Managerial Accounting Exam Bank
Course Introduction
Managerial Accounting focuses on the use of accounting information by managers within organizations to aid in decision-making, planning, and control. The course covers topics such as cost behavior, cost-volume-profit analysis, budgeting, performance evaluation, and decision-making relevant to both short-term operations and long-term strategy. Emphasis is placed on understanding how managerial accounting techniques support business goals, improve efficiency, and inform internal management processes. Students will develop the skills to analyze financial data, prepare internal reports, and utilize relevant accounting tools to make informed business decisions.
Recommended Textbook
Financial Managerial Accounting 16th Edition by Jan Williams
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Page 2
Chapter 1: Accounting: Information for Decision Making
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Sample Questions
Q1) Investors may be described as:
A) Individuals and enterprises that have provided credit to a reporting entity.
B) Individuals and enterprises that own a reporting entity business.
C) Anyone that has an interest in the results of the operations of the reporting entity.
D) Those whose primary economic activity consists of buying and selling stocks and bonds.
Answer: B
Q2) The best definition of an accounting system is:
A) Journals, ledgers, and worksheets.
B) Manual or computer-based records used in developing information about an entity for use by managers and also persons outside the organization.
C) The personnel, procedures, devices, and records used by an entity to develop accounting information and communicate this information to decision makers.
D) The concepts, principles, and standards specifying the information which should be included in financial statements, and how that information should be presented.
Answer: C
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3
Chapter 2: Basic Financial Statements
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Sample Questions
Q1) The entity principle states that the affairs of the owners are not part of the financial operations of a business entity and should be separated.
A)True
B)False
Answer: True
Q2) If Retained Earnings at December 31, 2010, is $100,000, Equipment is carried in Hercules Manufacturing, Inc. accounting records at:
A) $42,000.
B) $58,000.
C) $43,500.
D) $345,000.
Answer: B
Q3) The amount of owners' equity in a business is not affected by:
A) The percentage of total assets held in cash.
B) Investments made in the business by the owner.
C) The profitability of the business.
D) The amount of dividends paid to stockholders.
Answer: A
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4
Chapter 3: The Accounting Cycle: Capturing Economic
Events
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Sample Questions
Q1) Which of the following is not true regarding the general ledger account for Cash?
A) The balance of the account indicates the amount of cash owned by the business on a particular date.
B) Each debit entry in the Cash account represents a cash receipt.
C) Debit entries are made before credit entries.
D) Credit entries in the Cash account represent cash payments.
Answer: C
Q2) In a trial balance prepared at December 31, 2010 the total of the debit column is:
A) $1,540,000.
B) $780,000.
C) $1,020,000.
D) $700,000.
Answer: B
Q3) The credit side of an account is the right side, while the debit side is the left side.
A)True
B)False
Answer: False
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Page 5
Chapter 4: The Accounting Cycle: Accruals and Deferrals
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Q1) Before any month-end adjustments are made, the net income of Bennett Company is $76,000. The following adjustments are necessary: office supplies used, $3,160; services performed for clients but not yet recorded or collected, $3,640; interest accrued on note payable to bank, $3,040. After adjusting entries are made for the items listed above, Bennett Company's net income will be:
A) $66,160.
B) $78,560.
C) $73,440.
D) $76,000
Q2) Which of the following is not a purpose of adjusting entries?
A) To prepare the revenue and expense accounts for recording transactions of the following period.
B) To apportion the proper amounts of revenue and expense to the current accounting period.
C) To establish the proper amounts of assets and liabilities in the balance sheet.
D) To accomplish the objective of offsetting the revenue of the period with all the expenses incurred in generating that revenue.
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Chapter 5: The Accounting Cycle: Reporting Financial Results
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Q1) Which of the following accounts will be closed to Income Summary?
A) Prepaid Expenses.
B) Unearned Revenue.
C) Dividends.
D) Earned Revenue.
Q2) Working capital equals current assets divided by current liabilities.
A)True
B)False
Q3) Return on equity is a commonly used measure of a company's solvency.
A)True
B)False
Q4) The income summary account has debits of $85,000 and credits of $75,000. The company had which of the following:
A) Net income of $10,000.
B) Net income of $160,000.
C) Net loss of $10,000.
D) Net loss of $160,000.
Q5) Publicly owned companies are typically managed by their stockholders.
A)True
B)False
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Chapter 6: Merchandising Activities
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Sample Questions
Q1) The following information is available: Calculate the gross profit:
A) $0.
