Managerial Accounting Exam
Answer Key
Course Introduction
Managerial Accounting introduces students to the fundamental concepts and techniques used by managers to make informed business decisions. The course covers topics such as cost behavior, budgeting, performance evaluation, and cost-volume-profit analysis, emphasizing their practical application within organizations. Students learn how to interpret and use internal financial data to plan, control operations, and support strategic decision-making. Through case studies and real-world examples, the course develops analytical skills essential for effective management and enhances understanding of how accounting information drives organizational success.
Recommended Textbook
Financial and Managerial Accounting Information for Decisions 5th Edition by John J Wild
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Page 2
Chapter 1: Introducing Accounting in Business
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Q1) FastForward had cash inflows from operations of $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000.The net change in cash was:
A) $40,500 increase
B) $40,500 decrease
C) $134,500 decrease
D) $134,000 increase
E) $9,500 increase
Answer: A
Q2) Identify the users and uses of accounting information. Answer: There are two general types of users of accounting information.(1)Internal users are managers and officers of the business.They require information about business activities in order to make decisions about planning,monitoring,and control.(2)External users rely on financial statements to make business decisions.These users include lenders and shareholders.Lenders need information for measuring the risk and return of loans.Shareholders need information for assessing the risk and return for owning shares.
Q3) Della's Donuts has revenues of $83,000 and expenses of $64,000.Calculate its net income.
Answer: Net income = $83,000 - $64,000 = $19,000.
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Page 3
Chapter 2: Analyzing and Recording Transactions
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Q1) The debt ratio is used:
A) To measure the amount of equity relative to the expenses.
B) To reflect the risk associated with a company's debts.
C) Only by banks when a business applies for a loan.
D) To determine how much debt a firm should pay off.
E) To determine who a company owes.
Answer: B
Q2) Debits increase both asset and expense accounts.
A)True
B)False
Answer: True
Q3) Which financial statements are prepared for a period of time?
A) Income statement, statement of retained earnings, balance sheet and statement of cash flows.
B) Balance sheet.
C) Income statement, statement of retained earnings, and statement of cash flows.
D) Income statement and balance sheet.
E) Statement of retained earnings and statement of cash flows.
Answer: C
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Page 4
Chapter 3: Adjusting Accounts and Preparing Financial Statements
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Q1) On December 31,the balance in the Prepaid Advertising account was $176,000,which is the remaining balance of a 12-month advertising campaign purchased on August 31 in the current year.Assuming the cost is spread equally over each month,how much did this advertising campaign cost in total?
A) $286,000
B) $176,000
C) $264,000
D) $154,000
E) $22,000
Answer: C
Q2) Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.
A)True
B)False
Answer: True
Q3) A(n)_______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.
Answer: unadjusted trial balance.
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Chapter 4: Accounting for Merchandising Operations
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Q1) A company purchased $8,750 worth of merchandise,with terms of 2/10,n/30.The invoice was paid within the cash discount period.Accordingly,the company received a cash discount of _______________.
Q2) A company uses the perpetual inventory system and recorded the following entry: \[\begin{array} { | l | r | r | }
\hline \text { Accounts Payable } & 2,500 & \\
\hline \text { Merchandise Inventory } & & 50 \\
\hline \text { Cash } & & 2,450 \\ \hline
\end{array}\]
This entry reflects a:
A) Purchase, B) Return,
C) Sale,
D) Payment of the account payable and recognition of a cash discount taken, E) Purchase and recognition of a cash discount taken,
Q3) In a periodic inventory system,cost of goods sold is recorded as each sale occurs. A)True B)False
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Chapter 5: Inventories and Cost of Sales
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Q1) The _________________ method is commonly used to estimate the value of inventory that has been destroyed,lost or stolen.
Q2) Damaged and obsolete goods:
A) Are never included in inventory.
B) Are included in inventory at their full cost.
C) Are included in inventory at their net realizable value.
D) Should be disposed of immediately.
E) Are assigned a value of zero.
Q3) Given the following information,determine the cost of goods sold at November 30 using the weighted-average perpetual inventory method.
November 3: 15 units were purchased at $8 per unit.
November 11: 18 units were purchased at $9.50 per unit.
November 15: 15 units were sold at $45 per unit.
November 18: 30 units were purchased at $10.75 per unit.
November 30: 20 units were sold at $55 per.
Q4) If damaged and obsolete goods cannot be sold,they are not included in inventory.
A)True
B)False
Q5) What costs are assigned to merchandise inventory?
