Managerial Accounting Exam Bank
Course Introduction
Managerial Accounting focuses on the use of accounting information by managers within organizations to inform business strategy, decision-making, and planning. The course covers key concepts such as cost behavior, budgeting, performance evaluation, variance analysis, and cost-volume-profit relationships. Students learn to prepare and interpret internal financial reports, analyze operational efficiency, and support strategic decision processes. Emphasis is placed on how accounting data aids in solving practical business problems, managing resources, and achieving organizational objectives.
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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Sample Questions
Q1) Prepare a November 30 balance sheet in proper form for Green Bay Delivery Service from the following alphabetical list of the accounts at November 30: \(\begin{array}{|l|r|}
\hline\text { Accounts receivable } & \$ 10,000 \\
\hline \text { Accounts payable } & 18,000 \\
\hline \text { Building } & 28,000 \\
\hline \text { Common stock } & 30,000 \\
\hline \text { Cash } & 8,000 \\
\hline \text { Notes payable } & 45,000 \\
\hline \text { Office equipment } & 12,000 \\
\hline \text { Retained earnings } & ? \\
\hline \text { Trucks } & 55,000\\
\hline
\end{array}\)
Answer: 11ea8897_df67_9cc2_a96f_5dd70094c981_TB6312_00_TB6312_00_TB6312_00
Q2) The accounting equation can be restated as: Assets - Equity = Liabilities.
A)True
B)False
Answer: True
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Chapter 2: Analyzing and Recording Transactions
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Q1) An account format that is similar to a T-account in that it has columns for debits and credits but that is different in that it has columns for transaction date,explanation,and the account balance is the ___________________________________.
Answer: balance column account
Q2) A $72,000 receipt of cash from a customer paying on their account was recorded as a $72,000 debit to Accounts Receivable.Assuming this journal entry was posted,what correcting entry (if any)is needed?
A) Debit Cash and credit Accounts Receivable for $72,000 each.
B) Debit Cash and credit Accounts Receivable for $144,000 each.
C) Credit Cash and debit Accounts Receivable for $72,000 each.
D) Credit Cash and debit Accounts Receivable for $144,000 each.
E) No correcting entry is needed for this transaction.
Answer: B
Q3) The debt ratio reflects the risk of a company to both its owners and creditors.
A)True
B)False
Answer: True
Q4) Revenues and expenses are two categories of ____________________ accounts.
Answer: equity
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Chapter 3: Adjusting Accounts and Preparing Financial Statements
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Q1) The last four steps in the accounting cycle include preparing the adjusted trial balance,preparing financial statements,and recording closing and adjusting entries.
A)True
B)False
Answer: False
Q2) Depreciation expense is an example of an accrued expense.
A)True
B)False
Answer: False
Q3) The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the retained earnings account is the:
A) Income Summary account
B) Closing account
C) Balance column account
D) Contra account
E) Nominal account
Answer: A
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Chapter 4: Accounting for Merchandising Operations
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Q1) A company's cost of goods sold was $4,000.Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000.
A) Net Purchases: $15,000; ending inventory: $7,000
B) Net Purchases: $10,000; ending inventory: $15,000
C) Net Purchases: $9,000; ending inventory: $6,000
D) Net Purchases: $6,000; ending inventory: $7,000
E) Net Purchases: $16,000; ending inventory: $20,000
Q2) A period's ___________________ becomes the next period's beginning inventory.
Q3) A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:
A) 4.2%
B) 24.1%
C) 75.9%
D) $83,750
E) $264,050
Q4) Cost of goods sold is reported on both the income statement and the balance sheet.
A)True B)False
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Chapter 5: Inventories and Cost of Sales
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Q1) Given the following information,determine the cost of ending inventory at June 30 using the LIFO perpetual inventory method.Assume this is the first month of the company's operations.
June 1: 15 units were purchased at $20 per unit.
June 15: 12 units were sold.
June 29: 8 units were purchased for $25 per unit.
A) $200
B) $220
C) $260
D) $275
E) $300
Q2) The reliability of the gross profit method depends on a good estimate of the gross profit ratio.
A)True
B)False
Q3) What is the effect of an error in the ending inventory balance on the income statement?
Q4) Explain why the lower of cost or market rule is used to value inventory.
Q5) What costs are assigned to merchandise inventory?
Q6) Identify and describe the four inventory valuation methods.
