Financial Analysis and Control
Mock Exam
Course Introduction
Financial Analysis and Control introduces students to the principles and practices of analyzing financial information to support business decision-making and ensure effective control within organizations. The course covers key topics such as interpreting financial statements, assessing financial health through ratio analysis, budgeting, variance analysis, and internal controls. Students learn to identify financial risks, evaluate investment opportunities, and establish procedures to monitor and improve financial performance. Emphasis is placed on practical applications and real-life case studies, enabling students to develop the analytical and managerial skills necessary to contribute to strategic planning and operational efficiency in a corporate environment.
Recommended Textbook
Cornerstones of Cost Accounting 1st Edition by Don R. Hansen
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2433 Verified Questions
2433 Flashcards
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Chapter 1: Introduction to Cost Management
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Sample Questions
Q1) When a management accountant attends training seminars on new FASB rules, which part of the IMA Code of Conduct is being observed?
A) competence
B) confidentiality
C) integrity
D) credibility
Answer: A
Q2) Investigating production variances and adjusting the production process is an example of
A) planning.
B) control.
C) internal auditing.
D) both a and c.
Answer: B
Q3) Automation of the manufacturing environment is associated with increases in A) inventory.
B) productive capacity.
C) processing time.
D) none of these.
Answer: B
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Chapter 2: Basic Cost Management Concepts
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Sample Questions
Q1) In an accounting information system, the inputs are usually
A) financial statements.
B) analyzing data.
C) performance reports.
D) economic events.
Answer: D
Q2) Which of the following is a trait of a functional-based cost management system?
A) unit-based drivers
B) tracing intensive
C) use of both financial and nonfinancial measures of performance
D) detailed activity information
Answer: A
Q3) In a company that supplies garlic bread to pizza restaurants, which of the following would NOT be considered an input?
A) delivered garlic bread
B) flour
C) garlic
D) oil
Answer: A
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Page 4
Chapter 3: Cost Behavior
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Sample Questions
Q1) Refer to Figure 3-6.Using a computer or calculator, compute the estimate of maintenance costs at 100 units of production using the method of least squares.This value would be
A) $291.
B) $321.
C) $336.
D) $698.
Answer: A
Q2) Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value beyond which the line is parallel to the horizontal axis?
A) total direct material costs
B) a consultant paid $100 per hour with a maximum fee of $2,000
C) employees who are paid $15 per hour and guaranteed a minimum weekly wage of $300
D) rent on exhibit space at a convention.
Answer: B
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Chapter 4: Activity-Based Costing
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Sample Questions
Q1) If activity-based costing is used, materials handling would be classified as a A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
Q2) Unit-based product costing uses which of the following procedures?
A) Overhead costs are traced to departments, then costs are traced to products.
B) Overhead costs are traced to activities, then costs are traced to products.
C) Overhead costs are traced directly to products.
D) All overhead costs are expensed as incurred.
Q3) Refer for Figure 4-8.What is the allocation rate per packing order using activity-based costing?
A) $15,000
B) $ 60
C) $ 7,500
D) $ 200
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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) Refer to Figure 5-9.If the rework is considered normal spoilage, what is the journal entry for overhead control?
A) overhead control $ 140 materials $60
Payroll $80
B) materials $ 60 payroll $80
Overhead control $140
C) no journal entry is needed
D) none of these
Q2) Inseparability refers to the
A) nonphysical nature of services as opposed to products.
B) fact that production and consumption are inseparable for services.
C) greater chances for variation in the performance of services than in the production of products.
D) fact that services cannot be inventoried but must be consumed when performed.
Q3) A journal entry debiting Work-in-Process would normally NOT be accompanied by a credit to
A) Materials Inventory.
B) Finished Goods.
C) Overhead Control.
D) Wages Payable.
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Chapter 6: Process Costing
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Sample Questions
Q1) Refer to Figure 6-1.The journal entry to record goods completed and transferred out of the Assembly Department would include a
A) debit to Finished Goods Inventory for $120,000.
B) credit to Materials Inventory for $120,000.
C) debit to Work in Process-Assembly Department for $120,000.
D) debit to Work in Process-Finishing Department for $120,000.
Q2) Refer to Figure 6-21.What is Ring Company's amount transferred from the Mixing Department to the Bottling Department for Work Order 10?
A) $45,000
B) $84,500
C) $39,500
D) $62,500
Q3) Refer to Figure 6-19.Takon's equivalent units for materials using weighted average would be
A) 15.
B) 90.
C) 105.
D) 120.
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8
Chapter 7: Allocating Costs of Support Departments and Joint Products
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Sample Questions
Q1) What amount of joint costs will be allocated to No.2 common using the constant gross margin percentage method?
A) $300,000
B) $37,800
C) $67,200
D) $192,000
Q2) Refer to Figure 7-4.For purposes of performance evaluation, fixed costs allocated to Copy Center 1 are
A) $36,000.
B) $37,600.