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Chapter 6: Cash and Internal Controls
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Q1) The days' sales uncollected ratio measures a company's ability to manage its debt. A)True
B)False
Q2) Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of
Q3) The internal document that is used to notify the appropriate person that ordered goods have been received and to describe the quantities and condition of the goods is the____________________.
Q4) All disbursements from petty cash should be documented by a petty cash receipt. A)True
B)False
Q5) A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement. A)True
B)False
Q6) What is a voucher system?
Q7) What is the purpose of the petty cash account?
Page 8
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Chapter 7: Accounts and Notes Receivable
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Q1) During a given year,Compaq had net sales of $32,000 million and average account receivables of $6,850 million.Its accounts receivable turnover is equal to 0.21.
A)True B)False
Q2) The maturity date of a note receivable:
A) Is the day of the credit sale.
B) Is the day the note was signed.
C) Is the day the note is due to be paid.
D) Is the date of the first payment.
E) Is the last day of the month.
Q3) Hasbro had net sales of $7,875 and average accounts receivables of $1,350.Calculate Hasbro's accounts receivable turnover:
Q4) A company received a $1,000,90-day,10% note receivable.The journal entry to record receipt of the note would include a debit to Notes Receivable.
A)True B)False
Q5) What is the accounts receivable turnover ratio? How is it calculated? How is it used to assess financial condition?
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Chapter 8: Long-Term Assets
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Q1) On April 1,2012,SAS Corp.purchased and placed in service a plant asset.The following information is available regarding the plant asset:
\[\begin{array} { | l | r | }
\hline \text { Acquisition cost } & \$ 130,000 \\
\hline \text { Estimated salvage value } & \$ 15,000 \\
\hline \text { Estimated useful life } & 5 \text { years } \\
\hline
\end{array}\]
Make the necessary adjusting journal entries at December 31,2012,and December 31,2013,to record depreciation for each year under the following depreciation methods: a.Straight-line b.Double-declining-balance.
Q2) A new machine is expected to produce 600,000 units of product during its eight-year useful life.The machine cost $1,800,000 cash and it is estimated to have a $60,000 salvage value.If depreciation on the machine is calculated by the double-declining-balance method,what is the depreciation for the first year?
Q3) Explain the impact,if any,on depreciation when depreciation estimates change.
Q4) Explain the purpose and method of depreciation for partial years.
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Page 10
Chapter 9: Current Liabilities
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Q1) Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $1,000.
A)True
B)False
Q2) What is a short-term note payable? Explain the accounting issues related to notes payable.
Q3) When companies pay the government collected sales tax,sales taxes payable is credited and cash is debited.
A)True
B)False
Q4) An estimated liability:
A) Is an unknown liability of a certain amount.
B) Is a known obligation of an uncertain amount that can be reasonably estimated.
C) Is a liability that may occur if a future event occurs.
D) Can be the result of a lawsuit.
E) Is not recorded until the amount is known for certain.
Q5) A _______________________ is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle,whichever is longer.
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Chapter 10: Long-Term Liabilities
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Q1) Operating leases are long-term or noncancelable leases in which the lessor transfers all the risks and rewards of ownership to the lessee.
A)True
B)False
Q2) The carrying value of a bond payable at any point in time equals par value minus any unamortized _______________ or plus any unamortized _______________.
Q3) A company issued 25-year,8% bonds with a par value of $900,000.The company received $1,000,000 cash for the bonds.Using the straight-line method,the amount of interest expense for the first semiannual interest period is:
A) $36,000
B) $34,000
C) $38,000
D) $40,000
E) $32,000
Q4) Explain how to record the issuance and sale of a bond between interest payment dates.
Q5) Explain the present value concept and how it applies to long-term liabilities.
Q6) What is a bond? Identify and discuss the different types of bonds.
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Chapter 11: Corporate Reporting and Analysis
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Q1) Dividend payment involves three important dates.They are ______________________,_________________________ and
Q2) A company has 5,000 shares of $1 par value common stock and 6,000 shares of 2%,$98 par,noncumulative preferred stock outstanding.The balance in Retained Earnings at the beginning of the year was $750,000.Net income for the current year was $400,000.If the company paid a dividend of $3 per share on its common stock,what is the balance in Retained Earnings at the end of the year?
A) $1,123,240
B) $1,135,000
C) $1,150,000
D) $735,000
E) $723,240
Q3) A corporation reported net income of $3,730,000 and paid preferred cash dividends of $100,000 during the current year.There were 600,000 shares of common stock outstanding and the market price per common share was $88.33 at year-end.Calculate the company's price-earnings ratio.
