Management Accounting
Pre-Test Questions
Course Introduction
Management Accounting focuses on the processes and techniques used by managers to make informed business decisions. The course covers concepts such as cost behavior, budgeting, performance evaluation, and variance analysis, emphasizing how financial and non-financial data can be leveraged to plan, control, and evaluate operations within an organization. Students will learn to apply management accounting tools to support strategic planning and operational efficiency while gaining a thorough understanding of how internal accounting information differs from financial accounting aimed at external stakeholders.
Recommended Textbook
Atrills Accounting for Business Students 1st Australian Edition by Atrill McLaney
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14 Chapters
893 Verified Questions
893 Flashcards
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Page 2
Chapter 1: Introduction to Accounting
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76 Flashcards
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Sample Questions
Q1) The stages of an accounting system are:
A)evaluation, processing, output.
B)identification, recording, analysis, reporting.
C)setting objectives, planning, analysis.
D)none of the above.
Answer: B
Q2) Standards are written from the perspective of:
A)the accounting profession.
B)the taxation authority.
C)securities regulators.
D)corporation law.
Answer: A
Q3) Which statement is incorrect?
A)A budget defines precise targets, e.g., level of sales, levels of inventory.
B)A budget is expressed in monetary terms.
C)A budget is a short-term plan.
D)A budget summarises past information.
Answer: D
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3
Chapter 2: Measuring and Reporting Financial Position
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72 Verified Questions
72 Flashcards
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Sample Questions
Q1) Under the accounting standards, which alternative measure of value is not permitted to be used for valuing assets?
A)Historical cost
B)Net realisable value
C)Fair value
D)None of the above, i.e., all are permitted methods in some circumstances
Answer: D
Q2) There is a growing tendency for many non-current assets to be valued on the basis of market values. The item which is most likely to be valued at market value is:
A)the assets of a life insurer.
B)goodwill.
C)motor vehicles.
D)accounts receivable.
Answer: A
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Chapter 3: Measuring and Reporting Financial Performance
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72 Flashcards
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Sample Questions
Q1) Choose the statement which is correct. Assume that inventory prices are rising.
A)The LIFO method gives the highest closing inventory figure in the statement of financial position.
B)The FIFO method gives the highest closing inventory figure in the statement of financial position.
C)The FIFO method gives the lowest closing inventory figure in the statement of financial position.
D)The LIFO method gives the lowest figure for cost of sales.
Answer: B
Q2) When equipment accumulates depreciation, it causes:
A)equity to decrease and expenses to increase.
B)assets to increase and liabilities to increase.
C)assets to decrease and expenses to increase.
D)assets to decrease and revenues to decrease.
Answer: C
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5
Chapter 4: Recording Transactionsthe Journal and Ledger Accounts
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Sample Questions
Q1) If, at the end of the accounting period, non-current assets total $800 000 and depreciation is calculated based on 8% per annum straight line, depreciation expense would total:
A)$64 000
B)$46 000
C)$800 000
D)$10 000
Q2) After closing off the accounts, which of the following accounts will have a zero balance?
A)Cash
B)Creditors
C)Vehicle Expense
D)Inventory
Q3) In a perpetual inventory system, an end of period inventory count and valuation is required to compute cost of sales.
A)True
B)False
Q4) A balanced trial balance is proof that there are no errors in the accounts.
A)True
B)False
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Chapter 5: Accounting Systems and Internal Control
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39 Flashcards
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Sample Questions
Q1) Using a bar coding system to track equipment and other non-current assets is an example of:
A)segregation of duties.
B)physical audits.
C)reconciliations.
D)appropriate control over assets.
Q2) The bank statement arrives and shows a balance of $2 468. The cash account balance is $3 128. In reconciling the bank statement, which of the following would require a deduction from the cash account balance?
A)Unpresented cheques totalling $ 357.00.
B)A dishonoured cheque in the amount of $150.
C)A deposit made on the day of the statement which does not appear on the statement in the amount of $319.
D)Interest received on the account of $35.
Q3) When petty cash is replenished, the transaction to replenish it includes:
A)a debit to petty cash.
B)a credit to petty cash.
C)a debit to cash.
D)a credit to cash.
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Page 7
Chapter 6: Introduction to Limited Companies
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Sample Questions
Q1) An investor invests in Canta Ltd by purchasing 2 000 shares for $2.50 each. In the following year, the company distributes a 1 for 1 share dividend (bonus issue). After the issue, the number of shares held by the investor:
A)will increase by 200 and the market price of the shares will fall.
B)will increase by 2 000 and the market price of the shares will remain the same.
C)will increase by 2 000 and the market price of the shares will rise.
D)will increase by 2 000 and the market price of the shares will fall.
Q2) Which of the following is not a reason for a company making a bonus issue of shares?
A)To use cash.
B)As a signal to the market of the company's confidence in its future.
C)To reduce its share price when it has become too high.
D)None of the above, i.e., all are reasons for making a bonus issue
Q3) Which of these is not an advantage of a private company compared to a partnership?
A)Perpetual life
B)Easier transfer of ownership
C)Limited liability
D)Mutual agency
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Page 8
Chapter 7: Regulatory Framework for Companies
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Sample Questions
Q1) Under AASB 101, in the statement of financial position, companies are normally required to distinguish between:
A)cash on hand and cash at bank.
B)property and plant.
C)current and non-current liabilities.
D)current profit and retained profits.