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Chapter 6: Cash and Internal Controls
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Q1) The number of days' sales uncollected:
A) Is used to evaluate the liquidity of receivables.
B) Is calculated by dividing accounts receivable by sales.
C) Measures a company's ability to pay its bills on time.
D) Measures a company's debt to income.
E) Is calculated by dividing sales by accounts receivable.
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) Cash,not including cash equivalents,includes:
A) Postage stamps.
B) Coins, currency, and checking accounts.
C) IOUs.
D) Two-year certificates of deposit.
E) Money market funds.
Q4) At the end of the current period,a company reported $475,000 in net credit sales and $75,000 in ending accounts receivable.Calculate this company's days' sales uncollected at the end of the current period.
Q5) Explain the differences between cash and cash equivalents.
Q6) List the main principles of internal controls.
Page 8
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Chapter 7: Accounts and Notes Receivable
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Sample Questions
Q1) A company borrowed $5,000 by signing a three-month promissory note at 10%.The total interest on the note is $500.
A)True
B)False
Q2) The person to whom a note is payable to is known as the ______________.
Q3) The accounts receivable turnover ratio indicates how often accounts receivable are received and collected during the period.
A)True
B)False
Q4) The accounts receivable turnover is calculated by:
A) Dividing net sales by average accounts receivable.
B) Dividing net sales by average accounts receivable and multiplying by 365.
C) Dividing average accounts receivable by net sales.
D) Dividing average accounts receivable by net sales and multiplying by 365.
E) Dividing net income by average accounts receivable.
Q5) Writing off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used,a company should debit _______________________ and credit accounts receivable.
Q6) Explain how to record the receipt of a note receivable.
Page 9
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Chapter 8: Long-Term Assets
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Q1) A machine originally had an estimated useful life of 5 years,but after 3 complete years it was decided that the original estimate of useful life should have been 10 years.At that point the remaining cost to be depreciated should be allocated over the remaining:
A) 2 years
B) 5 years
C) 7 years
D) 8 years
E) 10 years
Q2) A company had net sales of $789,765 and average assets of $658,137.Calculate the company's total asset turnover.
Q3) Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate and is reflected in the past,current,and future financial statements.
A)True
B)False
Q4) The _____________________ principle requires that companies report the amount of accumulated depreciation on plant assets as well as the depreciation methods used to determine the annual depreciation expense.
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Chapter 9: Current Liabilities
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Sample Questions
Q1) FICA taxes include:
A) Social Security taxes
B) Charitable giving
C) Employee income taxes
D) Unemployment taxes
E) Federal taxes
Q2) ____________________________ are banks authorized to accept deposits of amounts payable to the federal government,including amounts due for payroll taxes.
Q3) FUTA requires employers to pay a federal unemployment tax on the first $7,000 in salary or wages paid to each employee.
A)True
B)False
Q4) A company had income before interest expense and income taxes of $176,000 and its interest expense is $55,000.Calculate the company's times interest earned ratio.
Q5) A payroll register is a cumulative record of an employee's hours worked,gross earnings,deductions,and net pay.
A)True B)False
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Chapter 10: Long-Term Liabilities
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Sample Questions
Q1) Using the debt to equity ratio,which of the following franchises would be assessed as having the riskiest financing structure?
\[\begin{array} { | l | c | c | c | c | c | }
\hline & \text { Franchise } & \text { Franchise } & \text { Franchise } & \text { Franchise } & \text { Franchise } \\ & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\
\hline \text { Total liabilities } & \$ 240,000 & \$ 120,000 & \$ 300,000 & \$ 500,000 & \$
270,000 \\
\hline \text { Total equity } & \$ 60,000 & \$ 20,000 & \$ 150,000 & \$ 100,000 & \$ 9 0 , 0 0 0 \\
\hline
\end{array}\]
A) Franchise A
B) Franchise B
C) Franchise C
D) Franchise D
E) Franchise E
Q2) Describe the recording procedures for the issuance,retirement,and paying of interest for notes.
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Page 12
Chapter 11: Corporate Reporting and Analysis
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Q1) The total amount of cash and other assets received by a corporation from its stockholders in exchange for common stock is:
A) Always equal to its par value.
B) Always equal to its stated value.
C) Referred to as contributed capital.
D) Referred to as retained earnings.
E) Always below its stated value.
Q2) The _______________________ protects stockholders' proportional interest in a corporation by allowing them to purchase their proportional share of any common stock later issued by the corporation.
