Intermediate Accounting Exam Review
Course Introduction
Intermediate Accounting dives deeper into the principles and practices of financial accounting, building on foundational concepts to enhance understanding of complex accounting issues. This course explores the preparation and analysis of financial statements in accordance with generally accepted accounting principles (GAAP), with an emphasis on asset valuation, liability measurement, revenue recognition, and the treatment of owners equity. Students will develop critical thinking and analytical skills through the application of accounting standards to real-world scenarios, the interpretation of financial disclosures, and the completion of in-depth problem sets, preparing them for advanced coursework and professional roles in accounting and finance.
Recommended Textbook
Management Accounting 2nd Edition by Leslie G. Eldenburg
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20 Chapters
1520 Verified Questions
1520 Flashcards
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Page 2
Chapter 1: The Role of Accounting Information in Management Decision Making
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81 Verified Questions
81 Flashcards
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Sample Questions
Q1) Organisational core competencies are the tactics that managers use to take advantage of the vision.
A)True
B)False
Answer: False
Q2) Which of the following is the best example of an internal report that might come from an organisation's information system?
A) Environmental Protection Agency regulatory report
B) Operating budget
C) Income tax returns
D) Credit rating agency report
Answer: B
Q3) Uncertainty and bias reduce decision quality.
A)True
B)False
Answer: True
Q4) Few management decisions can be made with absolute certainty.
A)True
B)False
Answer: True
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Chapter 2: Cost Concepts, Behaviour and Estimation
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) The high-low method is a specific application of this method of cost estimation
A) Two-point
B) Scatter plot
C) Engineered estimate of cost
D) Analysis at the account level
Answer: A
Q2) Three different divisions of a toy manufacturing company are estimating costs for their human resources departments. Each division has a cost structure that is different from the other divisions' and those structures are represented by the following cost behavior patterns. Which cost is best described as variable?
A) Cost A
B) Cost B
C) Cost C
D) Cost A and Cost C
Answer: A
Q3) Simple regression analysis produces an equation of the form : Y= + X +
A)True
B)False
Answer: True
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Chapter 3: A Costing Framework and Cost Allocation
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45 Verified Questions
45 Flashcards
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Sample Questions
Q1) The distinction between direct costs and indirect costs depends on their traceability to
A) a cost object
B) a manufacturing operation
C) an activity
D) a product
Answer: A
Q2) Direct costs are costs that can be directly linked to a cost object by physical tracking.
A)True
B)False
Answer: True
Q3) To avoid passing on inefficiencies of the support departments, support department costs should be allocated using:
A) a budgeted cost allocation rate
B) an actual cost allocation rate
C) only fixed costs per unit of service
D) only variable costs per unit of service
Answer: A
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Page 5
Chapter 4: Cost-Volume-Profit Cvp Analysis
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93 Verified Questions
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Sample Questions
Q1) When sales are $1,000, the contribution margin is $600 and a pretax loss of $60 occurs. What is the breakeven point in dollars?
A) $ 833
B) $1,100
C) $1,167
D) $1,750
Q2) The margin of safety is the excess of a firm's profits above the breakeven point.
A)True
B)False
Q3) Managers should consider which of the following in CVP analysis
I Assumptions
II Uncertainties
III Biases
A) I and III only
B) II and III only
C) I and II only
D) I, II, and III
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Chapter 5: Job Costing Systems
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45 Verified Questions
45 Flashcards
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Sample Questions
Q1) The cost that would not be included as an inventoriable product cost is:
A) Factory manager's salary
B) Depreciation of factory equipment
C) Selling cost
D) None, i.e. all would be included as inventoriable product costs
Q2) A cost driver is a synonym for an allocation base.
A)True
B)False
Q3) In a job costing system the accounting entry made at the time job 664 is delivered to the customer is:
A) debit to cost of goods sold; credit to finished goods inventory
B) debit to finished goods inventory; credit to work in process
C) debit to sales; credit to work in process
D) debit to cost of goods sold; credit to work in process
Q4) Generally all the costs assigned to a job are incremental, i.e. they would not be incurred if the job was not done.
A)True
B)False
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Chapter 6: Process Costing Systems
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Sample Questions
Q1) A costing system that determines an average cost for all units of product in a particular time period is a
A) Job costing system
B) Batch costing system
C) Process costing system
D) Direct costing system
Q2) Macey Ltd uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The cost of the units completed was
A) $40,000
B) $42,200
C) $41,760
D) $41,870
Q3) All spoilage in a process costing system is considered abnormal spoilage.
A)True
B)False
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Page 8
Chapter 7: Absorption, Variable and Throughput Costing
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) "Cost" and "expense" are two terms for describing the same concept.
A)True
B)False
Q2) In absorption costing systems, costs on the income statement are classified by their behavior.
