Intermediate Accounting
Final Exam Questions
Course Introduction
Intermediate Accounting builds upon foundational accounting principles to provide a deeper understanding of financial reporting, income measurement, and the preparation of financial statements. This course covers complex topics such as revenue recognition, accounting for assets and liabilities, investments, and equity transactions. Students examine accounting standards, regulatory frameworks, and ethical considerations while analyzing the impact of accounting choices on financial statements. Emphasis is placed on applying Generally Accepted Accounting Principles (GAAP), interpreting financial information for decision-making, and solving challenging accounting problems encountered in real-world business environments.
Recommended Textbook Managerial Accounting 6th Edition by John J Wild
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Page 2
Chapter 1: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) The model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is the ________.
Answer: lean business model
Q2) Which of the following items appears only in a manufacturing company's financial statements?
A) Cost of goods sold.
B) Cost of goods manufactured.
C) Goods available for sale.
D) Gross profit.
E) Net income.
Answer: B
Q3) Crane, Inc. reported the following data regarding costs and inventories for the current year: beginning goods-in-process inventory, $4,000; beginning finished goods inventory, $2,000; cost of goods manufactured, $11,500; operating expenses, $3,000; ending finished goods inventory, $1,000; ending goods-in-process inventory, $1,500. Cost of goods sold for Crane, Inc. equals ________.
Answer: $12,500
Q4) ________ is the process of setting goals and making plans to achieve them. Answer: Planning
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Chapter 2: Job Order Costing and Analysis
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Sample Questions
Q1) A company's job order costing system applies overhead based on direct labor cost. The company's estimated production costs for were: direct labor, $57,600; direct materials, $76,800; and factory overhead, $9,600. Calculate the company's overhead rate.
Answer: \[\frac { \$ 9,600 } { \$ 57,600 }\] = 16.7%
Q2) The target cost for a job using job costing is calculated as:
A) direct costs + desired profit.
B) direct costs - desired profit.
C) expected selling price - direct costs.
D) expected selling price - desired profit.
E) expected selling price + desired profit.
Answer: D
Q3) Overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the actual overhead incurred during a period. A)True
B)False
Answer: True
Q4) When factory payroll for indirect labor is assigned, ________ is debited. Answer: Factory Overhead
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Chapter 3: Process Costing and Analysis
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Sample Questions
Q1) The cost of units transferred from Work in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.
A)True
B)False
Answer: True
Q2) The number of equivalent units of production assigned to ending Work in Process inventory should be equal to or less than the number of physical units in ending Work in Process inventory.
A)True
B)False
Answer: True
Q3) In process costing, indirect materials are always classified as factory overhead, even if they are linked with a specific production process or department.
A)True
B)False
Answer: False
Q4) A ________ contains features of both process and job order costing systems. Answer: hybrid costing system
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Page 5
Chapter 4: Activity Based Costing and Analysis
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Sample Questions
Q1) Overhead costs are not directly related to production and cannot be traced to units of product like direct materials and direct labor can.
A)True
B)False
Q2) Data concerning volume-related measures are readily available in most manufacturing settings.
A)True
B)False
Q3) Why is overhead allocation under ABC usually more accurate than either the plantwide overhead allocation method or the departmental overhead allocation method?
Q4) A method of assigning overhead costs to a product using a single overhead rate is:
A) Plantwide overhead rate method.
B) Cost pool overhead rate method.
C) Departmental overhead rate method.
D) Activity-based costing.
E) Overhead cost allocation method.
Q5) Allocated overhead ________ vary depending upon the allocation method used.
Q6) How does ABC differ from using multiple departmental rates?
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Chapter 5: Cost Behavior Cost-Volume-Profit Analysis
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Sample Questions
Q1) Alvarez Company's break-even point in units is 1,000. The sales price per unit is $10 and variable cost per unit is $7. If the company sells 2,500 units, what will net income be?
A) $4,500
B) $7,500
C) $17,000
D) $35,000
E) $3,000
Q2) Henderson Co. has fixed costs of $36,000 and a contribution margin ratio of 24%. If expected sales are $200,000, what is the margin of safety as a percent of sales?
A) 6%.
B) 25%.
C) 33%.
D) 50%.
E) 75%.
Q3) As the level of volume of activity increases, the variable cost per unit remains constant.
A)True
B)False
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Chapter 6: Variable Costing and Analysis
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Sample Questions
Q1) ________ and ________ are product costs that can be directly traced to the product.
Q2) What is the general procedure for converting variable costing net income to absorption costing net income?
Q3) Variable costing separates the variable costs from fixed costs and therefore makes it easier to identify and assign control over costs.