Q3) On May 1,a company's board of directors declared a 10% stock dividend to be distributed on June 1 to the stockholders of record on May 21.The company had 250,000 shares of $10 par value common stock outstanding with a market value of $22 per share.Prepare the journal entries required on May 1,May 21,and June 1.
Q4) No-par stock to which the directors assign a value per share is called
Q5) The journal entry to record distribution of a cash dividend to common shareholders includes a debit to _______________________ and a credit to __________.
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Chapter 12: Reporting Cash Flows
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Q1) Cash flow amounts and their timing should be examined when planning and analyzing operating activities.
A)True
B)False
Q2) A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:
A) Operating activities
B) Investing activities
C) Financing activities
D) Direct activities
E) Indirect activities
Q3) Noncash financing and investing activities are disclosed in the ____________ or in a separate ______________________________.
Q4) Describe the format of the statement of cash flows,including the reporting of significant noncash investing and financing activities.
Q5) When preparing the operating section of the statement of cash flows using the indirect method,noncash expenses are _____________ net income.
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Chapter 13: Analysis of Financial Statements
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Sample Questions
Q1) The return on total assets can be calculated as the profit margin times the total asset turnover.
A)True
B)False
Q2) The evaluation of company performance and financial condition includes evaluation of (1)past and current performance,(2)current financial position,and (3)future performance and risk.
A)True
B)False
Q3) Explain where the following item should appear in the financial statements of a corporation:
One of the company's plants was destroyed by an earthquake.The area has never reported an earthquake.The amount of the loss,net of tax,was $850,000.
Q4) General standards of comparisons (rules-of-thumb)are developed from:
A) Industry statistics from the government.
B) Past experience.
C) Analysis of competitors.
D) Relations between financial items.
E) Dun and Bradstreet.
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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) Which of the following statements regarding fraud is true?
A) Fraud is a deliberate act.
B) Fraud can be deliberate or unintentional.
C) A company with a strong code of ethics can eliminate fraud.
D) A company with strong internal controls can eliminate fraud.
E) The most common type of fraud is financial statement fraud.
Q3) Products that are in the process of being manufactured but are not yet complete are called:
A) Raw materials inventory.
B) Conversion costs.
C) Cost of goods sold.
D) Goods in process inventory.
E) Finished goods inventory.
Q4) Identify the three categories of manufacturing costs.
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Chapter 15: Job Order Costing and Analysis
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Q1) When factory payroll for indirect labor is assigned,__________________ is debited.
Q2) The file of job cost sheets for completed but undelivered jobs equals the balance in the Goods in Process Inventory account.
A)True
B)False
Q3) Under a job order cost accounting system,individual jobs are always charged with actual overhead costs when they are transferred to finished goods.
A)True
B)False
Q4) Explain how a service firm,such as an advertising agency,might use job order costing.
Q5) A job order cost accounting system would best fit the needs of a company that makes:
A) Shoes and apparel.
B) Paint.
C) Cement.
D) Custom machinery.
E) Pencils and erasers.
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Chapter 16: Process Costing
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Q1) Describe the flow of labor in a process cost accounting system,including accounts used.
Q2) A department had 12,500 units that were 20% complete in beginning Goods in Process Inventory.During the current period 60,000 units were transferred in.Ending Goods in Process Inventory was 15,000 units that were 70% complete.Assume this company uses the weighted-average method of process costing and direct material is added uniformly throughout the process.What are the equivalent units produced with respect to direct material?
A) 65,500
B) 57,500
C) 37,000
D) 47,500
E) 68,000
Q3) Materials and labor costs that are clearly associated with a specific process are known as ___________________.Those costs that are not clearly associated with a specific process are called ________________.
Q4) What was the cost of goods transferred out of the Grating Department and into the Bagging Department?
Q5) What was the cost of the direct materials used in the Grating Department?
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Chapter 17: Activity-Based Costing and Analysis
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Q1) By definition,costs classified as overhead are consumed in basically the same manner regardless of the process involved.
A)True
B)False
Q2) Compute Aztec's departmental overhead rate for the baking department based on direct labor hours.
A) $1.50 per DLH
B) $5.00 per DLH
C) $0.75 per DLH
D) $0.50 per DLH
E) $2.08 per DLH
Q3) ABC can be used to assign costs to any cost object that is of management interest.