C) $30,000.
D) $32,800.
Q3) What is the overhead rate for Department Y assuming the direct method is used?
A) $163.50
B) $90.00
C) $187.50
D) $81.75
Q4) Describe the differences between the direct, sequential and reciprocal methods of allocating support department costs to production departments.
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Chapter 8: Budgeting for Planning and Control
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Sample Questions
Q1) Which of the following is NOT an advantage of budgeting?
A) It forces managers to plan.
B) It provides resource information that can be used to improve decision making.
C) It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent evaluation of performance.
D) It provides organizational independence.
Q2) When budgets are used to evaluate performance, which factor might NOT have a significant behavioral effect?
A) concern for status
B) concern for financial matters
C) concern for career
D) concern for company profit
Q3) What is the budget variance for inspection in an activity-based performance report?
A) $1,000 F
B) $2,000 F
C) $3,000 F
D) none of these
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) A five-percent wage increase for all factory employees would affect which of the following variances?
A) direct materials price variance
B) direct labor rate variance
C) direct labor efficiency variance
D) variable manufacturing overhead efficiency variance
Q2) What is the standard activity level on which Crawford based its fixed overhead rate?
A) 110,000 direct labor hours
B) 105,000 direct labor hours
C) 100,000 direct labor hours
D) 50,000 direct labor hours
Q3) Which of the following equations measures the total budget variance?
A) AQ ´ (AP - SP)
B) SP ´ (AQ - SQ)
C) SQ ´ (AP - SP)
D) (AQ ´ AP) - (SQ ´ SP)
Q4) Compare and contrast mix and yield variances.
Q5) How are standards developed? What is the difference between ideal and currently attainable standards?
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Chapter 10: Decentralization: Responsibility Accounting, Performance
Evaluation, and Transfer Pricing
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Sample Questions
Q1) A manufacturing division of a company would most likely be evaluated as a(n)
A) cost center.
B) investment center.
C) revenue center.
D) asset center.
Q2) Which of the following changes would increase return on investment (ROI)?
A) Decrease sales and expenses by the same percentage.
B) Increase total assets.
C) Increase sales and expenses by the same percentage.
D) Decrease sales and expenses by the same dollar amount.
Q3) _______________ is(are) the right to buy a certain number shares of a company's stock at a particular price.
A) Stock options
B) Cash compensation
C) Stock-based compensation
D) Perquisites
Q4) What problems do owners face in encouraging goal congruence of managers? What is a stock option? How can stock options encourage goal congruence?
Q5) How are information, responsibility, and accountability related?
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Chapter 11: Strategic Cost Management
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Sample Questions
Q1) Which of the following is NOT a trait of a JIT system?
A) acceptable quality level
B) long-term contracts
C) multi-skilled labor
D) high employee involvement
Q2) If traditional manufacturing is used, which of the following is considered direct costs?
A) setup costs
B) direct labor
C) maintenance of machinery
D) inspection costs
Q3) When a computer manufacturing company addresses supplier production problems, it is focusing on
A) external linkages.
B) internal linkages.
C) a differentiation strategy.
D) a cost leadership strategy.
Q4) Explain the difference between acceptable quality level and total quality control.
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Page 13
Chapter 12: Activity-Based Management
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Sample Questions
Q1) _______________ focuses on non-value-added activities.
A) Activity sharing
B) Activity elimination
C) Activity selection
D) Activity reduction
Q2) Which of the following is an example of a value-added activity?
A) supervision of production workers
B) inspection of products
C) scheduling of production
D) All of these are value-added activities.
Q3) Which of the following is descriptive of activity-based responsibility accounting?
A) It assumes that activities can be collected into independent subgroups.
B) Its focus is the organization.
C) It assigns responsibility to processes.
D) Its standards are engineered and tend to be static.
Q4) What is responsibility accounting? Compare and contrast financial-based responsibility accounting with activity-based responsibility accounting.
Q5) What is process value analysis?
Q6) What is Kaizen costing? How does activity analysis help reduce costs?
Page 14
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Chapter 13: The Balanced Scorecard: Strategic-Based Control
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Sample Questions
Q1) Which of the following would be a subjective measure?
A) employee capabilities
B) market share
C) return on investment
D) cost per unit
Q2) The theoretical velocity per hour is
A) 1.8 units.
B) 2.0 units.
C) 0.5 units.
D) 0.55units.
Q3) Which of the following is NOT an advantage of strategic-based responsibility accounting?
A) It includes perspectives that serve as a source of competitive advantage.
B) Change efforts are directed by the mission and strategy.
C) Responsibility is centralized within the organization.
D) All are advantages of strategic-based responsibility accounting.
Q4) How can management communicate strategy? What are three methods for achieving strategic alignment? What management failure can keep strategy from being actionable?
15
Q5) Compare and contrast activity-based measures and strategic-based measures.