A)True
B)False
Q4) Information presented in a variable costing format can assist management when making short-term pricing decisions.
A)True
B)False
Q5) What are the limitations of using variable costing?
Q6) If a company has excess capacity, increases in production level will increase variable production costs but not fixed production costs.
A)True
B)False
Q7) What costs are treated as product costs under the absorption costing method?
Page 8
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Chapter 7: Master Budgets and Performance Planning
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Sample Questions
Q1) Funcycle Manufacturing's budget includes the following credit sales for the current year: September, $145,000; October, $136,000; November, $120,000; December, $157,000. Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale, 50% in the first month after sale, and 35% in the second month after sale. What are the cash collections of credit sales in the month of December?
A) $23,550.
B) $107,600.
C) $83,550.
D) $157,000.
E) $131,150.
Q2) A manufacturing budget shows dollar amounts estimated to be spent to purchase additional plant assets and amounts expected to be received from plant asset disposals.
A)True
B)False
Q3) A capital expenditures budget is prepared before the operating budgets. A)True B)False
Q4) Briefly describe the process by which budgets are developed and administered.
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Chapter 8: Flexible Budgets and Standard Costs
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Sample Questions
Q1) Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of sales for 20,000 units would be:
A) $165,000.
B) $150,000.
C) $117,272.
D) $181,500.
E) $141,900.
Q2) Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit. Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000. Clevenger actually produced and sold 37,000 units.
Using a contribution margin format: Prepare a flexible budget income statement for the actual level of sales and production.
Q3) Based on predicted production of 25,000 units, Marvel Mix Co. anticipates $175,000 of variable costs and $137,500 of fixed costs. What are the flexible budget amounts of total costs for 28,000 units?
Q4) Explain variance analysis. Describe how variance analysis assists managers. To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Performance Measurement and Responsibility Accounting
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Sample Questions
Q1) A company pays $15,000 per period to rent a small building that has 10,000 square feet of space. This cost is allocated to the company's three departments on the basis of the amount of the space occupied by each. Department One occupies 2,000 square feet of floor space, Department Two occupies 3,000 square feet of floor space, and Department Three occupies 5,000 square feet of floor space. If the rent is allocated based on the total square footage of the space, Department One should be charged rent expense for the period of:
A) $4,400.
B) $3,000.
C) $4,000.
D) $2,200.
E) $2,000.
Q2) A(n) ________ is a department that generates revenues and incurs costs and whose manager is also responsible for using the center's assets to generate income for the center.
Q3) What is the purpose of a departmental accounting system?
Q4) Decentralization refers to companies that have multiple locations.
A)True
B)False
Q5) Define joint costs and explain how joint costs can be allocated.
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Chapter 10: Relevant Costing for Managerial Decisions
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Sample Questions
Q1) Additional power for operating machines, extra supplies, and added cleanup costs are examples of incremental overhead costs.
A)True
B)False
Q2) Relevant costs are also known as ________.
Q3) A company is considering a new project that will cost $19,000. This project would result in additional annual revenues of $6,000 for the next 5 years. The $19,000 cost is an example of a(n):
A) Sunk cost.
B) Fixed cost.
C) Incremental cost.
D) Uncontrollable cost.
E) Opportunity cost.
Q4) Relevant benefits refer to the additional or incremental revenue generated by selecting a particular course or action over another.
A)True
B)False
Q5) A ________ is the combination of products sold by a company.
Q6) Identify the five steps involved in managerial decision making.
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Chapter 11: Capital Budgeting and Investment Analysis
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Sample Questions
Q1) In ranking choices with the break-even time (BET) method, the investment with the highest BET measure gets the highest rank.
A)True
B)False
Q2) A new manufacturing machine is expected to cost $278,000, have an eight-year life, and a $30,000 salvage value. The machine will yield an annual incremental after-tax income of $35,000 after deducting the straight-line depreciation. Compute the accounting rate of return for the investment.
A) 22.7%.
B) 23.4%.
C) 46.9%.
D) 12.2%.
E) 24.5%.
Q3) The process of restating future cash flows in today's dollars is known as:
A) Budgeting.
B) Annualization.
C) Discounting.
D) Payback period.
E) Capitalizing.
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Page 13
Chapter 12: Reporting Cash Flows
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Sample Questions
Q1) The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:
\[\begin{array} { | l | r | }
\hline \text { Retained earnings balance at the beginning of the year } & \$ 126,000 \\
\hline \text { Cash dividends declared for the year } & 46,000 \\
\hline \text { Proceeds from the sale of equipment } & 81,000 \\
\hline \text { Gain on the sale of equipment } & 7,000 \\
\hline \text { Cash dividends payable at the beginning of the year } & 18,000 \\
\hline \text { Cash dividends payable at the end of the year } & 20,000 \\
\hline \text { Net income for the year } & 92,000 \\
\hline
\end{array}\] What is the ending balance for retained earnings?
