Financial Planning and Analysis
Pre-Test Questions
Course Introduction
Financial Planning and Analysis introduces students to the essential frameworks and tools used to forecast, budget, and evaluate a companys financial performance. The course covers key topics such as strategic planning, financial modeling, variance analysis, and the integration of business strategy with financial objectives. Emphasis is placed on interpreting financial statements, developing decision-making models, and supporting organizational goals through data-driven recommendations. Students will gain practical experience in creating budgets, performing scenario analysis, and communicating insights to stakeholders, preparing them for roles in corporate finance, consulting, and business management.
Recommended Textbook
Managerial Accounting Decision Making and Motivating Performance 1st Edition by Srikant M. Datar
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1755 Verified Questions
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Chapter 1: The Manager and Management Accounting
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Sample Questions
Q1) When workers underperform,behavioral considerations suggest:
A)managers write up the workers immediately.
B)managers send written reports that highlight their underperformance.
C)managers discuss with workers ways to improve performance actions.
D)managers should terminate the employee without taking other actions.
E)managers should ignore the underperformance and go on with business.
Answer: C
Q2) The number one planning tool when implementing strategy is a budget.
A)True
B)False
Answer: True
Q3) Successful management accountants only possess one skill and that is their ability to communicate in the organization.
A)True
B)False
Answer: False
Q4) Ethics form the basic foundation of any well-functioning economy.
A)True
B)False
Answer: True
Page 3
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Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) Managers use their knowledge about costs to help guide their decisions about product innovation,quality,and customer service.
A)True
B)False
Answer: True
Q2) Pricing and product-mix decisions include:
A)manufacturing costs only.
B)design costs plus manufacturing costs.
C)all costs incurred along the value chain.
D)distribution costs only.
E)production costs only.
Answer: C
Q3) A production system under which products are manufactured only when needed is:
A)absorption system production.
B)now system production.
C)future system production.
D)current system production.
E)just-in-time production.
Answer: E
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Page 4
Chapter 3: Cost-Volume-Profit Analysis
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126 Flashcards
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Sample Questions
Q1) Managers confuse gross margin and contribution margin in merchandising companies because:
A)cost of goods sold equals the variable cost of goods purchased.
B)cost of goods sold does not equal the variable cost of goods purchased.
C)manufacturing costs does not equal the variable cost of goods manufactured.
D)manufacturing costs are always relevant in merchandising companies.
E)managers never confuse the margin and contribution margin in merchandising companies.
Answer: A
Q2) Student credit hour is a potential level of output at a university.
A)True
B)False
Answer: True
Q3) The risk-return tradeoff across alternative cost structures can be measured as operating leverage.
A)True
B)False
Answer: True
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5
Chapter 4: Job Costing
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Sample Questions
Q1) Managers are not required to know the complete reciprocated costs of a support department for decisions about whether to outsource all the services that the support department provides.
A)True
B)False
Q2) Managers cost products to guide them in their long-term strategic planning process.
A)True
B)False
Q3) The widespread adoption of computerized accounting systems has greatly reduced the cost of using the adjusted allocation-rate approach.
A)True
B)False
Q4) The step-down method is also the:
A)reciprocal method.
B)indirect method.
C)engineering method.
D)budgeted overhead method.
E)sequential allocation method.
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Chapter 5: Process Costing and Cost Allocation
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Sample Questions
Q1) List and compare the two distinct systems that managerial accountants use to compute product costs.Include an example of a product that is typical in each system.
Q2) The costs of a production process that yields multiple products simultaneously are:
A)zero costs.
B)joint costs.
C)single costs.
D)common costs.
E)separable costs.
Q3) The primary reason managers are interested in joint-cost allocation is to calculate the cost of goods sold and inventory values for individual products.
A)True
B)False
Q4) Managerial accountants treat partially-assembled units the same as a fully-assembled units.
A)True
B)False
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Chapter 6: Activity-Based Costing and Activity-Based Management
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Sample Questions
Q1) What should a managerial accountant consider if all or most of the indirect costs are identified as output unit-level costs?
Q2) ABC systems help managers evaluate the effect of current product and process designs on activities and costs and to identify new designs to reduce costs.
A)True
B)False
Q3) Operating personnel manage costs by ________.