B) $1,500.
C) $450.
D) $900.
Q2) Refer to the information above. Washington maintains a subsidiary ledger account for each type of TV carried in the store. An examination of the account for the Flat TV model at the end of February would show:
A) 4 units on hand with a total value of $1,400.
B) 4 units on hand with a total value of $5,600.
C) 13 units on hand with a total value of $18,200.
D) The amount that Washington owes to Bass.
Q3) In a perpetual inventory system, the entry to record the cost of goods sold always includes an entry of equal amount to the:
A) Inventory account.
B) Sales account.
C) Purchases account.
D) None of the above.
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Chapter 7: Financial Assets
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Sample Questions
Q1) The balance shown on a bank statement is always less than the month-end balance of a company's cash account in the general ledger.
A)True
B)False
Q2) Balance sheet method-journal entries
The general ledger controlling account for Accounts Receivable has a balance of $120,500 at year-end before adjustment. The company uses the balance sheet approach to estimate uncollectible accounts. By aging the individual customers' accounts, it was determined that the doubtful accounts amounted to $5,020. Prepare the year-end adjusting entry for uncollectible accounts under each of the following independent assumptions.
(a.) Allowance for Doubtful Accounts has a credit balance of $2,850.
(b.) Allowance for Doubtful Accounts has a debit balance of $925.
Q3) Each of these categories of assets is normally shown in the balance sheet at current value, except:
A) Inventories.
B) Accounts receivable.
C) Short-term investments in marketable securities.
D) Cash.
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Page 9
Chapter 8: Inventories and the Cost of Goods Sold
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Sample Questions
Q1) In July 2011, the accountant for LBJ Imports is in the process of preparing financial statements for the quarter ended June 30, 2011. The physical inventory, however, was last taken on June 5 and the accountant must establish the approximate cost at June 30 from the following data: The gross profit on sales has consistently averaged 40% of sales. Using the gross profit method, compute the approximate inventory cost at June 30, 2011.
A) $420,000.
B) $880,000.
C) $480,000.
D) $1,360,000.
Q2) In a perpetual inventory system, the flow of inventory cost is:
A) First through the income statement, then through the balance sheet.
B) First through the balance sheet, then through the income statement.
C) Only through the balance sheet and not the income statement.
D) Only through the income statement and not the balance sheet.
Q3) Because of the consistency principle, inventory should never be written down below cost.
A)True
B)False
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10
Chapter 9: Plant and Intangible Assets
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Q1) Throughout the current year, Calverton Company treated sales taxes paid on purchases of plant assets as revenue expenditures. As a result, the current year's:
A) Net income is overstated.
B) Revenue is overstated.
C) Depreciation expense is understated.
D) None of the above; payments of sales taxes should be treated as revenue expenditures.
Q2) Total stockholders' equity of Tucker Company is $4,000,000. The fair market value of Tucker's net identifiable assets (assets less liabilities) is $5,000,000. Empire Corporation makes an offer to purchase Tucker's entire business for $5,800,000. In this situation:
A) Tucker Company should report goodwill of $800,000 in its balance sheet.
B) Tucker Company should report goodwill of $1,800,000 in its balance sheet.
C) Empire Corporation is willing to pay $1,800,000 for goodwill generated by Tucker, and Empire will report this goodwill in its balance sheet if the purchase is finalized.
D) Empire Corporation is willing to pay $800,000 for goodwill generated by Tucker, and Empire will report this goodwill in its balance sheet if the purchase is finalized.
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11
Chapter 10: Liabilities
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Q1) Trego's entry at June 30, 2012, to record the first semiannual payment of interest and amortization of discount/premium on the bonds includes a:
A) Debit to Bond Interest Expense of $20,000.
B) Credit to Cash of $22,000.
C) Credit to Premium on Bonds Payable of $2,000.
D) Debit to Bond Interest Expense of $22,000.
Q2) The adjusting entry at December 31, 2009, with respect to this note included:
A) A debit to Interest Expense for $18,000.
B) A credit to Cash for $18,000.
C) A credit to Notes Payable for $18,000.
D) A credit to Interest Expense for $18,000.
Q3) The pension expense of the current period is equal to:
A) Amounts paid to retired workers during the current period.
B) The estimated future pension benefits earned by today's workers during the current period.
C) The present value of the estimated future pension benefits earned by today's workers during the current period.
D) Cash payments made during the period to the trustee of the pension plan.
