Financial and Managerial Accounting Study Guide Questions
Course Introduction
Financial and Managerial Accounting introduces students to the fundamental principles and practices of accounting used in business decision-making. The course covers the preparation, interpretation, and analysis of financial statements for external stakeholders, as well as internal accounting methods used by managers to plan, control, and evaluate business operations. Key topics include accounting cycles, cost behavior, budgeting, performance evaluation, and ethical considerations in financial reporting. By the end of the course, students gain essential skills to analyze financial data, support organizational goals, and make informed business decisions.
Recommended Textbook
Introduction to Managerial Accounting 4th Canadian Edition by Peter C. Brewer
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Page 2
Chapter 1: An Introduction to Managerial Accounting and Cost Concepts
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Sample Questions
Q1) What is the professional designation for the majority of professional accountants in Canada?
A) Chartered Certified Accountants
B) Chartered Management Accountants
C) Chartered Professional Accountants
D) Certified Public Accountants
Answer: C
Q2) Effective corporate governance enhances stakeholders' confidence that an organization is being managed in their best interests rather than solely in the interests of top management and certain key individuals.
A)True
B)False
Answer: True
Q3) The management cycle proceeds in what order?
A) Control,implementation,planning
B) Planning,implementation,control
C) Implementation,planning,control
D) Implementation,control,planning
Answer: B
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Chapter 2: Systems Design: Job-Order Costing
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Sample Questions
Q1) The cost of goods manufactured or the year (in thousands of dollars)was:
A) $450.
B) $470.
C) $530.
D) $540.
Answer: A
Q2) Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?
A) Product cost.
B) Manufacturing overhead.
C) Period cost.
D) Administrative cost.
Answer: C
Q3) Variable costs are costs whose per unit costs vary as the activity level rises and falls.
A)True
B)False
Answer: False
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Chapter 3: Systems Design: Activity-Based Costing
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Q1) Discretionary fixed costs:
A) vary directly and proportionately with the level of activity.
B) have a long-term planning horizon,generally encompassing many years.
C) are made up of plant,equipment,and basic organizational costs.
D) usually arise from annual decisions by management.
Answer: D
Q2) Modern technology is causing shifts away from variable costs toward more fixed costs in many industries.
A)True
B)False
Answer: True
Q3) The total monthly fixed cost for Boggs Sports Equipment Company is?
A) $12,000.
B) $22,500.
C) $25,000.
D) $40,000.
Answer: C
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Chapter 4: Systems Design: Process Costing
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Sample Questions
Q1) Hussain Shop uses a job-order costing system.Overhead is applied to jobs based on direct labour hours.The source document that would give the number of direct labour hours worked on Job 256 is the:
A) material requisition form.
B) labour time sheet.
C) machine hours usage ticket.
D) Job-order cost sheet.
Q2) Stan Wilson,a newly hired worker at Superior Molding,was puzzled by the job cost sheets attached to the jobs he worked on.He understood the materials and labour cost entries - these represent the actual costs of materials he requisitioned for the job and the cost of the labour hours he recorded for the job.However,he did not understand the entry for manufacturing overhead.This entry was made at the end of the day by the accountants and he had no idea where this number came from.He asked the company's controller,Mary Donner,but the only part of the explanation he understood was that the overhead entries do not represent actual overhead costs.
Required:
Explain to Stan what the manufacturing overhead entries on the job cost sheet mean.
Q3) What was the cost of jobs completed during 2014?
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Chapter 5: Cost Behavior: Analysis and Use
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Sample Questions
Q1) Assuming that the company uses the weighted-average cost method,what is the cost per equivalent unit for material costs for the month in the Blending Department? (Round your answer to the nearest cent)
A) $1.09.
B) $1.18.
C) $1.22.
D) $1.25.
Q2) Assuming that the company uses the weighted-average cost method,what is the total value of the ending work in process inventory in the Blending Department? (Round intermediate calculation to the nearest cent and final answers to the nearest dollar)
A) $12,903.
B) $20,060.
C) $32,963.
D) $63,070.
Q3) The total cost of the October 31 work in process inventory was?
A) $35,000.
B) $41,250.
C) $43,750.
D) $78,750.
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Page 7
Chapter 6: Cost-Volume-Profit Relationships
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Q1) Which of the following would not be considered as an internal failure cost?
A) Quality training.
B) Investigation of cause of failure.
C) Rework costs.
D) Scrap costs.
Q2) In the initial stages of a quality improvement process,there usually will be immediate reductions in total quality costs.
A)True
B)False
Q3) Assuming that actual activity turns out to be the same as expected activity,the total amount of overhead cost allocated to Product X would be closest to:
A) $296,100.
B) $298,000.
C) $339,000.
D) $372,600.
Q4) The unit cost for Dept.F,using activity rates,is?
Q5) If direct labour hours are used to assign total overhead costs,what is the application rate?
Q6) The activity rate for receiving is?
8
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Chapter 7: Profit Planning
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Q1) If the company has budgeted to sell 25,000 units of Product SW in July,then the total budgeted selling and administrative expenses for July will be:
A) $56,250.
B) $78,000.
C) $123,250.
D) $134,250.
Q2) Determine the total cash disbursements that Cummings Corporation will make for the operating expenses during the month of April.
Q3) In a budgeted balance sheet,the merchandise inventory on February 28 would be:
A) $3,200.
B) $4,800.
C) $7,500.
D) $9,600.
Q4) The cash balance at the beginning of the second quarter (item e in thousands)is:
A) $0.
B) $7.
C) $10.
D) $14.
Q5) Determine what the cash collection for October will be.
