Introduction to Accounting Exam Questions
Course Introduction
Introduction to Accounting provides students with a foundational understanding of accounting principles, concepts, and procedures. This course covers the preparation and interpretation of financial statements, the accounting cycle, and essential topics such as assets, liabilities, equity, revenues, and expenses. Students will explore how accounting information supports business decision-making, internal controls, and ethical considerations within the profession. Emphasis is placed on the practical application of accounting techniques, enabling students to analyze and record basic financial transactions and comprehend the financial health of organizations.
Recommended Textbook
Introduction to Management Accounting 16th Edition by Charles T. Horngren
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17 Chapters
2438 Verified Questions
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Page 2
Chapter 1: Managerial Accounting,the Business
Organization,and Professional Ethics
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) Examples of business process reengineering do NOT include ________.
A) computer-aided design
B) computer-aided manufacturing
C) robots
D) labor-intensive machines
Answer: D
Q2) A budget ________.
A) is a quantitative expression of a plan of action
B) provides feedback by comparing actual results with planned results
C) includes deviations from planned results
D) ignores areas that are presumed to be running smoothly
Answer: A
Q3) In a typical manufacturing factory,line functions do NOT include ________.
A) purchasing
B) stamping
C) welding
D) assembly
Answer: A
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Chapter 2: Introduction to Cost Behavior and Cost Volume
Profit Relationships
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Sample Questions
Q1) Cost of goods sold is the cost of the merchandise that a company acquires or produces and then sells.
A)True
B)False
Answer: True
Q2) Assume fixed costs are constant and contribution margin per unit is reduced by 50 percent.What will happen to the break-even point in units?
A) It will decrease 50 percent.
B) It will increase 100 percent.
C) It will be the same.
D) It will increase 50 percent.
Answer: B
Q3) It is misleading to call a cost-volume-profit graph a break-even graph.Why?
A) The graph reveals more information than the break-even point.
B) The graph does not show the break-even point.
C) The main purpose of the graph is to show the cost drivers for different activity levels.
D) The main purpose of the graph is to show the margin of safety.
Answer: A
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Chapter 3: Measurement of Cost Behavior
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Sample Questions
Q1) A cause and effect relationship between a ________ and a ________ is desirable in order to obtain accurate and useful cost functions.
A) cost driver; cost function
B) cost function; resource cost
C) cost driver; resource cost
D) step cost; capacity cost
Answer: C
Q2) When referring to a cost function,plausibility refers to whether you can rely upon the cost function for predicting the future.
A)True
B)False
Answer: False
Q3) Most companies make capacity decisions frequently.
A)True
B)False
Answer: False
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Chapter 4: Cost Management Systems and Activity-Based
Costing
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Sample Questions
Q1) Which of the following types of costs cannot be specifically and exclusively identified with a cost object in an economically feasible manner?
A) variable costs
B) fixed costs
C) direct costs
D) indirect costs
Q2) Companies must assign all nonproduction costs to cost objects for internal management purposes.
A)True
B)False
Q3) In a manufacturing firm,the Finished Goods Inventory account is only found on the balance sheet.
A)True
B)False
Q4) In designing an activity-based cost accounting system,what is the first step?
A) Collect data about costs and the physical flow of the cost-driver units.
B) Determine the relationships among cost objects, activities, and resources.
C) Determine the key components of the activity-based cost accounting system.
D) Calculate and interpret the new activity-based cost information.
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Chapter 5: Relevant Information for Decision Making With a
Focus on Pricing Decisions
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Sample Questions
Q1) Product design affects a small amount of costs in the value chain.
A)True
B)False
Q2) ________ is the additional cost resulting from producing and selling one additional unit.
A) Marginal cost
B) Common cost
C) Opportunity cost
D) Target cost
Q3) Companies use cost-plus pricing for products where management actions can influence the market price.
A)True
B)False
Q4) In imperfect competition,if prices have little or no effect on sales volume,demand is ________.
A) stable
B) uniform
C) highly elastic
D) highly inelastic
Page 7
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Chapter 6: Relevant Information for Decision Making With a
Focus on Operational Decisions
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Sample Questions
Q1) What is the most common value-chain function outsourced in most businesses?
A) production process
B) research and development
C) product design
D) corporate support
Q2) Sue is considering leaving her current position to open a coffee shop.Sue's current annual salary is $83,000.Annual coffee shop revenue and costs are estimated at $260,000 and $210,000,respectively.What is Sue's opportunity cost of staying at her current work position?
A) $50,000
B) $83,000
C) $210,000
D) $343,000
Q3) Since managers are usually evaluated based on the operating results in one year,they do not usually consider the long range impact of their decisions.