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12
Chapter 11: Stockholders Equity: Paid-In Capital
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Q1) When assets are donated to a corporation, a revenue account should be credited for the fair market value of the assets received.
A)True
B)False
Q2) In a corporation's organization chart, which is the highest position?
A) Stockholders.
B) Board of directors.
C) CEO.
D) President.
Q3) A stock split will decrease the total par value of the stock.
A)True
B)False
Q4) A deficit appears in a corporation's financial statements:
A) Among the operating expenses.
B) Among the liabilities.
C) As a deduction from assets.
D) As a deduction from total paid-in capital.
Q5) Contributed capital is equivalent to paid-in capital.
A)True
B)False
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Chapter 12: Income and Changes in Retained Earnings
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Q1) Which of the following situations would not be presented in a separate section of the current year's income statement of Hamilton Corporation? (More than one answer may be correct.) During the current year:
A) Hamilton's St. Louis headquarters are destroyed by a tornado.
B) Hamilton sells its entire juvenile furniture operations and concentrates upon its remaining children's clothing segment.
C) Hamilton's accountant discovers that the entire price paid several years ago to purchase company offices in Texas had been charged to a Land account; consequently, no depreciation has ever been taken on these buildings.
D) As a result of labor union contract changes, Hamilton paid increased compensation expense during the year.
Q2) Which of the following statistics is generally computed for both common and preferred stock?
A) Earnings per share.
B) Price-earnings ratio (p/e ratio).
C) Annual dividend per share.
D) Retained earnings per share.
Q3) What was the average issue price per share of preferred stock?
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) The amount of cash paid by Hierarchy to acquire plant assets during the current year was:
A) $252,000.
B) $504,000.
C) $724,000.
D) $768,000.
Q2) The Nelson Corporation reported net income in excess of its net cash flow from operating activities for the current year. An explanation for this may be:
A) A loss on the sale of equipment in the current year.
B) An increase in accounts payable during the year.
C) Depreciation expense recognized for the year.
D) A gain on the sale of investments during the year.
Q3) Bert's Bungy Jumping, Inc. paid $650,000 cash for casualty insurance during the year 2009. If the income statement for the year reports insurance expense of $620,000:
A) Bert's prepaid insurance decreased $30,000.
B) Bert's cash account balance decreased $30,000.
C) Bert's prepaid insurance increased $30,000.
D) Bert's prepaid insurance was $30,000 at year-end.
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Page 15
Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) The current ratio is calculated by:
A) Dividing current assets by total assets.
B) Dividing current assets by total liabilities.
C) Dividing current assets by stockholders' equity.
D) Dividing current assets by current liabilities.
Q2) The measures most often used in evaluating solvency-the current ratio, quick ratio, and amount of working capital-are developed from amounts appearing in the: A) Balance sheet.
B) Income statement.
C) Statement of retained earnings.
D) Statement of cash flows.
Q3) The acid test ratio includes marketable securities but does not include accounts receivable.
A)True
B)False
Q4) When an income statement does not show gross profit or operating income it is called a consolidated statement.
A)True
B)False
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Chapter 15: Global Business and Accounting
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Q1) China, Japan, and Australia have amended their current standards to converge with International Financial Reporting Standards, but the United States has chosen not to adopt the International Financial Reporting Standards.
A)True
B)False
Q2) Prepare journal entries for the following transactions for Inter-Global Co.
October 10: Purchased merchandise on account from Le Monde, a French company, for 80,000 euros. The exchange rate was $0.82.
November 2: Paid Le Monde for the merchandise purchased on October 1. The exchange rate at this date was $0.83.
November 15: Sold merchandise to Nippon, a Japanese company for 300,000 yen on account. The rate of exchange was $0.0091.
November 20: The Japanese company paid the full amount. The exchange rate was $0.0090.
December 5: Sold merchandise to Ponti, an Italian company for $24,000. The exchange rate is $0.81. The Italian company agrees to pay in U.S. dollars.
December 18: Collected the full amount from the Italian company.
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Page 17
Chapter 16: Management Accounting: a Business Partner
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Q1) The completion of a computer by First Wireless, Inc. would require a debit to which of the following accounts?
A) Cost of Goods Sold.
B) Work in Process Inventory.
C) Finished Goods Inventory.
D) Materials Inventory.
Q2) The set of linked activities and resources needed to create and deliver a product or service to the customer is referred to as:
A) The budget.
B) The value chain.
C) The operating cycle.
D) The production process.