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Chapter 8: Standard Costs
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Sample Questions
Q1) The total contribution margin decreases if sales volume remains the same and which of the following occurs?
A) Fixed expenses increase.
B) Fixed expenses decrease.
C) Variable expense per unit increases.
D) Variable expense per unit decreases.
Q2) The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.
A)True
B)False
Q3) If the number of units sold increases by 10%,how much will net income increase?
A) $5,000.
B) $10,000.
C) $20,000.
D) $50,000.
Q4) What are target sales in necklaces to generate a before tax income of $3,000?
Q5) Based on the Oates Tannery data presented above,how many units of sales would be required to realize an operating profit of $40,000?
Q6) What is the breakeven point for this seashell necklace business?
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Chapter 9: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Lusk Company produces and sells 15,000 units of Product A each month.The selling price of Product A is $20 per unit,and variable expenses are $14 per unit.A study has been made concerning whether Product A should be discontinued.The study shows that $70,000 of the $100,000 in fixed expenses charged to Product A would continue even if the product were discontinued.These data indicate that if Product A is discontinued,the company's overall net operating income would:
A) increase by $10,000 per month.
B) decrease by $20,000 per month.
C) increase by $20,000 per month.
D) decrease by $60,000 per month.
Q2) Up to how much should the company be willing to pay for one additional hour of milling machine time if the company has made the best use of the existing milling machine capacity? (Round off to the nearest whole cent. )
A) $0.00.
B) $4.55.
C) $11.25.
D) $15.50.
Q3) Glocker Company makes three products in a single facility.These products have the following unit product costs:
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Page 11
Chapter 10: Decentralization
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Sample Questions
Q1) The net present value on this investment is closest to:
A) $76,750.
B) $80,000.
C) $91,600.
D) $400,000.
Q2) Bradley Company's required rate of return is 14%.The company has an opportunity to be the exclusive distributor of a very popular consumer item.No new equipment would be needed,but the company would have to use one-fourth of the space in a warehouse it owns.The warehouse cost $200,000 new.The warehouse is currently half-empty and there are no other plans to use the empty space.In addition,the company would have to invest $100,000 in working capital to carry inventories and accounts receivable for the new product line.The company would have the distributorship for only 5 years.The distributorship would generate a $17,000 net annual cash inflow.The working capital would be fully released at the end of the five years to be available for other purposes. Required:
What is the net present value of the project at a discount rate of 14%? Should the project be accepted?
Q3) Monson Company is considering three investment opportunities with cash flows as described below:
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Page 12
Chapter 11: Relevant Costs for Decision Making
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Sample Questions
Q1) Management by exception means that a manager's attention is directed toward those parts of the organization where variances between actual and budget are significant.
A)True
B)False
Q2) If the standard hours allowed for the actual output of the period is greater than the denominator level of activity (in hours),then the overhead budget variance will be unfavourable.
A)True
B)False
Q3) In a standard cost system,the resources applied to production are recorded as additions to work in process inventory using the standard quantities and the standard prices for each actual unit added.
A)True
B)False
Q4) The labour rate variance is:
A) $1,125 U.
B) $1,125 F.
C) $2,500 F.
D) $2,500 U.
Page 13
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Chapter 12: Capital Budgeting Decisions
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Sample Questions
Q1) Multidimensional performance systems such as the balanced scorecard are appropriate for not-for-profit organizations but not for commercial businesses.
A)True
B)False
Q2) Last year,a company had stockholder's equity of $160,000,net operating income of $16,000 and sales of $100,000.The turnover was 0.5.The return on investment (ROI)was?
A) 7%.
B) 8%.
C) 9%.
D) 10%.
Q3) Cost centre managers are often evaluated by comparing actual costs under their control against budgeted or standard costs using variance analysis.
A)True
B)False
Q4) The following data have been extracted from the year-end reports of two companies-Company X and Company Y:
Q5) Financial data for Bingham Company for last year appear below:
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Chapter 13: How Well Am I Doing Statement of Cash Flows
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Sample Questions
Q1) Harris Company,a retailer,had cost of goods sold of $290,000 last year.The beginning inventory balance was $26,000 and the ending inventory balance was $24,000.The company's inventory turnover was closest to:
A) 5.80 times.
B) 11.15 times.
C) 11.60 times.
D) 12.08 times.
Q2) Erack Company has $15,000 in cash,$4,000 in marketable securities,$38,000 in current receivables,$18,000 in inventories,and $40,000 in current liabilities.The company's acid-test (quick)ratio is closest to:
A) 0.95 to 1.
B) 1.33 to 1.
C) 1.43 to 1.
D) 1.88 to 1.
Q3) The acid-test ratio is a test of the quality of accounts receivable-in other words,whether they are likely to be collected.
A)True
B)False
Q4) Calculate the debt-to-equity ratio for 20 × 4
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Chapter 14: How Well Am I Doing Financial Statement Analysis
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Sample Questions
Q1) Which of the following statements is true about the operating activities section?
A) In a direct method cash flow statement,the section starts with net income.
B) Net income is not included in an indirect method cash flow statement.
C) Regardless of the method used,net cash from operating activities is the same.
D) The indirect method results in a higher amount for cash from operating activities if there is net income and in a lower amount if there is a net loss.
Q2) The total of wage expense to employees for the year was $600,000.Wages payable to employees at the beginning of the year were $15,000 and at the end of the year $10,000.Wage expense resulted in cash outflows of?
A) $595,000
B) $600,000
C) $605,000
D) $610,000
Q3) Cash flow from investing activities was?
A) $0
B) $(20,000)
C) $(40,000)
D) $(60,000)
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