Management Accounting
Question Bank
Course Introduction
Management Accounting focuses on the processes and techniques used by organizations to plan, control, and make informed financial decisions. This course covers topics such as budgeting, cost analysis, performance evaluation, and strategic planning, emphasizing how accounting information supports management in achieving organizational objectives. Students will explore various tools for internal reporting, understand the behavior of costs, and learn to analyze financial data to improve operational efficiency and support decision-making within different types of businesses.
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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2
Chapter 1: Introduction to Accounting
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Sample Questions
Q1) Which of these is an accounting entity?
A)Sole proprietor
B)Partnership
C)Company
D)All of the above
Answer: D
Q2) Advantages of operating as a sole proprietor are:
A)total control by the owner over all decisions.
B)low start-up costs.
C)limited liability.
D)Both A and B
Answer: D
Q3) Budgets are typically set for:
A)a decade.
B)one year.
C)one month.
D)five years.
Answer: B
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Chapter 2: Measuring and Reporting Financial Position
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Sample Questions
Q1) In recent years, the more common format of layout for the statement of financial position is:
A)horizontal format.
B)parallel format.
C)'T' format.
D)vertical or narrative format.
Answer: D
Q2) Which of the following statements in relation to non-current assets is untrue?
A)They are held for sale or consumption
B)They may be tangible or intangible
C)May vary in classification according to the nature of the business
D)They are generally held for generating wealth
Answer: A
Q3) If the prudence (conservatism)convention conflicts with another convention, which will normally prevail?
A)Prudence (conservatism)
B)The other convention
C)50% of the time prudence and 50% of the time the other convention
D)Conventions never conflict so the issue does not arise
Answer: A
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Chapter 3: Measuring and Reporting Financial Performance
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Sample Questions
Q1) An item of inventory costing $750 can now only be sold at auction for $200. Auction costs of $50 will be incurred to make the sale. The net realisable value of the inventory is:
A)$700
B)$150
C)$750
D)$200
Answer: B
Q2) Accrued expenses are classified in the statement of financial position as a:
A)current liability.
B)non-current asset.
C)non-current liability.
D)current asset.
Answer: A
Q3) Under accrual accounting, profit is measured as:
A)income minus expenses.
B)assets minus liabilities.
C)sales minus cost of sales.
D)cash sales minus payments for expenses.
Answer: A
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Page 5
Chapter 4: Recording Transactionsthe Journal and Ledger Accounts
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Sample Questions
Q1) In closing off the accounts the balance in the Cost of Sales account will be:
A)debited to the profit and loss account.
B)debited to the capital account.
C)transferred to the balance sheet.
D)credited to the drawings account.
Q2) A book of original entry, used to record all relevant details needed to record a transaction in the ledger is the:
A)balance sheet.
B)journal.
C)profit and loss book.
D)worksheet.
Q3) The report prepared from the trading and manufacturing accounts is required by the government.
A)True
B)False
Q4) After adjustments are completed, the next step is to prepare:
A)the balance sheet.
B)the profit and loss statement.
C)the trial balance.
D)the adjusted trial balance.
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Chapter 5: Accounting Systems and Internal Control
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Sample Questions
Q1) While, in practice, most transactions are recorded in a subsidiary record, any transaction could be posted in the general journal.
A)True
B)False
Q2) Which of the following businesses would be most likely use sales and purchases books?
A)A hardware store
B)A real estate agent
C)A physician
D)A hair salon
Q3) In which ledger would you find a list of debtors and the amount owed by each?
A)Purchases ledger
B)General ledger
C)Sales ledger
D)Cash ledger
Q4) Subsidiary records are not part of the double-entry accounting system.
A)True
B)False
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Page 7
Chapter 6: Introduction to Limited Companies
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Sample Questions
Q1) If the retained profit figure in a company statement of financial position increases from the beginning of the year to the end of the year, it is most probable that:
A)profit for the year is less than dividends declared.
B)bonus shares have been issued.
C)additional capital has been raised during the year.
D)profit for the year is more than dividends declared.
Q2) A public issue of shares where the investor must state in advance the amount they are willing to pay for the shares is called a:
A)tender issue.
B)private issue.
C)share purchase plan.
D)venture share issue.
Q3) Redeemable preference shares:
A)are the same as bonus shares.
B)can be repurchased by the company.
C)allow the holders full voting rights.
D)can be exchanged for ordinary shares.
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Chapter 7: Regulatory Framework for Companies
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Sample Questions
Q1) Three key groups associated with companies are directors, shareholders and auditors. a. Explain the relationship between these three groups.
B. Define a reporting entity and a disclosing entity.
Q2) Information if by its omission, misstatement or non-disclosure has the potential to influence economic decision-making, is regarded as:
A)reliable.
B)true and fair.
C)material.
D)objective.
Q3) How would trade debtors normally be classified in a statement of financial position?