Q3) Amounts debited to the Work in Process Inventory account may best be described as:
A) Direct materials purchased, direct labor costs paid, and payments for items classified as manufacturing overhead.
B) The cost of finished goods manufactured during the period.
C) Total manufacturing costs charged to production.
D) The cost of goods sold.
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Page 18
Chapter 17: Job Order Cost Systems and Overhead
Allocations
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Q1) Which of the following are true regarding activity-based costing?
A) A primary goal of using ABC is the accurate allocation of manufacturing overhead to product lines.
B) Under ABC, direct labor hours is never used to allocate overhead costs to activity pools or product lines.
C) The use of ABC is indicated when it is suspected that each of the firm's product lines consume approximately the same amount of overhead resources but the current allocation scheme assigns each line a substantially different amount.
D) ABC can be used in conjunction with process costing.
Q2) What are the total manufacturing overhead costs allocated to the Strollers for the current month?
A) $69,837.
B) $102,873.
C) $37,290.
D) $210,000.
Q3) What is the finished goods inventory at November 30? $___________
Q4) Activity-based costing tracks cost to the activities that consume resources.
A)True
B)False
Page 19
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Chapter 18: Process Costing
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Q1) The production cost report is an estimate of the equivalent units completed during the period.
A)True
B)False
Q2) For the month of June, the number of equivalent units of labor and overhead produced was:
A) 750.
B) 600.
C) 645.
D) 595.
Q3) The number of equivalent full units of production during a period may be greater than, equal to, or smaller than the actual number of units completed and transferred to the finished goods warehouse.
A)True
B)False
Q4) A process costing system is suitable for a company with a large volume of standard products produced on a relatively continuous basis, for example, golf balls or petroleum.
A)True
B)False
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Chapter 19: Costing and the Value Chain
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Q1) The suppliers and production component of the value chain would include all of the following costs except:
A) Direct production labor.
B) Production set-up.
C) Salaries for sales personnel.
D) Receipt of direct materials from suppliers.
Q2) In a just-in-time manufacturing system, reliable vendor relationships are essential only if the prices they charge are the lowest possible prices.
A)True
B)False
Q3) If Summit Products requires a 25% return on sales to undertake production, what is the target cost for the new widget?
A) $65.00.
B) $67.50.
C) $80.
D) Some other amount.
Q4) Consideration of all potential resources that will be consumed by a product from development through disposal. _______________________________
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Chapter 20: Cost-Volume-Profit Analysis
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Q1) If Rhinefold's monthly fixed costs increase by $8,500, what level of monthly sales revenue will be required to break-even? $__________.
Q2) In comparison to selling a product with a low contribution margin ratio, selling a product with a high contribution margin ratio always:
A) Requires less dollar sales volume to cover a given level of fixed costs.
B) Results in a greater margin of safety.
C) Results in higher operating income.
D) Results in a higher contribution margin per unit sold.
Q3) The high-low method is the only method to be used when determining semivariable costs.
A)True
B)False
Q4) A company with monthly revenue of $120,000, variable costs of $50,000, and fixed costs of $40,000 has a contribution margin of:
A) $120,000.
B) $80,000.
C) $70,000.
D) $35,000.
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Page 22
Chapter 21: Incremental Analysis
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Q1) The term "out-of-pocket cost" is often used to describe costs which have not yet been incurred and which may vary among alternative courses of action.
A)True
B)False
Q2) What will be the average per-unit manufacturing cost of the VCR, including repair costs, assuming that K Corp. does the repairs? $_____________ per unit
Q3) The net change in operating income resulting from a decision to manufacture MB-2 is (specify whether the change is an increase or a decrease): $_____________
Q4) In determining whether to scrap or to rebuild defective units of product, the cost already incurred in producing the defective units is not relevant.
A)True
B)False
Q5) The split-off point is the point at which joint products can be separated into two or more products.
A)True
B)False
Q6) Joint costs allocated to product EB total: $_____________
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Page 23
Chapter 22: Responsibility Accounting and Transfer Pricing
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Q1) The dollar amount used by one division which supplies a good or a service to another division within a company is called a:
A) Market price.
B) Transfer price.
C) Fair price.
D) Agreed-upon price.
Q2) All costs become traceable at some level of the organization.
A)True
B)False
Q3) In preparing an income statement that measures contribution margin and responsibility margin for a responsibility center, two concepts are applied in classifying costs. One is whether the costs are variable or fixed. The other is whether the costs are:
A) Product costs or period costs.
B) Traceable to the responsibility center.
