Introduction to Managerial Accounting Question Bank
Course Introduction
Introduction to Managerial Accounting provides students with a foundational understanding of the principles and techniques used by managers to make informed business decisions. The course covers topics such as cost behavior, budgeting, performance evaluation, and the use of accounting information for internal planning and control. Emphasis is placed on how accounting data is used to support management functions like planning, controlling, and decision making within an organization. Through practical examples and case studies, students learn to analyze financial and non-financial information and apply it to real-world managerial scenarios.
Recommended Textbook
Managerial Accounting 5th Edition by Karen
W. Braun
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15 Chapters
3668 Verified Questions
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Which type of system integrates ALL of the company's departments, worldwide functions, and data?
A)TQM System
B)ERP System
C)ISO System
D)QuickBooks
Answer: B
Q2) The primary goal of managerial accounting is to provide information to
A)internal decision-makers.
B)shareholders.
C)creditors.
D)both shareholders and creditors.
Answer: A
Q3) Describe the position of the CFO, the main function of the treasurer, and the main function of the controller within the organization.
Answer: The treasurer and controller both report to the CFO. The treasurer is responsible for the investing functions of the organization (i.e., obtaining financing, paying down debt, issuing stock, etc.). The controller is responsible for the financial accounting system and the managerial accounting system of the organization.
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Page 3
Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) Collectively, all costs such as distribution, marketing, and design are part of
A)downstream activities.
B)fixed costs.
C)the value chain.
D)manufacturing costs.
Answer: C
Q2) 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
Q3) An example of an uncontrollable cost is
A)property taxes.
B)property insurance.
C)depreciation on factory equipment.
D)all of the above.
Answer: D
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4
Chapter 3: Job Costing
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Sample Questions
Q1) In job costing, the journal entry to record the use of direct materials on jobs is to debit Work-in-Process Inventory account and credit
A)Raw Materials Inventory account.
B)Finished Goods Inventory account.
C)Manufacturing Overhead account.
D)Wages Payable account.
Answer: A
Q2) In job costing, when raw materials are requisitioned for a job, the Raw Materials Inventory account is credited.
A)True
B)False
Answer: True
Q3) If manufacturing overhead has been overallocated during the period, and most of the jobs produced have been sold, then
A)Cost of Goods Sold on the income statement should be increased.
B)Cost of Goods Sold on the income statement should be decreased.
C)finished goods inventory should be increased.
D)work in process inventory should be decreased.
Answer: B
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Page 5
Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) In ABC, how is the activity allocation rate computed?
A)The total estimated activity allocation base is divided by the total estimated activity cost pool.
B)The total estimated activity cost pool is divided by the total estimated activity allocation base.
C)The total estimated activity allocation base is multiplied by the total estimated activity cost pool.
D)You take the total estimated activity allocation base and subtract the total estimated total activity cost pool.
Q2) The costs incurred when poor quality goods or services are detected and corrected before delivery to customers are called ________ costs.
A)appraisal
B)external failure
C)prevention
D)internal failure
Q3) Inspection is considered a non-value-added activity.
A)True
B)False
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Chapter 5: Process Costing
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Sample Questions
Q1) In a job cost system, all costs flow to a particular job.
A)True
B)False
Q2) The Work in Process Inventory account for process costing accumulates which of the following costs?
A)Direct materials
B)Allocated manufacturing overhead
C)Direct labor
D)All of the above
Q3) Conversion costs are generally added evenly throughout a process.
A)True
B)False
Q4) Process costing is typically used for businesses that make large quantities of identical items.
A)True
B)False
Q5) In process costing, manufacturing costs are usually combined into two categories: direct materials and conversion costs.
A)True
B)False
Page 7
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Managers should consider which of the following when predicting costs at different volumes?
A)The relevant range of the cost
B)The type of cost behavior
C)Both of the above should be considered.
D)Neither of the above should be considered.
Q2) Rent on a factory building would likely be classified as a fixed cost.
A)True
B)False
Q3) In the equation y = vx + f, the f represents the volume of activity.
A)True
B)False
Q4) If the data points in a scatter plot fall in a fairly straight line, it means that there is a fairly strong relationship between cost and volume.
A)True
B)False
Q5) Describe the scatterplot method. Discuss the advantages and disadvantages of using the scatterplot method.
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Page 8
Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Companies with low operating leverage have relatively higher variable costs and lower fixed costs.
A)True
B)False
Q2) Who Done It Mystery Theater sells tickets for dinner and a show for $55 each. The cost of providing dinner is $21 per ticket and the fixed cost of operating the theater is $60,000 per month. The company can accommodate 15,000 patrons each month. What is the contribution margin ratio?
A)99.38%
B)62.00%
C)34%
D)162%
Q3) Contribution margin less fixed costs yields A)sales.
B)operating income.
C)variable costs.
D)none of the above.
Q4) A hotel would be an example of a company with high operating leverage. A)True B)False
Page 9
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) Paula has the following information to evaluate-her current salary of $59,000 versus total revenues of $170,000 and expenses of $76,000 from starting a new business. How much is the opportunity cost associated with starting the new business?
A)$59,000
B)$170,000
C)$94,000
D)$76,000
Q2) Fixed costs that do not differ between two alternatives are A)irrelevant to the decision.