Q4) Explain how to compute dividend yield and discuss how it is used in analysis of a company's financial condition.
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Chapter 12: Reporting Cash Flows
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Q1) Activities that involve the production or purchase of merchandise and the sale of goods and services to customers,including expenditures related to administering the business,are classified as:
A) Financing activities
B) Investing activities
C) Operating activities
D) Direct activities
E) Indirect activities
Q2) Explain the purpose and format of the statement of cash flows.Also,describe its use to decision makers.
Q3) The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.
A)True
B)False
Q4) Financing activities include receiving cash dividends from investments in other companies' stocks.
A)True
B)False
Q5) All cash transactions eventually affect noncash ___________ accounts.
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Chapter 13: Analysis of Financial Statements
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Q1) Working capital is computed as current liabilities minus current assets.
A)True
B)False
Q2) Liquidity refers to the availability of resources to meet short-term cash requirements.
A)True
B)False
Q3) Dividing accounts receivable by net sales and multiplying the result by 365 is equal to the:
A) Profit margin
B) Days' sales uncollected
C) Accounts receivable turnover ratio
D) Average accounts receivable ratio
E) Current ratio
Q4) What are the standards for financial analysis comparison? Give examples of each.
Q5) Explain the form and content of a complete income statement.
Q6) Describe ratio analysis including its purpose,application,and interpretation.
Q7) Identify and explain the four building blocks of financial statement analysis.
Q8) David and Tom Gardner created The Motley Fool to help investors.What do David and Tom believe is their mission?
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Chapter 14: Managerial Accounting Concepts and Principles
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Q1) Days' sales in raw materials inventory is a measure of:
A) How much raw materials are needed for the company to earn a profit.
B) How long it takes the company to pay for raw materials..
C) How many times a company turns over its raw materials during a period.
D) How long it takes raw materials to be used in production.
E) The product costs a company has incurred during a period.
Q2) One of the main differences between the calculation of cost of goods sold for a merchandiser and that of a manufacturer is that the calculation includes cost of goods purchased for the merchandiser,but the manufacturer replaces that with
Q3) Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production,including all manufacturing costs other than direct material and direct labor costs,are called:
A) Administrative expenses
B) Nonmanufacturing costs
C) Sunk costs
D) Factory overhead
E) Preproduction costs
Q4) What are the components of the manufacturing statement? Describe each component.
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Chapter 15: Job Order Costing and Analysis
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Q1) The job cost sheet for Job number 93-471 includes the following information:
DIRECT MATERIALS:
7/12 Requisition R93-566: 20 units @ $ 3.50 per unit
7/13 Requisition R93-576: 18 units @ $ 5.00 per unit
7/13 Requisition R93-578: 4 units @ $25.00 per unit
7/14 Requisition R93-591: 40 units @ $ 1.25 per unit
DIRECT LABOR:
7/12 Employee 19: 8 hours @ $ 9.00 per hour
7/13 Employee 19: 6 hours @ $ 9.00 per hour
7/13 Employee 37: 6 hours @ $ 7.00 per hour
7/14 Employee 19: 5 hours @ $ 9.00 per hour
7/14 Employee 92: 5 hours @ $11.00 per hour
FACTORY OVERHEAD:
Assigned at 150% of direct labor cost. What is the total cost of Job number 93-471?
Q2) Any material amount of under- or overapplied factory overhead must always be closed to Cost of Goods Sold at the end of an accounting period.
A)True
B)False
Q3) A ______________________ is a separate record maintained for each job.
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Chapter 16: Process Costing
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Q1) To compute an equivalent unit of production,one must be able to reasonably estimate:
A) The percentage of completion.
B) Units completed.
C) Units started and completed.
D) Direct labor cost.
E) Materials cost.
Q2) The following journal entry would be made to record the use of direct materials in the reporting period covered by the information:
\(\begin{array}{llr}
\text {Goods in Process Inventory, Pickling Dept } &16,000\\
\text { Goods in Process Inventory, Canning Dept } &3,000\\
\text {Raw Materials Inventory } &19,000 \end{array}\)
A)True
B)False
Q3) What was the cost of the goods transferred out of the Bagging Department and into the finished goods inventory?
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Chapter 17: Activity-Based Costing and Analysis
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Q1) Refer to the data in the preceding tables.How much overhead cost will be assigned to each product line using activity-based costing (ABC)?
A) Dog food: $462,500; cat food: $462,500.
B) Dog food: $860,000; cat food: $65,000.
C) Dog food: $60,000; cat food: $45,000.