A)True
B)False
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Page 8
Chapter 7: Introduction to Budgets and Preparing the Master Budget
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Sample Questions
Q1) Stickel Company has the following sales budget: \(\begin{array}{lll}\text { Month }&\text { Cash Sales }&\text { Credit Sales }\\
\text { September } & \$ 100,000 & \$ 200,000 \\
\text { October } & 125,000 & 190,000 \\
\text { November } & 207,000 & 199,000 \\
\text { December } & 67,000 & 144,000 \end{array}\)
Collection of credit sales are 50% in the month of sale,40% in the month following sale,and 10% two months following sale.No uncollectible accounts are expected.What is the expected balance of Accounts Receivable at October 31?
A) $95,000
B) $110,000
C) $115,000
D) $180,000
Q2) What item is NOT a line item on the purchases and cost of goods sold budget?
A) purchases of inventory
B) sales
C) beginning inventory
D) desired ending inventory
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Chapter 8: Flexible Budgets and Variance Analysis
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Sample Questions
Q1) The Matthew Company makes tables for which the following standards have been developed:
\(\begin{array}{lll}&\text { Standard Inputs Expected }&\text { Standard Price }\\ \text { Expected }&\text { For Each Unit of Output }&\text { Per Unit of Input }\\\hline \text { Direct Materials } & 7 \text { ounces } & \$5.20 \text { per ounce } \\ \text { Direct Labor } & 3 \text { hours } & \$ 16 \text { per hour } \end{array}\)
Production of 200 tables was expected in May,but 220 tables were actually completed.Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound.Direct labor cost for the month was $10,620,and the actual pay per hour was $18.00.What is the direct labor price variance for the month of May?
A) $1,180 Favorable
B) $1,180 Unfavorable
C) $1,200 Favorable
D) $1,200 Unfavorable
Q2) ......
Q3) What are some common causes of unfavorable quantity variances for direct labor?
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Chapter 9: Management Control Systems and Responsibility Accounting
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Which of the following statements about performance reports and variances is FALSE?
A) They are most effective when managers use them positively to encourage employees to improve performance.
B) When they are used negatively, employees will resist and undermine these techniques.
C) These tools should be used to find weaknesses and deficiencies in employees' performance.
D) These tools should be used constructively to influence behavior.
Q2) In recent years,companies in the United States have discovered it is more cost effective to prevent defects than to detect and correct them.
A)True
B)False
Q3) Total quality management (TQM)________.
A) does not advocate high quality levels for all products
B) is not used in the development of organizational goals
C) promotes maximizing the cost of quality
D) focuses on the prevention of defects and on the achievement of customer satisfaction
Page 11
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Chapter 10: Management Control in Decentralized Organizations
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Sample Questions
Q1) Managers in decentralized units may waste time negotiating with other units about goods or services one unit transfers to the other.
A)True
B)False
Q2) A full-cost transfer price can potentially create dysfunctional decisions.
A)True
B)False
Q3) The concentration of decision-making authority only at the highest levels of the organization is called ________.
A) management by objective
B) balanced scorecard
C) decentralization
D) centralization
Q4) There is(are)________ goal(s)of transfer pricing systems.There is no universally ________ transfer price.
A) multiple; maximum
B) one; maximum
C) multiple; optimal
D) one; optimal
Page 12
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Chapter 11: Capital Budgeting
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Sample Questions
Q1) Whitney Company is contemplating three different equipment investments.The relevant data follows:
\(\begin{array}{llll}&\text { Poposal D }&\text { Poposal O }&\text { Poposal G }\\
\text { Cost } & \$ 200,000 & \$ 300,000 & \$ 830,000 \\
\text { Annual cash savings (end of year) } & \$ 40,000 & \$ 70,000 & \$ 150,000 \\
\text { Terminal salvage value } & \$ 10,000 & \$ 5,000 & \$ 20,000 \\
\text { Estimated useful life in years } & 10 & 10 & 10 \\
\text { Minimum desired rate of return } & 12 \% & 12 \% & 12 \%\\
\text { Method of depreciation }&\text { Straight-line }&\text { Straight-line }&\text { Straight-line }\\
\end{array}\)
The present value factor of an ordinary annuity of one for 10 periods at 12% is 5.6502.
The present value factor of one for 10 periods at 12% is 0.322.
Required:
A) Compute the net present value of each investment. Ignore income taxes.
B) If only one investment can be acquired, which investment should be chosen?
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Chapter 12: Cost Allocation
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Sample Questions
Q1) Which of the following formulas should be used to allocate variable costs from service departments to user departments?
A) budgeted unit rate × total budgeted units planned to be used
B) actual unit rate × total budgeted units planned to be used
C) budgeted unit rate × actual units used
D) actual unit rate × actual units used
Q2) Customers with a high cost to serve have ________.
