Financial Reporting and Analysis Exam Bank
Course Introduction
Financial Reporting and Analysis provides students with a comprehensive understanding of the principles, standards, and processes involved in preparing, interpreting, and analyzing financial statements. The course covers key topics such as the accounting cycle, revenue recognition, measurement of assets and liabilities, and the preparation and presentation of financial statements in accordance with generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). Emphasis is placed on the analysis of financial statements to assess an organization's performance, profitability, and financial position, equipping students with the analytical tools necessary for informed decision-making by managers, investors, and other stakeholders.
Recommended Textbook
Managerial Accounting 5th Edition by Karen W. Braun
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The management accountant at Technology Innovators determined $500,000 is the organization's earning goal to accommodate the organizational plan during the first quarter during a new year. The accountant realizes that to achieve the new earning goal, the operations manager needs to increase the price of technology parts charged to a consumer to $250.00 per unit. The manager is scheduling a new staff meeting to determine if they need to increase the marketing efforts at the firm, or if they need to design a new part that uses materials that are less expensive to produce. Which of the following management responsibilities is the managerial accountant using in this example?
A)Directing
B)Planning
C)Controlling
D)Implementing
E)Designing Answer: B
Q2) The IMA's overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility.
A)True
B)False Answer: True
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Page 3
Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) The value chain is used by
A)service, manufacturing, and merchandising businesses.
B)only service and manufacturing businesses.
C)only service and merchandising businesses.
D)only manufacturing and merchandising businesses.
Answer: A
Q2) Period costs are generally also known as
A)factory overhead.
B)prime costs.
C)annual expenses.
D)operating expenses.
Answer: D
Q3) An example of a fixed cost for a manufacturer would be which of the following?
A)Sales commissions
B)Salary of plant manager
C)Direct materials
D)Delivery costs
Answer: B
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Chapter 3: Job Costing
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Sample Questions
Q1) The journal entry needed to record the completion of a job includes a
A)debit to Cost of Goods Sold account.
B)debit to Work-in-Process Inventory account.
C)debit to Finished Goods Inventory account.
D)debit to Raw Materials Inventory account.
Answer: C
Q2) Job costing systems accumulate the costs for each individual job.
A)True
B)False
Answer: True
Q3) A labor time record identifies the employee and the amount of time the employee spent on a particular job.
A)True
B)False
Answer: True
Q4) A food and beverage company like Coca-Cola would most likely use job costing.
A)True
B)False Answer: False
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Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) Lean companies typically emphasize quality.
A)True
B)False
Q2) Why are large amounts of inventory considered wasteful?
A)It ties up cash that could be used for other, more useful purposes.
B)Inventory could spoil, get broken or stolen, or become obsolete.
C)Storing inventory is very expensive.
D)All of the above are reasons large amounts of inventory are considered wasteful.
Q3) The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs by the estimated total quantity of the cost allocation base.
A)True
B)False
Q4) The costs incurred when poor quality goods or services are detected and corrected after delivery to customers are called ________ costs.
A)appraisal
B)external failure
C)prevention
D)internal failure
6
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Chapter 5: Process Costing
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Sample Questions
Q1) When units are transferred from Processing Department #1 to Processing Department #2, a debit is made to WIP-Processing Department #1 to reflect the transferred-out costs.
A)True
B)False
Q2) In Step 1 of the process costing procedure, the "total units accounted for" is the sum of
A)the units completed and transferred out plus the units in ending WIP.
B)the units in ending WIP plus the units started in production during the month.
C)the units in beginning WIP plus the units in ending WIP.
D)the units in beginning WIP plus the units completed and transferred out.
Q3) Flying High Manufacturing produces frisbees using a three-step process that includes molding, coloring and finishing. Which of the following accounts is credited for direct labor used during the molding process?
A)Wages Payable
B)Manufacturing Overhead
C)Raw Materials Inventory
D)WIP Inventory-Molding
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Stanley's Bicycles store buys bicycles on average for $650 and sells them on average for $770. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1400 a month rent for his store, and also pays $4000 a month to his staff in addition to the commissions. Stanley sold 150 bicycles in June. If Stanley prepares a contribution margin income statement for the month of June, what would be his contribution margin?
A)$675
B)$115,500
C)$98,175
D)$230,325
Q2) Best Birdies produces ornate birdcages. The company's average cost per unit is $23 when it produces 2600 birdcages. If $5900 of the total costs are fixed, what is the variable cost of producing each birdcage?
A)$2.27
B)$53,900.00
C)$23.00
D)$20.73
Q3) What are three methods used to estimate cost behavior? What are the advantages and disadvantages of each method?
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Page 8
Chapter 7: Cost-Volume-Profit Analysis
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Q1) A company that sells one product would be more likely to calculate breakeven in terms of sales units, rather than sales revenue.
A)True
B)False
Q2) The contribution margin ratio explains the percentage of each sales dollar that
A)contributes towards variable costs.
B)contributes towards sales revenue.
C)contributes towards period expenses.
D)contributes towards fixed costs and generating a profit.
Q3) Gabe Industries sells two products, Basic models and Deluxe models. Basic models sell for $44 per unit with variable costs of $25 per unit. Deluxe models sell for $54 per unit with variable costs of $25 per unit. Total fixed costs for the company are $1441. Gabe Industries typically sells three Basic models for every Deluxe model. What is the breakeven point for Basic models and Deluxe models? (Round any intermediary calculations to the nearest cent and your final answers to the nearest whole unit.)
A)38 units of Basic; 25 units of Deluxe
B)25 units of Basic; 38 units of Deluxe
C)50 units of Basic; 23 units of Deluxe
D)23 units of Basic; 50 units of Deluxe
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Page 9
Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) When making a pricing decision, it is not necessary to separate costs into fixed and variable.