D) Dog food: $800,000; cat food: $20,000.
E) Dog food: $320; cat food: $320.
Q2) Which of the following are advantages of using the plantwide overhead rate method?
A) The use of cost pools is considerably more accurate than other overhead allocations.
B) The necessary information is readily available.
C) It is more accurate than traditional overhead allocations.
D) Each department has its own overhead rate and its own allocation base.
E) It takes into account that when products differ in batch size and complexity, they usually consume different amounts of overhead resources.
Q3) What is the basic principle underlying activity-based costing?
Q4) How does ABC differ from using multiple departmental rates?
Q5) The ________________________ is the target of the cost assignment.
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Chapter 18: Cost-Volume-Profit Analysis
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Q1) A company manufactures and sells a product for $150 per unit.The company's fixed costs are $68,200,and its variable costs are $95 per unit.The company's break-even point in units is:
A) 718 units
B) 455 units
C) 1,240 units
D) 1,364 units
E) 1,137 units
Q2) A company has total fixed costs of $200,000.Its product sells for $25 per unit and variable costs amount to $15 per unit.The company wishes to earn an after-tax income of $35,000.Assume that the company has a 30% tax rate.How many units must be sold to achieve this after-tax income level?
Q3) To calculate the break-even point in units,one must know unit fixed cost,unit variable cost,and unit sales price.
A)True
B)False
Q4) What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?
Q5) Define variable cost,fixed cost,and mixed cost.
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Chapter 19: Variable Costing and Performance Reporting
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Q1) Which of the following is not a product cost?
A) Direct labor.
B) Indirect manufacturing costs.
C) Direct materials.
D) Manufacturing overhead.
E) Advertising costs.
Q2) The biggest problems with producing too much are lost sales and customer dissatisfaction.
A)True
B)False
Q3) ________________________ is the exact point where revenues equal expenses.
Q4) Given the Scavenger Company data,what is net income using absorption costing?
A) $201,250
B) $181,250
C) $150,000
D) $177,600
E) $276,250
Q5) _______________ and _______________ are product costs that can be directly traced to the product.
Q6) What are the limitations of using variable costing?
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Chapter 20: Master Budgets and Performance Planning
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Q1) A Company is preparing a cash budget for June.The company has $67,000 cash at the beginning of June and anticipates $82,330 in cash receipts and $93,520 in cash disbursements during June.This company has an agreement with its bank to maintain a cash balance of at least $65,000.As of May 31,the company owes $25,000 to the bank.To maintain the $65,000 required balance,during June the company must:
A) Borrow $9,190
B) Repay $13,190
C) Borrow $25,000
D) Repay $25,000
E) Repay $9,190
Q2) Fairway's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit.The desired ending inventory is 30% higher than the beginning inventory,which was 1,000 units.Budgeted purchases of units in April would be:
A) 6,000 units
B) 7,000 units
C) 6,300 units
D) 7,300 units
E) Some other amount
Q3) Describe at least five benefits of budgeting.
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Chapter 21: Flexible Budgets and Standard Costs
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Q1) What is the labor rate variance?
A) $22,000 unfavorable
B) $16,000 unfavorable
C) $6,000 unfavorable
D) $16,000 favorable
E) $22,000 favorable
Q2) If Blue Jay Enterprises actual overhead incurred during a period was $49,050 and the company reported an unfavorable overhead controllable variance of $1,800 and a favorable overhead volume variance of $1,350,how much standard overhead cost was assigned to the products produced during the period?
Q3) Actual fixed overhead for a company during March was $97,612.The flexible budget for fixed overhead this period is $88,000 based on a production level of 5,500 units.If the company actually produced 4,300 units,what is the fixed overhead spending variance for March?
A) $9,612 favorable
B) $1,200 unfavorable
C) $28,812 unfavorable
D) $9,612 unfavorable
E) $28,812 favorable
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Chapter 22: Decentralization and Performance Measurement
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Q1) What is a cost center?
Q2) Contribution to overhead generated by a department is the same as gross profit generated by that department.
A)True
B)False
Q3) What is a profit center?
Q4) Which of the following would not be considered a cost center?
A) Accounting department.
B) Purchasing department.
C) Research department.
D) Advertising department.
E) Pharmacy in a grocery store.