B)considered opportunity costs.
C)relevant to the decision.
D)important only if they represent a material dollar amount.
Q3) Cost-plus pricing is essentially the opposite of target-costing. A)True
B)False
Q4) An example of an expansion constraint would be the size of the available labor pool. A)True
B)False
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10
Chapter 9: The Master Budget
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Sample Questions
Q1) Budgets are helpful because managers can plan the cash inflows and outflows in an organization.
A)True
B)False
Q2) All of the following budgets are prepared by merchandising companies except A)manufacturing overhead.
B)capital expenditures.
C)budgeted income statement.
D)cash.
Q3) Kotrick Company has beginning inventory of 17,000 units and expected sales of 21,000 units. If the desired ending inventory is 20,000 units, how many units should be produced?
A)18,000
B)42,000
C)16,000
D)24,000
Q4) Merchandising companies prepare sales, cash, and operating expenses budgets.
A)True
B)False
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Chapter 10: Performance Evalulation
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Sample Questions
Q1) Return on Investment (ROI)is defined as operating income divided by current assets.
A)True
B)False
Q2) The use of return on investment (ROI)as a short-term performance measure may lead managers to reject projects that may be profitable for the company as a whole.
A)True
B)False
Q3) Southern Instruments makes calculators for business applications. The budgeted selling price is $120 per calculator, the variable rate is $81 per calculator and budgeted fixed costs are $160,000 per month. What is the budgeted operating income for 16,000 calculators sold in a month?
A)$624,000
B)$1,456,000
C)$1,920,000
D)$464,000
Q4) Total assets is the denominator in the formula managers use to compute ROI.
A)True
B)False
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12
Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) The managerial accountant at Matheson Tool Company is compiling a fixed overhead volume variance report. According to the data, 4,200 standard hours were tallied at $8 per machine hour, the fixed overhead volume variance was calculated at $2,860 U. Compute the budgeted fixed overhead cost at $2,860U and compare the budgeted fixed overhead cost if the fixed overhead volume variance was $2,860F.
Q2) How is the direct labor rate variance calculated?
A)The difference between the standard labor rate and the actual labor rate multiplied by the actual labor hours used
B)The difference between the standard labor rate and the actual labor rate multiplied by the standard allowable hours
C)The difference between the standard labor hours and the allowable labor hours
D)The difference between the standard labor rate and the actual labor rate
Q3) Standard costs for production inputs are used to develop flexible budgets.
A)True B)False
Q4) The fixed overhead budget variance is also known as the fixed overhead spending variance.
A)True B)False
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Chapter 12: Capital Investment Decisions and the Time
Value
of Money
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Sample Questions
Q1) A major criticism of the payback method is that it focuses only on time, not on profitability.
A)True
B)False
Q2) The Future Value of $1 table is used to calculate how much $100 in hand today would be worth in 5 years.
A)True
B)False
Q3) The hurdle rate is the length of time it takes to recoup an investment's initial cost from the cash inflows that investment generates.
A)True
B)False
Q4) Self-check-in machines at airports are an example of capital assets. A)True B)False
Q5) Accrual-based accounting is not used in determining the accounting rate of return. A)True
B)False
14
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) The statement of cash flows does not report why cash increased or decreased during the period.
A)True
B)False
Q2) The three major categories included on the statement of cash flows are
A)investing, capital and financing activities.
B)investing, operating and financing activities.
C)investing, operating and capital activities.
D)financial, operating and capital activities.
Q3) Regarding the statement of cash flows, which of the following is true?
A)The statement of cash flows reports why cash increased or decreased during the period.
B)The statement of cash flows covers a span of time and is dated "Year Ended, Month, Day, and Year."
C)The statement of cash flows shows where cash came from and how cash was spent.
D)All of the above are true of the statement of cash flows.
Q4) Investors and management use the statement of cash flows to evaluate a firm's profitability.
A)True
B)False
Page 15
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Comparing the horizontal analysis of McDonald's financial statements to the horizontal analysis of Burger King's financial statements in percentages of increase or decrease from 2010 to 2011 would be
A)vertical analysis.
B)benchmarking.
C)ratio analysis.
D)horizontal analysis.
Q2) Vertical analysis is the analysis of a financial statement that reveals the relationship of each statement item to a specified base.
A)True
B)False
Q3) In a vertical analysis of an income statement, sales revenue is assigned a percentage of 100.
A)True
B)False
Q4) A common size statement reports only dollar values.
A)True
B)False
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Page 16
Chapter 15: Sustainability
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Sample Questions
Q1) The cost of water used to cool steel beams at a steel mill would be categorized as what type of cost by an environmental management accounting system (EMA)?
A)Materials cost of non-product outputs
B)Materials cost of product outputs
C)Waste and emission control cost
D)Intangible cost
Q2) An EMA system only requires aggregated data to function effectively.
A)True
B)False
Q3) Which of the following is a challenge an organization would face in implementing an environmental management accounting system?
A)Environmental costs are traditionally hidden in overhead costs.
B)Information systems are not equipped to deal with environmental information.
C)Environmental accounting is a relatively new field and is still developing.
D)All of the above.
Q4) The "triple bottom line" reports on three factors: profits, people, and planet.
A)True
B)False
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