C) $144,625.
D) $124,000.
Answer: C
Q2) The following costs should be considered by a law firm to be indirect costs of defending a particular client in court: rent on the law firm's offices,the law firm's receptionist's wages,the costs of heating the law firm's offices,and the depreciation on the personal computer in the office of the attorney who has been assigned the client.
A)True
B)False
Answer: True
Q3) All costs incurred in a merchandising firm are considered to be period costs. A)True
B)False
Answer: False
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Page 4
Chapter 3: Cost Behaviour: Analysis and Use
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Sample Questions
Q1) Using the high-low method,the estimated variable cost per machine hour for electricity is closest to which of the following?
A) $0.40 per hour.
B) $0.98 per hour.
C) $1.68 per hour.
D) $2.50 per hour.
Answer: A
Q2) When analysing mixed costs with the high-low method,begin by identifying the period with the lowest level of activity and the period with the highest level of activity.
A)True
B)False
Answer: True
Q3) Modern technology is causing shifts away from variable costs toward more fixed costs in many industries.
A)True
B)False
Answer: True
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Chapter 4: Cost-Volume-Profit Relationships
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Sample Questions
Q1) A company has provided the following data:
\(\begin{array}{|l|r|}
\hline \text { Sales } & 3,000 \text { units } \\
\hline \text { Sales price } & \$ 70 \text { per unit } \\
\hline \text { Variable cost } & \$ 50 \text { per unit } \\
\hline \text { Fixed cost } & \$ 25,000 \\
\hline
\end{array}\)
If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,what will the outcome be for operating income?
A) Decrease by $31,875.
B) Decrease by $15,000.
C) Increase by $20,625.
D) Decrease by $3,125.
Q2) What is the break-even point in units?
A) 8,247 books.
B) 7,767 books.
C) 7,407 books.
D) 6,504 books.
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Chapter 5: Systems Design: Job-Order Costing
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Sample Questions
Q1) What is the cost of goods manufactured?
A) $114,000.
B) $133,000.
C) $121,000.
D) $138,000.
Q2) Which of the following contain(s)the detailed cost data that support the Work in Process control account?
A) Job cost sheets.
B) The Manufacturing Overhead account.
C) The Finished Goods inventory account.
D) Purchase requisitions.
Q3) How much of any underapplied or overapplied overhead would have been due to the fact that the estimated overhead costs were different from the actual?
A) $4,000.
B) $6,000.
C) $10,000.
D) $14,000.
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Chapter 6: Systems Design: Process Costing
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Sample Questions
Q1) Using the FIFO method,what are the equivalent units of production for materials for May?
A) 82,400 units.
B) 104,000 units.
C) 107,200 units.
D) 108,000 units.
Q2) Trapp Company uses the weighted-average method in its process costing system.The beginning work-in-process inventory in its Painting Department consisted of 3,000 units that were 70% complete with respect to materials and 60% complete with respect to conversion costs.The cost of the beginning work-in-process inventory in the department was recorded as $10,000.During the period,9,000 units were completed and transferred on to the next department.The costs per equivalent unit for the period were $2.00 for material and $3.00 for conversion costs.What was the cost of units transferred out during the month?
A) $39,600.
B) $45,000.
C) $45,400.
D) $35,400.
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Chapter 7: Activity-Based Costing: A Tool to Aid Decision Making
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Sample Questions
Q1) Setting up equipment is an example of an activity at which of the following levels?
A) Unit-level activity.
B) Batch-level activity.
C) Product-level activity.
D) Organization-sustaining activity.
Q2) Changing a cost accounting system is likely to meet with little resistance in an organization since it is a technical matter of little interest to individuals outside of the accounting department.
A)True
B)False
Q3) The cost per unit of Product B is closest to which of the following?
A) $17.69.
B) $41.58.
C) $74.73.
D) $81.53.
Q4) Transaction drivers usually take more effort to record than duration drivers.
A)True
B)False
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Chapter 8: Variable Costing: A Tool for Management
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Sample Questions
Q1) What was the dollar value of the company's inventory on May 31 under the absorption costing method?
A) $60,000.
B) $75,000.
C) $90,000.
D) $120,000.
Q2) When the number of units in work-in-process and finished goods inventories increase,absorption costing operating income will typically be greater than variable costing operating income.
A)True
B)False
Q3) What is the operating income (loss)for the month under absorption costing?