A)True
B)False
Q3) Bella Ltd has operated for 2 years. During that time it produced 1,000 units in year 1 and 800 in year 2, while sales were 800 units in year 1 and 900 in year 2. Variable production costs were $8 per unit during both years. The company uses last-in, first-out (LIFO) for inventory costing. The absorption costing income statements for these 2 years were: Operating profit for year 2 using variable costing would be
A) $1,000
B) $1,600
C) $4,000
D) $1,450
Q4) Throughput costing was an outgrowth of the Theory of Constraints.
A)True
B)False
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Chapter 8: Activity Analysis: Costing and Management
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) Activity-based management and activity-based costing are two ways of describing the same thing.
A)True
B)False
Q2) ABC systems measure resource flows in an organisation.
A)True
B)False
Q3) Both activity-based costing and traditional costing allocate overhead costs to cost objects.
A)True
B)False
Q4) BVH manufactures and sells mobile phones. Which of the following activities is least likely to be considered a value-added activity for BVH?
A) Repairing phones
B) Offering phones for sale in designer colors
C) Making phones smaller
D) Creating several ring-tone options for mobile phones
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10
Chapter 9: Relevant Costs for Decision Making
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122 Flashcards
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Sample Questions
Q1) The general rule is to discontinue a service when its total fixed costs are less than its avoidable fixed costs.
A)True
B)False
Q2) Managers may choose to keep an unprofitable product if dropping it would adversely affect the sales of profitable products.
A)True
B)False
Q3) When resources are constrained, managers are most likely to use which of the following methods to develop decision making information
A) Simple or multiple regression
B) Analysis at the account level
C) Linear programming
D) High-low method
Q4) When resources are constrained, managers should emphasise products and services that maximise the contribution margin per unit of constrained resource.
A)True
B)False
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Chapter 10: Standard Costs, Flexible Budgets and Variance Analysis
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104 Verified Questions
104 Flashcards
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Sample Questions
Q1) Variance analysis involves the steps listed below. In which order should the steps be performed? 1 Calculate variances
2 Choose variances for further investigation
3 Draw conclusions and take action
4 Identify reasons for variances
A) 1, 2, 3, 4
B) 2, 1, 3, 4
C) 2, 1, 4, 3
D) 1, 2, 4, 3
Q2) The standard cost of direct materials is computed as the standard price per unit of input times the standard quantity per unit of input.
A)True
B)False
Q3) A variance that is considered immaterial should be closed to the cost of goods sold account.
A)True
B)False
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Page 12
Chapter 11: Operational Budgets
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87 Verified Questions
87 Flashcards
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Sample Questions
Q1) Which of the following items is least likely to be included in a cash budget?
A) Accounts receivable collections
B) Depreciation
C) Short-term borrowing
D) Long-term debt repayments
Q2) Participative budgeting involves customers and managers at all levels in the organisation.
A)True
B)False
Q3) Planning Systems, has forecast the following unit sales and production for the next year, by quarter: A finished unit requires one unit of material A and two units of material
B. There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories. How much material A must be purchased in quarter 2?
A) 138
B) 142
C) 156
D) 162
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Chapter 12: Strategy and Control
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35 Flashcards
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Sample Questions
Q1) Under the Kaplan and Norton strategy map framework preparing budgets comes under which stage?
A) Developing the strategy
B) Translating the strategy
C) Planning operations
D) Monitoring and learning
Q2) 'Control' in the text, is commonly used as a short-form term for managerial control and/or managerial control system tools.
A)True
B)False
Q3) Strategic management accounting is essentially theoretical in nature.
A)True
B)False
Q4) Porter classifies strategy into either cost leadership or product differentiation.
A)True
B)False
Q5) Overproduction is a non-value added activity.
A)True
B)False
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Chapter 13: Planning and Budgeting for Strategic Success
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Sample Questions
Q1) The primary disadvantage of zero-based budgeting is
A) Its tendency to motivate managers to create budgetary slack
B) It encourages managers to spend all their budgeted money each year to avoid future cutbacks
C) It ignores the input of managers
D) The time it takes to develop a zero-based budget
Q2) A budgeting approach that requires a cost centre to plan its expenditure specifically around the programs or projects conducted by the cost centre is known as:
A) Activity based budgeting
B) Kaizen budgeting
C) Flexible budgeting
D) Program budgeting
Q3) To achieve the best results for the organisation, budgets should be geared to promote competition amongst employees rather than cooperation.
A)True
B)False
Q4) In any planning exercise, profit is regarded as the key independent variable.
A)True
B)False
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Chapter 14: Capital Budgeting and Strategic Investment
Decisions
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93 Flashcards
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Sample Questions
Q1) The nominal method of NPV analysis adjusts future cash flows for the impact of inflation.