Q5) Grey Division's departmental income is:
A) $163,000
B) $211,000
C) $241,000
D) $52,000
E) $173,000
Q6) Cycle time is
24
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Chapter 23: Relevant Costing for Managerial Decisions
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Q1) A company paid $400,000 five years ago for a specialized machine that has no salvage value and is being depreciated at the rate of $40,000 per year.The company is considering using the machine in a new project that will have incremental revenues of $48,000 per year and annual cash expenses of $30,000.In analyzing the new project,the $40,000 depreciation on the machine is an example of a(n):
A) Incremental cost
B) Opportunity cost
C) Variable cost
D) Sunk cost
E) Out-of-pocket cost
Q2) In a make or buy decision,management should focus on costs that are constant under the two alternatives.
A)True
B)False
Q3) Costs already incurred in manufacturing the units of a product that do not meet quality standards are relevant costs in a scrap or rework decision.
A)True
B)False
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Chapter 24: Capital Budgeting and Investment Analysis
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Q1) What is the payback period for this machine?
A) 24 years
B) 12 years
C) 6 years
D) 4 years
E) 1 year
Q2) Monterey Corporation is considering the purchase of a machine costing $36,000 with a six-year useful life and no salvage value.Monterey uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year.In calculating the accounting rate of return,what is Monterey's average investment?
A) $6,000
B) $7,000
C) $18,000
D) $21,000
E) $36,000
Q3) How does the calculation of break-even time (BET)differ from the calculation of payback period (PBP)?
Q4) The minimum acceptable rate of return on an investment is called the
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Chapter 25: Accounting With Special Journals
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Q1) Accounting information systems are so accurate that decision makers in practice do not need a basic knowledge of how the systems work.
A)True
B)False
Q2) An accounts receivable ledger is:
A) A subsidiary ledger that contains an account for each credit customer.
B) A list of the balances of selected accounts in the accounts receivable ledger that is added to show the total amount of the significant accounts receivable outstanding.
C) A book of original entry that is designed and used for recording only a specified type of transaction.
D) The ledger that contains the financial statement accounts of a business.
E) A subsidiary ledger that contains a separate account for each creditor (supplier) to the company.
Q3) ______________________ provide the basic information processed by an accounting system and can include bank statements,billings to customers,and employee earnings records.
Q4) ___________________ processing enters and processes data as soon as source documents are available.
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Chapter 26: Time Value of Money
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Q1) Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly.How much will Keisha have accumulated after two years?
A) $4,433.80
B) $4,340.00
C) $4,390.40
D) $3,920.00
E) $3,500.00
Q2) A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years.The fund will earn 7% interest,and the company intends to put away a series of equal year-end amounts for seven years.What amount must the company deposit annually?
Q3) Sam has a loan that requires a single payment of $4,000 at the end of three years.The loan's interest rate is 6%,compounded semiannually.How much did Sam borrow?
A) $3,358.40
B) $4,000.00
C) $3,660.40
D) $4,776.40
E) $3,350.00
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Chapter 27: Investments and International Operations
Available Study Resources on Quizplus for this Chatper
176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/72496
Sample Questions
Q1) Vans purchased 40,000 shares of Skechers common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:
A) Debit to Long-Term Investments for $92,800.
B) Debit to Long-Term Investments for $232,000.
C) Credit to Long-Term Investments for $92,800.
D) Credit to Long-Term Investments for $232,000.
E) Debit to Long-Term Investment for $40,000.
Q2) Long-term investments include:
A) Investments in bonds and stocks that are not marketable.
B) Investments in marketable stocks that are intended to be converted into cash in the short-term.
C) Investments in marketable bonds that are intended to be converted into cash in the short-term.
D) Only investments readily convertible to cash.
E) Investments intended to be converted to cash within one year.
Q3) When using the equity method,receipt of cash dividends increases the carrying value of an investment in equity securities.
A)True
B)False
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Page 30
Chapter 28: Accounting for Partnerships
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/72495
Sample Questions
Q1) If the partners agree on a formula to share income and say nothing about losses,then the losses are shared equally.
A)True
B)False
Q2) Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.
A)True
B)False
Q3) Nguyen invested $100,000 and Hansen invested $200,000 in a partnership.They agreed to share income and loss by allowing a $60,000 per year salary allowance to Nguyen and a $40,000 per year salary allowance to Hansen,plus an interest allowance on the partners' beginning-year capital investments at 10%,with the balance to be shared equally.Under this agreement,the shares of the partners when the partnership earns a $105,000 in income are:
A) $52,500 to Nguyen; $52,500 to Hansen.
B) $35,000 to Nguyen; $70,000 to Hansen.
C) $57,500 to Nguyen; $47,500 to Hansen.
D) $42,500 to Nguyen; $62,500 to Hansen.
E) $70,000 to Nguyen; $60,000 to Hansen.
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