A) ($14,100).
B) $3,900.
C) $8,100.
D) $12,000.
Q4) Absorption costing treats fixed manufacturing overhead as a period cost,rather than as a product cost.
A)True
B)False
Page 10
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Chapter 9: Budgeting
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Sample Questions
Q1) Friden Company has budgeted sales and production over the next quarter as follows:
\(\begin{array}{|l|rr|r|}
\hline& \text { Apri } & \text { May } & \text { June } \\
\hline \text { Sales in Units } & 100,000 & 120,000 & ? \\
\hline \text { Production in Units } & 104,000 & 128,000 & 156,000 \\ \hline
\end{array}\)
On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units)must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units)?
A) 128,000 units.
B) 160,000 units.
C) 184,000 units.
D) 188,000 units.
Q2) The effect of responsibility accounting is to personalize the accounting system.
A)True
B)False
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Page 11
Chapter 10: Standard Costs and Overhead Analysis
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Sample Questions
Q1) For August,what was the variable overhead spending variance?
A) $4,300 favourable.
B) $4,300 unfavourable.
C) $6,500 favourable.
D) $6,500 unfavourable.
Q2) How much overhead was applied to products during the period,rounded to the nearest dollar?
A) $93,240.
B) $94,483.
C) $94,770.
D) $96,034.
Q3) How much overhead was applied to products during the period,rounded to the nearest dollar?
A) $151,993.
B) $153,270.
C) $154,410.
D) $157,200.
Q4) Standard costs should generally be based on the actual costs of prior periods. A)True B)False
Page 12
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Chapter 11: Reporting for Control
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Sample Questions
Q1) What will be the total internal failure cost appearing on the quality cost report?
A) $85,000.
B) $127,000.
C) $146,000.
D) $217,000.
Q2) For the past year,what was the minimum required rate of return?
A) 11%.
B) 12%.
C) 13%.
D) 14%.
Q3) What were the total variable expenses in Store K?
A) $70,000.
B) $110,000.
C) $130,000.
D) $200,000.
Q4) Many firms tend to adopt a focus or a niche strategy instead of either a cost leadership or a differentiation strategy.
A)True
B)False
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Chapter 12: Relevant Costs for Decision Making
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Sample Questions
Q1) What is the markup percentage needed on Product S in order to achieve the company's required return on investment?
A) 29%.
B) 37%.
C) 40%.
D) 50%.
Q2) The book value of old equipment is NOT a relevant cost in an equipment replacement decision.
A)True
B)False
Q3) Suppose that total regular sales of jigs are 85,000 units per month,and all other conditions remain the same.If Immanuel accepts the special order,what will be the change in monthly operating income?
A) $3,600 decrease.
B) $5,400 decrease.
C) $7,200 increase.
D) $14,000 increase.
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Chapter 13: Capital Budgeting Decisions
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Sample Questions
Q1) At what amount should the capital cost allowance (CCA)tax shield be included in the calculation of the net present value of an investment project?
A) The amount of the CCA with no adjustment for taxes.
B) The amount of the CCA multiplied by one minus the tax rate.
C) The amount of the CCA multiplied by the tax rate.
D) Zero, since the amount of CCA is not relevant to the calculation of net present value.
Q2) The net present value of this investment is closest to which of the following? (Do not round your intermediate calculations.)
A) $1,119.
B) $6,550.
C) $13,450.
D) $20,000.
Q3) The payback period would be closest to which of the following?
A) 2.90 years.
B) 3.00 years.
C) 3.33 years.
D) 8.00 years.
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Chapter 14: Financial Statement Analysis
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Sample
Questions
Q1) Martin Company reported an extraordinary after-tax loss of $180,000,resulting from an earthquake.What must have been the before-tax loss if Martin's marginal income tax rate was 40%?
A) $72,000.
B) $108,000.
C) $300,000.
D) $450,000.
Q2) Last year,Javer Company had a net income of $200,000,income tax expense of $74,000,and interest expense of $20,000.The company's times interest earned was closest to which of the following?
A) 5.30 times.
B) 10.00 times.
C) 11.00 times.
D) 14.70 times.
Q3) What was the price-earnings ratio for the prior year?
A) 11.1 to 1.
B) 12.2 to 1.
C) 14.3 to 1.
D) 15.8 to 1.
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Page 16