A)As a current liability
B)As a current asset
C)As a non-current liability
D)As a reserve
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Chapter 8: Measuring and Reporting Cash Flows
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Sample Questions
Q1) All purchases of inventory are for cash. If inventory at the beginning of the year is $63 000 and at the end $88 000 and the cost of sales is $200 000, the cash paid for inventory purchased for the year is:
A)$175 000
B)$225 000
C)$200 000
D)None of the above
Q2) 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.
Q3) Which of the following is an example of a non-cash investing or financing transaction?
A)Charging depreciation
B)Sale of a parcel of shares
C)Repayment of a loan
D)The purchase of a building paid for by an issue of shares direct to the vendor
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Chapter 9: Corporate Social Responsibility and Sustainability Accounting
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Sample Questions
Q1) The specific standards classifications used by the GRI for disclosure does not include:
A)economic.
B)environmental.
C)governance.
D)social.
Q2) Reasons why a business might engage in activities that are less profitable to itself but which are beneficial to society are:
A)because of expectations of future legislation.
B)to market itself as a good citizen.
C)to improve liquidity.
D)Both A and B
Q3) Briefly outline the essence of the balance scorecard approach.
Q4) Which of these is an example of an environmental disclosure in an annual report?
A)Implementation of tree planting schemes
B)Introduction of environmental audits
C)Sponsoring environmental achievement awards
D)All are examples
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Chapter 10: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) Because a company's inventory is less liquid than its other current assets when investors are assessing liquidity, they should examine the:
A)debt-equity ratio.
B)accounts receivable turnover ratio.
C)acid test ratio.
D)current ratio.
Q2) If gross profit is $500 000, interest expense is $200 000, sales is $1 900 000 and total assets are $5 400 000, calculate the gross profit margin.
A)6.3%
B)18.9%
C)26.3%
D)10%
Q3) Dividend yield on ordinary shares is calculated as:
A)dividends per share divided by market price per share.
B)annual dividend divided by issued capital.
C)annual dividend divided by earnings.
D)None of the above
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Page 12
Chapter 11: Costvolumeprofit Analysis and Relevant Costing
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Sample Questions
Q1) When contribution margin per unit increases:
A)break-even output remains the same.
B)break-even output increases.
C)break-even output decreases.
D)fixed costs decrease.
Q2) How are fixed costs best defined?
A)As fixed in relation to changes in activity over the relevant range of output
B)As fixed for all time
C)As fixed for 6 months
D)As fixed for a given number of products
Q3) Which of the following is an example of a semi-fixed (semi-variable)cost?
A)Cost of telephone calls.
B)Total telephone account, both calls and rental.
C)Cost of telephone rental.
D)None of the above
Q4) How is margin of safety best described?
A)As the difference between the actual output and the break-even output
B)As the difference between variable costs and total output
C)As the difference between the fixed costs and total revenue
D)As the difference between break-even point and total revenue
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Chapter 12: Full Costing
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Sample Questions
Q1) The classification of a cost as either direct or indirect depends primarily on:
A)the computer tracing system within the organisation.
B)the definition of the cost object.
C)the knowledge of the accountant.
D)the type of business.
Q2) Which of these is not another name for overhead costs?
A)Indirect costs
B)Common costs
C)Fixed costs
D)None of the above, i.e., all are other names for overhead costs
Q3) At the time of the industrial revolution in Britain, the manufacturing sector was characterised by the following features, except for:
A)high use of technology.
B)a relatively uncompetitive market.
C)direct labour-intensive and direct labour-paced production.
D)a low level of overheads relative to direct costs.
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Chapter 13: Planning and Budgeting
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Sample Questions
Q1) Refer to the table above. The raw materials variance can best be described as:
A)an adverse variance resulting from a rise in the price of raw materials.
B)an adverse variance resulting from excessive use of raw materials and/or an increase in their price.
C)an adverse variance resulting from excessive use of raw materials.
D)a favourable variance resulting from efficient use of raw materials.
Q2) Budgets are generally regarded as having several areas of usefulness. Which of these is not one of them?
A)They can facilitate control within the business.
B)They tend to promote forward thinking.
C)They help coordinate the various sectors of the business.
D)They can be used to allocate direct expenses.
Q3) In which step of the decision-making process are projected financial statements likely to have a valuable role?
A)Prepare a long-term plan based on the most appropriate options.
B)Identify objectives.
C)Consider options.
D)Evaluate options and make a decision.
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) You have won a special type of lottery where you are to receive $250 000 in 4 years' time. The current interest rate is 6%. How much is the lottery win worth in today's dollars?
A)$200 000
B)$158 400
C)$255 010
D)$198 000
Q2) What is the main disadvantage of the Internal Rate of Return method?
A)It ignores the scale of projects, which could lead to wrong decision-making.
B)It is difficult for management to incorporate it into decision-making.
C)It is too simplistic.
D)All of the above
Q3) The decision rule for the accounting rate of return method of assessing investment projects is to accept all projects with:
A)a positive return.
B)the highest return.
C)the highest return subject to a minimum required return.
D)none of the above.
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