A)controlling physical cost drivers
B)controlling nonphysical cost drivers
C)establishing weekly meetings to train staff
D)layoff nonessential personnel in various offices
E)observing employees to ensure they manage time
Q4) When managers structure activity cost pools more finely with cost drivers for each activity cost pool as the cost-allocation base,it leads to more accurate costing of activities.
A)True B)False
Q5) Why is it important for managerial accountants to identify the cost-allocation bases?
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Chapter 7: Pricing Decisions, customer Profitability, and Cost Management
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Sample Questions
Q1) Accounting managers that start pricing decisions by asking "Given what our customers want and how our competitors will react to what we do,what price should we charge" is most likely to use:
A)cost-plus approach.
B)cost-based approach.
C)market-based approach.
D)strategic-based approach.
E)consumer-based approach.
Q2) Tracking price discounts by customer and by salesperson has no impact on customer profitability.
A)True
B)False
Q3) ________ focus on total costs incurred by a customer to acquire,use,maintain,and dispose of a product or service.
A)Product life-cycle
B)Life-cycle budgeting
C)Customer life-cycle costs
D)Life-cycle costing
E)Price discrimination
Q4) Do service companies use cost-plus pricing?
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Chapter 8: Determining How Costs Behave
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Sample Questions
Q1) The quantitative analysis method is the most rigorous approach to estimate costs.
A)True
B)False
Q2) The horizontal axis is called the ________.
A)a-axis
B)b-axis
C)x-axis
D)y-axis
E)z-axis
Q3) Variations in the level of a single activity explain variations in the related ________.
A)total costs
B)mixed costs
C)linear costs
D)nonlinear costs
E)regression analysis
Q4) The independent variable is the factor used to predict the dependent variable.
A)True
B)False
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Chapter 9: Decision Making and Relevant Information
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Sample Questions
Q1) What is an opportunity cost and why should managers consider it when making decisions?
Q2) The resource that restricts or limits the production or sale of products is:
A)never machine hours.
B)the average contribution margin per unit of constraint.
C)the lowest contribution margin per unit of constraint.
D)the highest contribution margin per unit of constraint.
E)the product that achieves additional capacity in the short-run.
Q3) There is no opportunity cost of using warehouse space and equipment for companies when there is no alternative use of the space and equipment.
A)True
B)False
Q4) ________ is purchasing goods and services from outside vendors.
A)Insourcing
B)Outsourcing
C)Incremental cost
D)Full cost of product
E)Business function cost
Q5) Explain the difference of theory of constraints compared to activity-based costing systems.
11
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Chapter 10: Quality, inventory Management, and Time
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Sample Questions
Q1) How does a manager know to implement just-in-time purchasing?
Q2) To implement JIT,the manager at Seaton Hammock Manufacturing must incur $110,000 in annual production costs to reduce setup times.The manager expects JIT to reduce average inventory by $450,000 and relevant costs of insurance,storage,materials handling,and setup by $35,000 each year.The required rate of return on inventory investments is 10% per year.The manager was thinking about enhancing the quality of rework and warranty repair costs.What are the savings? Does the manager have enough information to implement the system?
Q3) ________ is the purchase of materials so that they are delivered just as needed for production.
A)Appraisal
B)Just-in-time purchasing
C)Conformance quality
D)Manufacturing lead time
E)Manufacturing cycle efficiency
Q4) Managers only use personal observation to evaluate and control JIT performance.
A)True
B)False
Q5) Do companies view time as a driver of strategy?
Q6) What is the economic-order-quantity decision model?
Page 12
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Chapter 11: Capital Investments
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Sample Questions
Q1) Why is the finance theory important when managers use different methods that lead to different ranking of projects?
Q2) In-a-Jiff Tire Service owner,Jeffery Haberton,has the opportunity to invest $360,000 at 8% interest during a one-year period.After the first year,the value of the investment is expected to be $28,800.According to the time value of money,how much would the same $360,000 be worth in one year if it is not invested at 8%?
A)$300,000
B)$308,000
C)$333,333
D)$346,800
E)$360,000
Q3) In what stage of the capital budgeting process do managers forecast all potential cash flows attributable to the alternative projects?
A)Stage 1: Identify projects.