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Chapter 14: Quality and Environmental Cost Management
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Sample Questions
Q1) Downtime attributed to quality problems is a(n)
A) external failure cost.
B) internal failure cost.
C) appraisal cost.
D) prevention cost.
Q2) The total quality approach
A) sets a robust zero-defect standard.
B) allows a certain number of defective products.
C) provides no encouragement for continuous improvement.
D) sets a currently attainable standard.
Q3) What is the change in environmental costs from 2013 to 2014?
A) $66,000
B) $840,000
C) $774,000
D) $58,000
Q4) In 2013, Shelby Foods instituted a quality improvement program.At the end of 2014, the management of the corporation requested a report to show the amount saved by the measures taken during the year.The actual sales and actual quality costs for 2013 and 2014 are as follows:
Q5) What does quality mean and how has improving quality increased firm value?
Page 16
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Chapter 15: Lean Accounting and Productivity Measurement
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Sample Questions
Q1) What is the partial operational measure for labor for 2012?
A) 1.00
B) 2.50
C) 3.20
D) 1.25
Q2) What is the partial operational measure for materials for 2011?
A) 2.00
B) 1.00
C) 2.35
D) 1.25
Q3) Which of the following statements is true about the box scorecard?
A) Operational, non-financial measures are used at the cell level.
B) There is a comparison between prior week metrics, current week metrics, and desired future state metrics.
C) The expectation to achieve desired future state provides motivation towards constant performance improvement.
D) All of these.
Q4) Discuss the linkage between quality and productivity.
Q6) Explain the difference between technical and input trade-off efficiency. 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) Baker Company sells its product for $60.In addition, it has a variable cost ratio of 40 percent and total fixed costs of $9,000.What is the break-even point in units for Baker Company?
A) 375 units
B) 3,600 units
C) 250 units
D) 2,400 units
Q2) The break-even point is
A) the volume of activity where all fixed costs are recovered.
B) where fixed costs equal total variable costs.
C) where total revenues equal total costs.
D) where total costs equal total contribution margin.
Q3) What is the break-even point in units using ABC?
A) 5,625 units
B) 16,875 units
C) 7,500 units
D) 11,250 units
Q4) In the Cost-Volume-Profit analysis, what are two ways management can deal with risk and uncertainty?
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Chapter 17: Activity Resource Usage Model and Tactical Decision Making
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Sample Questions
Q1) If a firm is at full capacity, the minimum special order price must cover
A) variable costs associated with the special order.
B) variable and fixed manufacturing costs associated with the special order.
C) variable and incremental fixed costs associated with the special order.
D) variable costs and incremental fixed costs associated with the special order plus foregone contribution margin on regular units not produced.
Q2) ______________ are future costs that differ across alternatives.
A) Relevant costs
B) Irrelevant costs
C) Sunk costs
D) Past costs
Q3) Which of the joint products should be sold at split-off?
A) A
B) B
C) C
D) both A and B
Q4) What are relevant costs? How do they relate to decision making?
Q5) Describe the steps in the decision-making process.What is the role of qualitative factors in tactical decision-making?
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Chapter 18: Pricing and Profitability Analysis
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Sample Questions
Q1) What is the profit (loss) from Option Three?
A) $215,000
B) $1,200,000
C) $110,000
D) ($60,000)
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) What are some of the pricing practices regulated by law?
Q4) When production is less than sales volume, net income under absorption costing will be _______________ profits using variable costing procedures.
A) greater than
B) less than
C) equal to
D) randomly different than
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Chapter 19: Capital Investment
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Sample Questions
Q1) A firm is evaluating a project that has a net present value of $0 when a discount rate of 8 percent is used.A discount rate of 6 percent will result in a
A) negative net present value.
B) positive net present value.
C) net present value of $0.
D) the question cannot be answered based upon the information provided.
Q2) Jackson Company is considering a project that requires an investment of $700,000.The project is expected to generate an annual cash flow of $280,000 for six years.The cash flow would be received at the end of each year.
Q3) Van Meter plans to use MACRS and keep the production equipment for seven years.(Round amounts to dollars.)
The MACRS deduction in Year 2 would be
A) $172,000.
B) $170,000.
C) $160,000.
D) $140,000.
Q4) What are the differences that affect capital investment decisions regarding advanced technology and environmental considerations?
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Page 22
Chapter 20: Inventory Management: Economic Order
Quantity, Jit, and the Theory of Constraints
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Sample Questions
Q1) Refer to Figure 20-4.What is the constraint on machine hours for Heft Company?
A) 1A + 4B £ 500
B) 5A + 2B £ 500
C) 1A + 4B £ 300
D) 40A + 30B £ 500
Q2) The reorder point for the inventory item is
A) 200 units.
B) 970 units.
C) 320 units.
D) 500 units.
Q3) If inventory consists of goods purchased from an outside supplier, the inventory-related costs are
A) ordering and carrying costs.
B) setup costs and carrying costs.
C) ordering and setup costs.
D) both a and c.
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