Q2) Which of the following financial statements does not have to be prepared by a publicly listed company?
A)Statement of comprehensive income
B)Statement of changes in equity
C)Statement of cash flows
D)All of the above must be prepared
Q3) Which of the following is not true about segmented financial reports?
A)Under-performing segments will be revealed.
B)Risks and profitability of individual segments are identified.
C)Segments that have been sold will be identified and can be evaluated.
D)Investors can evaluate the company as a whole.
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Chapter 8: Measuring and Reporting Cash Flows
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Sample Questions
Q1) If prepaid interest at the beginning of the period was zero and at the end of the period was $4 000 and interest expense appears in the statement of comprehensive income for the year as $17 300, how much was paid out in cash for interest during the year?
A)$13 300
B)$21 300
C)$17 300
D)$4 000
Q2) What is the effect on profit and cash of a firm paying a trade creditor?
A)Decrease in profit and decrease in cash
B)No effect on profit and decrease in cash
C)No effect on profit and no effect on cash
D)Decrease in profit and no effect on cash
Q3) The purpose of the statement of cash flows is to provide information on:
A)profits.
B)net worth.
C)losses.
D)cash inflows and outflows.
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10
Chapter 9: Corporate Social Responsibility and Sustainability Accounting
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Sample Questions
Q1) The sustainability reporting framework that is the most widely accepted standard for corporate sustainability reporting around the world is:
A)the ASX corporate governance principles.
B)the balanced scorecard.
C)the global reporting initiative (GRI).
D)None of the above
Q2) An argument against corporate social responsibility is:
A)it is too costly.
B)it is too difficult.
C)business is about building wealth for its shareholders, not helping society.
D)All of the above
Q3) Which of the following is a reason that a business might engage in activities that are less profitable to itself but which are beneficial to society?
A)Because of expectations of future legislation
B)Because of enlightened self-interest
C)To publish the results and put pressure on competitors
D)All of the above
Q4) Briefly outline the essence of the balance scorecard approach.
Page 11
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Chapter 10: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) Dollar Ltd has a current ratio of 2:1. This means that:
A)there is $2 of current assets for every $1 of current liabilities.
B)its current assets are half its current liabilities.
C)its current assets are insufficient to meet its current liabilities.
D)its current assets are equal to its current liabilities.
Q2) Which ratios are specifically concerned with assessing the efficiency with which assets have been used by the business?
A)Liquidity ratios
B)Efficiency ratios
C)Gearing ratios
D)Investment ratios
Q3) Which ratios measure the degree of risk associated with borrowing money from outsiders to finance the business?
A)Liquidity ratios
B)Investment ratios
C)Gearing ratios
D)Efficiency ratios
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Page 12
Chapter 11: Costvolumeprofit Analysis and Relevant Costing
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70 Flashcards
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Sample Questions
Q1) What does an operating loss indicate?
A)Sales are greater than break-even
B)Sales are less than break-even
C)Sales are equal to break-even
D)None of the above
Q2) Relevant costs for decision-making are those costs that:
A)vary amongst alternatives.
B)represent fixed costs only.
C)are the same for all alternatives.
D)None of the above
Q3) Refer to the table above. The operating gearing for Unique Tables is:
A)higher with the turning machine.
B)higher without the turning machine.
C)insignificant.
D)Equal in both cases
Q4) On a profit-volume chart, the slope of the graph is equal to:
A)profit per unit.
B)variable costs per unit.
C)contribution margin per unit.
D)fixed plus variable costs per unit.
13
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Chapter 12: Full Costing
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Sample Questions
Q1) Which of the following statements is incorrect?
A)Full costs are useful in decision-making, because this approach focuses on future costs.
B)The use of full costs is criticised, because it focuses on past costs.
C)Full costing can lead to incorrect decision-making, because it can distort figures.
D)Actual costs do not always follow the direction that the recovery rate may suggest.
Q2) Refer to the table above. The budgeted overhead recovery rate based on direct labour hours is:
A)$3.85 per DLH.
B)$5.60 per DLH.
C)$2.85 per DLH.
D)$5.85 per DLH.
Q3) To what are service cost centre costs assigned?
A)Individual customers
B)Corporate headquarters
C)Production cost centres
D)Units of output directly
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14
Chapter 13: Planning and Budgeting
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Sample Questions
Q1) In which order do the following steps in the budget setting process actually occur?
i)Co-ordinate the budget.
ii) Identify the limiting factor.
iii) Monitor performance relative to budget.
A)ii, iii, i.
B)ii, i, iii.
C)i, ii, iii.
D)iii, i, ii.
Q2) Managements interest in variances is due to:
A)the need to gain the information that may assist them to put things back in control.
B)the desire to gain the maximum information.
C)the need to compensate employees.
D)the desire to check all details.
Q3) How is a budget best defined?
A)As a forecast for a future period of time
B)As a prediction for a future period
C)As a non-financial plan for a future period of time
D)As a financial plan for a future period of time
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) On what should the decision to invest in a project be based?
A)Both financial and quantitative information
B)Both non-financial and qualitative information
C)Both financial and non-financial information
D)None of the above
Q2) Which of the following would be a reason for preferring $100 now rather than $100 in one year's time?
A)Risk
B)Interest lost
C)The effects of inflation
D)All of the above
Q3) Refer to the table above. The annual depreciation charge for the project is:
A)$300 000
B)$250 000
C)$150 000
D)$200 000
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