A)True
B)False
Q2) A "constraint" is best described by which of the following?
A)The distribution of all products to be sold
B)A factor that restricts production or sales of a product
C)Benefits foregone by choosing a particular alternative course of action
D)Expected future costs that differ among alternatives
Q3) Blue Technologies manufactures and sells DVD players. Great Products Company has offered Blue Technologies $22 per DVD player for 10,000 DVD players. Blue Technologies' normal selling price is $33 per DVD player. The total manufacturing cost per DVD player is $14 and consists of variable costs of $10 per DVD player and fixed overhead costs of $5 per DVD player. (NOTE: Assume excess capacity and no effect on regular sales.) Should Blue Technologies accept or reject the special sales order?
A)Accept, because operating income would increase $320,000.
B)Reject, because operating income would decrease $120,000.
C)Accept, because operating income would increase $120,000.
D)Reject, because operating income would decrease $230,000.
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Page 10
Chapter 9: The Master Budget
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Sample Questions
Q1) At the beginning of the year, Lakeview Corporation has 690 life vests in inventory. The company wants to have 2300 vests in inventory at the end of the year and plans to sell 6100 life vests during the year. How many life vests must Lakeview Corporation produce during the year?
A)8400
B)3110
C)7710
D)9090
Q2) Lakewood Jet Skis has budgeted sales for June and July at $490,000 and $480,000 , respectively. Sales are 75% credit, of which 30% is collected in the month of the sale and 70% is collected in the following month. What is the accounts receivable balance on July 31?
A)$257,250
B)$336,000
C)$252,000
D)$360,000
Q3) List and describe three reasons why a company and its managers could benefit from the use of budgeting.
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11
Chapter 10: Performance Evalulation
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Sample Questions
Q1) Total hours of continuing professional education taken by employees may be an example of measuring which perspective of the balanced scorecard?
A)Financial
B)Customer
C)Internal business
D)Learning and growth
Q2) Describe the four types of responsibility centers. Give a specific example of each of the four types of responsibility centers.
Q3) If a company must decrease its sales price of a product while all of the company's expenses remain constant, what will happen to return on investment (ROI)?
A)ROI will decrease.
B)ROI will increase.
C)ROI will not be affected.
D)We cannot determine the effect from the information provided.
Q4) Total assets is the denominator in the formula managers use to compute ROI.
A)True
B)False
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) The fixed overhead budget variance measures the difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs.
A)True
B)False
Q2) An unfavorable direct labor rate variance indicates which of the following?
A)Both Actual Quantity (AQ)and actual cost of direct labor hours exceeded standard quantity and standard cost of hours for actual output.
B)The Actual Quantity (AQ)of direct labor hours worked exceeded the standard quantity of hours for actual output.
C)The actual direct labor cost per hour exceeded the standard direct labor cost per hour for Actual Quantity (AQ)of direct labor hours.
D)The actual cost of direct labor per hour was less than the standard cost of direct labor per hour.
Q3) A cost benchmark is valid only if the standards are
A)based on historical costs.
B)kept up to date.
C)reviewed by salaried assembly-line workers.
D)practical and attainable.
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Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) "Management's minimum desired rate of return on an investment" is best described by which of the following terms?
A)Payback return
B)Internal rate of return
C)Discount rate
D)Net present value
Q2) A manager wants to know which investment decision will affect the bottom line of the financial statements according to Generally Accepted Accounting Principles. Which capital budgeting method would he choose?
A)Payback method
B)Accounting rate of return method
C)Net present value method
D)Profitability index
Q3) The net present value method assumes that all cash inflows are immediately reinvested at a rate of return equal to the internal rate of return.
A)True
B)False
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Page 14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) A cash flow statement shows $17,000 from operations, ($8900)from investing, and $25,000 from financing. The cash balance must have increased or decreased by A)$33,100.
B)$16,100.
C)$50,900.
D)$42,000.
Q2) The statement of cash flows reflects cash flows during a period of time. A)True
B)False
Q3) A statement of cash flows is generated to show A)the revenues the company has earned during the period. B)the expenses the company incurred during the period.
C)how profits were generated during the period.
D)the inflow and outflow of cash during the time period.
Q4) The statement of cash flows shows not only the amount of cash used during a particular time, but also how the cash was used. A)True
B)False
Q5) List three ways that owners and investors use the statement of cash flows.
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Vertical analysis would rarely be performed on which of the following?
A)Income statement
B)Schedule of depreciation
C)Balance sheet
D)All of the above are common targets of vertical analysis.
Q2) In a horizontal analysis, the earlier period is the base period.
A)True
B)False
Q3) The ________ ratio measures the ability of a company to pay all current liabilities if they came due immediately.
A)inventory turnover
B)current
C)day's sales in receivables
D)acid-test
Q4) Which of the following is the formula to compute times-interest-earned?
A)Total liabilities/total assets
B)Interest expense/income from operations
C)Income from operations/interest expense
D)Total assets/total liabilities
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Chapter 15: Sustainability
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Q1) The cost to install equipment to reduce the emissions of a coal-fired power plant would be categorized as what type of cost by an environmental management accounting system (EMA)?
A)Waste and emission control cost
B)Prevention cost
C)Intangible cost
D)Research and development (R&D)cost
Q2) Which of the following organizations has developed the G4 Guidelines?
A)Global Reporting Initiative (GRI)
B)International Accounting Standards Board (IASB)
C)Carbon Disclosure Project (CDP)
D)International Organization for Standardization (ISO)
Q3) Implementing sustainable business practices may help an organization to grow its market share.
A)True
B)False
Q4) Materials flow accounting (MFA)reconciles physical output with all physical inputs.
A)True
B)False
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