A) $218,000.
B) $170,000.
C) $352,000.
D) $172,000.
E) $179,000.
Q2) All cash transactions eventually affect noncash ________ accounts.
Q3) Explain how cash flows from investing and financing activities are determined.
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Page 14
Chapter 13: Analysis of Financial Statements
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Q1) The following selected financial information for a company was reported for the current year end. Calculate the following company ratios:
(a) Accounts receivable turnover.
(b) Inventory turnover.
(c) Days' sales uncollected
Accounts receivable, beginning-year . $170,000
Accounts receivable, year-end 190,000
Merchandise inventory, beginning-year . 80,000
Merchandise inventory, year-end 60,000
Cost of goods sold ... 580,000
Credit sales ... 1,000,000
Q2) Horizontal analysis:
A) Is a method used to evaluate changes in financial data across time.
B) Is also called vertical analysis.
C) Is the presentation of financial ratios.
D) Is a tool used to evaluate financial statement items relative to industry statistics.
E) Evaluates financial data across industries.
Q3) Describe the purpose of vertical financial statement analysis and how it is applied.
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15
Chapter 14: Time Value of Money
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Sample Questions
Q1) ________ is a borrower's payment to the owner of an asset for its use.
Q2) A company needs to have $200,000 in 4 years, and will create a fund to insure that the $200,000 will be available. If it can earn a 7% return compounded annually, how much must the company invest in the fund today to equal the $200,000 at the end of 4 years?
Q3) A company is creating a fund today by depositing $65,763. The fund will grow to $90,000 after 8 years. What annual interest rate is the company earning on the fund?
Q4) Sandra has a savings account that has accumulated to $50,000. She started with $28,225, and earned interest at 10% compounded annually. It took her five years to accumulate the $50,000. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
A)True
B)False
Q5) A company is beginning a savings plan to purchase a new building. It will be saving $43,000 per year for the next 10 years. How much will the company have accumulated after the tenth year-end deposit, assuming the fund earns 9% interest?
Q6) Explain the concept of the future value of a single amount.
Q7) Explain the concept of the present value of an annuity.
Page 16
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Chapter 15: Analyzing for Business Transactions
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Sample Questions
Q1) Jerry's Butcher Shop had the following assets and liabilities at the beginning and end of the current year: Assets Liabilities
Beginning of the year $114,000 $68,000
End of the year 135,000 73,000
If stockholders invested an additional $12,000 in the business during the year in exchange for common stock, but no dividends were paid during the year, what was the amount of net income earned by Jerry's Butcher Shop?
Q2) "Unearned" accounts are liabilities that must be fulfilled.
A)True
B)False
Q3) Identify the statement that is incorrect.
A) Higher financial leverage involves higher risk.
B) Risk is higher if a company has more liabilities.
C) Risk is higher if a company has higher assets.
D) The debt ratio is one measure of financial risk.
E) Lower financial leverage involves lower risk.
Q4) The ________ is found by determining the difference between total debits and total credits for an account, including any beginning balance.
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Chapter 16: Partnership Accounting
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Sample Questions
Q1) The Redtail Partnership agrees to dissolve. The cash balance after selling all assets and paying all liabilities is $56,000. The final capital account balances are: Paulson, $33,000; Gray, $27,000; and Chang, ($4,000). Chang agrees to pay $4,000 cash from personal funds to settle his deficiency. Prepare the journal entries to record the transactions required to dissolve this partnership.
Q2) On May 1, Gosworth and Jordan formed a partnership. Gosworth contributed cash of $100,000 and equipment valued at $142,000. Jordan contributed land valued at $130,000 and a building valued at $250,000. The partnership also assumed responsibility for Jordan's $120,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Gosworth is to receive a salary allowance of $38,000, both are to receive an annual interest allowance of 8% of their beginning-year capital investments, and any remaining income or loss is to be shared equally. During the year, Gosworth withdrew $40,000 and Jordan withdrew $42,000 cash. After the adjusting and closing entries are made to the revenue and expense accounts at the end of the year, the Income Summary account had a credit balance of $140,000. Prepare the journal entries to record (a) the partners' initial capital investments, (b) their cash withdrawals, and (c) closing of both the Withdrawals and Income Summary accounts.
Q3) The life of a partnership is ________ in duration.
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