A) large order quantity
B) few order changes
C) standard delivery requirements
D) frequent returns
Q3) In the step-down method,the first service department used in the sequence to allocate service department costs is the department that renders the ________.
A) greatest service as measured by physical capacity
B) greatest service as measured by total employees
C) greatest service as measured by costs to the other service departments
D) greatest service as measured by costs to the producing departments
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Chapter 13: Accounting for Overhead Costs
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Sample Questions
Q1) Gnat Company reported the following information about the production and sale of its only product during the first month of operations:
\[\begin{array} { l l }
\text {Selling price per unit }&\$ 300\\
\text {Sales }&\$ 480,000\\
\text { Direct materials used}&\$ 220,000\\
\text {Direct labor }&\$200,000 \\
\text {Variable factory overhead}&\$60,000 \\
\text {Fixed factory overhead }&\$80,000 \\
\text {Variable selling and administrative expenses }&\$20,000 \\
\text {Fixed selling and administrative expenses }&\$ 10,000\\
\text {Ending inventory, Direct Materials }& 0\\
\text {Ending inventory, Work-in-process }& 0\\
\text {Ending inventory, Finished Goods }&400 \text { units } \\ \end{array}\]
Under variable costing,the operating income or loss is ________.
A) $(6,000)
B) $(14,000)
C) $10,000
D) $41,000
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Page 15
Chapter 14: Job-Order Costing and Process-Costing Systems
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154 Flashcards
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Sample Questions
Q1) In a process costing system,which of the following entries is prepared to transfer direct materials from storage to the cooking process?
A) Debit Direct Materials Inventory, Credit Work-In-Process Inventory-Cooking
B) Debit Direct Materials Inventory, Credit Accounts Payable
C) Debit Work-In-Process Inventory-Cooking, Credit Work-In-Process Inventory-Storage
D) Debit Work-In-Process Inventory-Cooking, Credit Direct Materials Inventory
Q2) Three types of costs are accumulated on job-cost records that include direct materials,________ and ________.
A) direct labor; actual factory overhead
B) direct labor; applied factory overhead
C) variable factory overhead; fixed factory overhead
D) direct labor; budgeted factory overhead
Q3) Source documents used in job-order costing include ________.
A) labor time tickets
B) material requisitions
C) time cards
D) all of the above
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Page 16
Chapter 15: Basic Accounting: Concepts, techniques, and Conventions
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Sample Questions
Q1) The ownership claim arising from the reinvestment of previous profits is called
A) net assets
B) stockholders' equity
C) investment income
D) retained earnings
Q2) Generally Accepted Accounting Principles in the United States are developed by the International Accounting Standards Committee.
A)True
B)False
Q3) A sole proprietorship has ________ owner's equity account(s).A partnership with three partners has ________ owners' equity account(s).
A) one; one
B) two; one
C) one; three
D) one; four
Q4) For a corporation,assets must equal liabilities plus paid-in capital.
A)True
B)False
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Chapter 16: Understanding Corporate Annual Reports:
Basic Financial Statements
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Sample Questions
Q1) Par value is the value that is printed on the face of the stock certificate. A)True
B)False
Q2) Selected items from the financial statements for Lorna Company are listed below: \(\begin{array} { l }
\text { Paid in capital, December 31,2014}&\$100,000\\
\text {Retained earnings, December 31, 2014 }&\$75,000\\
\text {Commonstock dividends declared in 2014 }&\$75,000\\
\text { Net income for the year ended December } 31,2014&\$100,000\\ \end{array}\)
Lorna Company has 5,000 common shares outstanding during the year.What are the earnings per share for the year ended December 31,2014?
A) $12.00
B) $15.00
C) $20.00
D) $25.00
Q3) Accounts receivable is a current asset. A)True
B)False
Page 18
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Chapter 17: Understanding and Analyzing Consolidated Financial Statements
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Sample Questions
Q1) On January 1,2012,Parrot Company acquired all of the stock of a subsidiary.The following data is available: \(\begin{array}{ll} &\text { Parrot Company } & \text { Subsidiary } \\ \text {Total assets }&\$ 650 & \$ 400 \\ \text { Total liabilities }&\$ 200 & \$ 190 \\ \text { Total stockholders' equity}&\$ 450 & \$ 210 \end{array}\)
The acquisition by the Parrot Company represents a 100 percent interest in the subsidiary.On January 1,2012,the fair value of the subsidiary's assets and liabilities are equal to their book value.Parrot Company paid $450 for the 100 percent interest in the subsidiary.What amount of goodwill is implied in the purchase?
A) $0
B) $10
C) $200
D) $240
Q2) Goodwill is amortized on the consolidated financial statements.
A)True
B)False
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