B)Stage 2: Obtain information.
C)Stage 3: Make predictions.
D)Stage 4: Make decisions by choosing among alternatives.
E)Stage 5: Implement the decision,evaluate performance,and learn.
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Chapter 12: Master Budget and Responsibility Accounting
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Sample Questions
Q1) A key use of sensitivity analysis is to ________ cash flow.
A)use
B)spend
C)budget
D)prepare
E)eliminate
Q2) Which of the following is not a way that managers at multinational companies reduce the negative impact on performance caused by unfavorable exchange rate movements?
A)Option contracts.
B)Future contracts.
C)Forward contracts.
D)Sophisticated techniques.
E)Unsophisticated techniques.
Q3) When badly managed,budgeting can lead to:
A)better employee commitment.
B)better employee accountability.
C)better communication.
D)increased honesty at the firm.
E)game-playing and budgetary slack.
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Chapter 13: Flexible Budgets, cost Variances, and Management Control
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Sample Questions
Q1) When there is no efficiency variance,the fixed overhead spending variance is ________ the overhead flexible budget variance.
A)the same amount as B)the flexible budget divided by C)actual revenues multiplied by D)the growth variance added to E)the budgeted level of output minus
Q2) The managerial accountant at Diamond Manufacturing reported that the static-budget operating income of $110,000 for 12,000 diamond-stud jackets is $9.16 per jacket.The manager reported a shortfall of 1,800 jackets.
Required
Compute the operating-income volume variance.
A)$15,000
B)$15,500
C)$15,750
D)$16,244
E)$16,488
Q3) What would cause an unfavorable,U,variance in the fixed overhead flexible-budget?
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Chapter 14: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
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Sample Questions
Q1) What happens after the manager identifies unused capacity?
Q2) Downsizing,also called ________,is an integrated approach of configuring processes,products and people to match cost to the activities that need to be performed to operate effectively and efficiently in the present and future.
A)retrenching
B)trimming
C)rightsizing
D)curtailing
E)out-phasing
Q3) Which of the following is not a measure of the internal-business process perspective?
A)Yield.
B)On-time delivery.
C)Order-delivery time.
D)Service response time.
E)Employee-satisfaction ratings.
Q4) What is the purpose of the x-axis and the y-axis on the customer preference map?
Q5) How can a manager determine which strategy to follow?
Q7) Why do managers choose to form cross-functional teams? Page 16
Q6) Why do companies consider a balanced scorecard a linked,or causal,scorecard?
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Chapter 15: Transfer Pricing
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Sample
Questions
Q1) How can the employee or manager's effort go beyond physical exertion?
Q2) Which of the following exists when there is a homogeneous product with buying prices equal to selling prices and no individual buyers or sellers can affect those prices by their own actions?
A)Simple competitive market.
B)Double competitive market.
C)Complex competitive market.
D)Uniquely competitive market.
E)Perfectly competitive market.
Q3) Which of the following is not an issue a manager raises about full-cost transfer pricing?
A)How are each subunit's indirect costs allocated to products?
B)Have the correct activities bases been identified?
C)Have the correct cost pools been identified?
D)Have the correct cost-allocation bases been identified?
E)Have we considered that the current market price is a distress price?
Q4) What is the goal of the APA program?
Q5) Can a manager directly reward and observe effort?
Q6) How do managers reduce excessive focus of subunit managers on their own subunits?
Page 18
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Chapter 16: Performance Measurement and Compensation
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Sample Questions
Q1) In Step 2 of the designing accounting-based performance measures,managers ask,"Should performance reports be sent to top management daily,weekly,or monthly?"
A)True
B)False
Q2) Which of the following is not true about intrinsic motivation?
A)Results from added responsibilities.
B)Results from doing interesting and creative work.
C)Results from doing standard and normal work with no creativity.
D)Results from employees that actively show pride in their work.
E)Results from the development of personal bonds with coworkers.
Q3) Which of the following are formal information systems that managers use to focus the company's attention and learning on key strategic issues?
A)Strategic goals.
B)Belief systems.
C)Boundary systems.
D)Diagnostic control systems.
E)Interactive control systems.
Q4) Why may current-cost estimates be difficult to obtain for some assets?
Q5) What are the advantages of the net book value?
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