A)True
B)False
Q2) The time value of money means
A) A dollar received today will be worth more than a dollar received in the future
B) A dollar received today will be worth less than a dollar received in the future
C) Ignoring the profitability of a capital investment
D) The more you invest, the smaller your return is
Q3) Inflation refers to the
A) Exchange rate between two different currencies
B) Decline in general purchasing power of a monetary unit
C) Increase in general purchasing power of a monetary unit
D) Time value of money
Q4) The time value of money is important in completing a net present value analysis.
A)True B)False
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Chapter 15: The Strategic Management of Costs and Revenues
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) The practice of charging higher prices for products or services when they are first introduced is known as
A) Transfer pricing
B) Price skimming
C) Peak load pricing
D) Price gouging
Q2) The statement concerning customer profitability analysis that is not true is
A) To conduct this analysis it is necessary to identify the resources consumed and the associated costs of servicing customers
B) The customer or customer groupings become the cost object
C) There is not normally a connection between more profitable products or services and more profitable customers
D) None of the above, i.e. all the statements are true
Q3) Kaizen costing is
A) Another name for target costing
B) Focused only on cost reduction
C) Continuous improvement in cost, quality, and functionality
D) A method for budgeting
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Chapter 16: Strategic Management Control: a Lean Perspective
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46 Verified Questions
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Sample Questions
Q1) Which of these is not a benefit of the just-in-time system?
A) it guarantees that inventory will always be available from the supplier
B) it reduces inventory obsolescence
C) it reduces raw material handling costs
D) none of the above is not a benefit, i.e. all are benefits of the just-in-time system
Q2) The statement concerning total quality management (TQM) that is not true is:
A) TQM is an important part of lean accounting
B) it promotes an organisation-wide philosophy
C) the units cost of the product or service generally increase slightly as quality is improved
D) none of the statements is untrue. i.e. all are true statements
Q3) The philosophy of TQM is to cut costs while increasing quality.
A)True
B)False
Q4) Lean accounting incorporates which of the following?
A) Just-in-time
B) Total quality management
C) The theory of constraints
D) All of the above
Page 18
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Chapter 17: Responsibility Accounting, Performance
Evaluation and Transfer Pricing
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63 Verified Questions
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Sample Questions
Q1) If a supplying division has excess capacity, the best transfer price is the product's variable cost.
A)True
B)False
Q2) When decision making is decentralised
A) Upper management does not make decisions
B) Decision-making authority is delegated throughout the organisation
C) The important information in an organisation is very general
D) Organisations are less likely to experience agency costs concerning goal congruence
Q3) Return on investment can be decomposed into two ratios: investment turnover and return on sales.
A)True
B)False
Q4) An ideal transfer price would be the opportunity cost of internal transfers.
A)True
B)False
Q5) Residual income measures a company's profits given a required rate of return.
A)True
B)False
Page 19
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Chapter 18: The Balanced Scorecard and Strategy Maps
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Sample Questions
Q1) Strengths of the balanced scorecard can typically be summarised in three groups. Which of the following is not one of them?
A) Communication and linkages
B) Guidance for improvements
C) Motivation
D) Cost
Q2) The balanced scorecard implementation process begins with
A) Selecting an implementation team.
B) Developing measures for each perspective.
C) Hiring an outside consultant.
D) Clarifying organisational vision.
Q3) An organisation's operating plans include all of the following except
A) Specific performance objectives
B) Actual operations
C) Short-term financing
D) Short-term resource allocation
Q4) The first step in implementing a balanced scorecard is developing measures for each of the perspectives.
A)True
B)False
Page 20
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Chapter 19: Rewards, Incentives and Risk Management
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Sample Questions
Q1) According to the CoCo (criteria of control) guidance on control integrated framework, the impact of a carbon pollution reduction scheme would be classed as which category of risk?
A) Strategic risk
B) Financial risk
C) Legal and regulatory risk
D) Operational risk
Q2) Compensation contracts prepared to deal with the agency problem can be based on accounting and/or non-accounting measurements.
A)True
B)False
Q3) It is more likely that the performance of a top executive will be measured at which of these levels?
A) individual
B) department
C) product
D) corporate
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21
Chapter 20: Sustainability Management Accounting
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Sample Questions
Q1) Currently many organisations are well on their way to being sustainable.
A)True
B)False
Q2) Under activity based costing, as it is currently practiced, sustainability costs are generally grouped into the one cost pool.
A)True
B)False
Q3) Ethical behavior is required of every employee within an organisation.
A)True
B)False
Q4) Carbon accounting can be interpreted as a vehicle for internalising previously ignored externalities.
A)True
B)False
Q5) An organisation can reduce its carbon footprint by outsourcing some of its operations.
A)True
B)False
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