C) Under the control of the manager.
D) Transfer prices.
Q4) Increase in responsibility margin that would be expected to result from a 10% increase in sales volume. $_____________
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24
Chapter 23: Operational Budgeting
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Q1) A budget prepared using the total quality management approach is always achievable by departments within a company.
A)True
B)False
Q2) The total quality management approach to budgeting sets budgeted amounts at levels that can be achieved through reasonably efficient operations.
A)True
B)False
Q3) The operating cycle is the average time required to manufacture products for sale.
A)True
B)False
Q4) Flexible budgeting may be viewed as combining the concepts of budgeting and:
A) Incremental analysis.
B) Product costing.
C) Cost-volume-profit analysis.
D) Financial statement analysis.
Q5) Explain what is meant by "profit rich, yet cash poor".
Q6) Discuss the benefits that a company may derive from a formal budgeting process.
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Chapter 24: Standard Cost Systems
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Q1) If the actual cost per pound of direct material is less than the standard cost per pound, there is:
A) A favorable materials price variance.
B) An unfavorable materials price variance.
C) A favorable materials quantity variance.
D) A favorable total materials variance.
Q2) If the hourly wage rate actually paid during January is higher than the standard rate, the result is:
A) An unfavorable labor rate variance.
B) A favorable labor rate variance.
C) An unfavorable labor efficiency variance.
D) A favorable total labor variance.
Q3) In a system designed to measure cost variances, goods transferred from the Work-in-Process account to the Finished Goods Inventory are valued at:
A) Actual cost.
B) Market value.
C) Standard cost.
D) The lower of actual cost or market value.
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26
Chapter 25: Rewarding Business Performance
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Q1) Define the measurement model known as the DuPont system used for evaluating business performance.
Q2) Assuming division Y's manager has an opportunity to undertake an investment that would require a $500,000 investment and yield $40,000 in net operating income for its product B, what would be the ROI for the entire division?
A) 11.0%.
B) 10%.
C) 9%.
D) 8%.
Q3) Morgan Company has a ROI of 5% and a capital turnover of 8%. What is its return on sales?
A) 133%.
B) 75%.
C) 62.5%.
D) Some other percentage.
Q4) The return on investment is calculated by multiplying the capital turnover by the return on sales.
A)True B)False
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Chapter 26: Capital Budgeting
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Q1) Which of the following factors does the payback method does NOT ignore?
A) Total profitability of an investment.
B) The cash flows over the entire life of an investment.
C) The timing of cash flows.
D) The initial investment.
Q2) In computing the return on average investment of a particular asset, the asset's annual depreciation expense may be viewed as:
A) An increase in the average amount invested over the life of the asset.
B) An increase in the asset's carrying value each year.
C) A recovery of the amount originally invested in the asset.
D) A decrease in the asset's net cash flows.
Q3) Capital budgeting estimates often involve a considerable degree of uncertainty.
A)True
B)False
Q4) The payback period for this proposed investment is:
A) 4.5 years.
B) Twelve years.
C) Six years.
D) Two years.
Q5) Payback period: ____________ years
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Chapter 28: Forms of Business Organization
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Q1) The entry to record the issuance of 100 shares of capital stock in exchange for $1,000 cash includes a debit to Capital Stock.
A)True
B)False
Q2) A corporation, as well as a partnership, must file a corporate income tax return and pay tax on its earnings.
A)True B)False
Q3) When a corporation receives cash or other assets from its owners in a sale of capital stock, it records these investment transactions by crediting Retained Earnings.
A)True
B)False
Q4) Income taxes to a partnership:
A) Are an obligation of the partnership.
B) Are an obligation to each partner only when cash is received.
C) Are an obligation to each partner based on their share of profits.
D) Are not an obligation to each partner since a partnership does not pay tax.
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Chapter 27: The Time Value of Money: Future Amounts and
Present Values Answer Key
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/78576
Sample Questions
Q1) The future amount of an annuity is calculated by multiplying the present value of the annuity by its applicable factor from a table.
A)True
B)False
Q2) The present value of an ordinary annuity is the amount that equals payments made at the end of successive equal periods is worth today.
A)True
B)False
Q3) The future value of an annuity is:
A) Always more than the present value.
B) Always less than the present value.
C) Equal to the present value.
D) Double the present value.
Q4) The future value of an investment gradually increases toward the present amount. A)True
B)False
Q5) An annuity due assumes the cash flow will occur at the beginning of the period.
A)True
B)False
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