A)True
B)False
Q4) A cost pool is a collection of costs that are related to the same or similar activity. A)True B)False
Q5) What are the major advantages of using a plantwide overhead rate?
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Chapter 18: Cost-Volume-Profit Analysis
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Sample Questions
Q1) The contribution margin per unit expressed as a percentage of the product's selling price is the:
A) Volume variance.
B) Margin of safety.
C) Contribution margin ratio.
D) Break-even point.
E) Rate of return on sales.
Q2) Cost-volume-profit analysis cannot be used when a firm produces and sells more than one product.
A)True
B)False
Q3) A graph used to analyze past cost behaviors by displaying costs and volume levels for each period as points on the diagram is called a:
A) Least-squares diagram.
B) Step-wise diagram.
C) Scatter diagram.
D) Break-even diagram.
E) Composite diagram.
Q4) What is the high-low method? Briefly describe how it is applied.
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Chapter 19: Variable Costing and Performance Reporting
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Q1) Given the following data,calculate product cost per unit under absorption costing.
\(\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 7 \text { per unit } \\
\hline \text { Direct materials } & \$ 1 \text { per unit } \\
\hline \text { Overhead } & \\
\hline \text { Total variable overhead } & \$ 20,000 \\
\hline \text { Total fixed overhead } & \$ 90,000 \\
\hline & \\
\hline \text { Expected units to be produced } & 40,000 \text { units } \\
\hline
\end{array}\)
A) $8 per unit
B) $8.50 per unit
C) $10.25 per unit
D) $10.75 per unit
E) $12 per unit
Q2) What is a contribution margin report?
Q3) What is the formula to compute break-even volume in units?
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Page 21
Chapter 20: Master Budgets and Performance Planning
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Q1) If each unit of Kyoto's product takes two hours to produce and the labor rate is expected to be $10 per hour,what is the budgeted labor cost for the second quarter?
A) $16,400
B) $17,280
C) $9,840
D) $8,960
E) $17,560
Q2) Operating budgets include all the following budgets except the:
A) Sales budget.
B) Selling expense budget.
C) Cash budget.
D) Merchandise purchases budget.
E) General and administrative expense budget.
Q3) The task of preparing a budget should be the sole task of the most important department in an organization.
A)True
B)False
Q4) What are rolling budgets? Why are rolling budgets prepared?
Q5) What is a sales budget? How is the sales budget prepared?
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Chapter 21: Flexible Budgets and Standard Costs
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Q1) A planning budget based on a single predicted amount of sales or production volume is called a:
A) Sales budget.
B) Standard budget.
C) Flexible budget.
D) Fixed budget.
E) Variable budget.
Q2) Use the following data to find the total direct labor cost variance: \(\begin{array}{ll}
\text { Direct labor standard (4 hrs. @ } & \text { \$28 per unit } \\
\text { \$7/hr.) } & \\
\text { Actual hours worked per unit } & \text { 3.5 hours } \\
\text { Actual units produced } & 3,500 \text { units } \\
\text { Actual rate per hour } & \$ 7.50 \end{array}\)
A) $6,125 unfavorable
B) $7,000 unfavorable
C) $7,000 favorable
D) $12,250 favorable
E) $6,125 favorable
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Chapter 22: Decentralization and Performance Measurement
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Q1) Cycle time is the sum of _____________ plus ____________ plus __________ plus ______________.
Q2) In producing oat bran,the joint cost of milling the oats into bran,oatmeal,and animal feed is considered a direct cost to the oat bran,because the oat bran cannot be produced without incurring the joint cost.
A)True
B)False
Q3) Describe the information found on a responsibility accounting performance report.
Q4) An expense that does not require allocation between departments is a(n):
A) Common expense.
B) Indirect expense.
C) Direct expense.
D) Administrative expense.
E) Overhead expense.
Q5) What is a profit center?
Q6) The concepts of direct expenses and controllable costs are essentially the same.
A)True
B)False
Page 24
Q7) What is the main difference between a cost center and a profit center?
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Chapter 23: Relevant Costing for Managerial Decisions
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Q1) If Parker wishes to earn $1,250 on the special order,the size of the order would need to be:
A) 4,500 units.
B) 2,250 units
C) 1,125 units
D) 625 units
E) 300 units
Q2) Good management accounting indicates that projects be evaluated using relevant data.In choosing among alternatives,what factors (considerations)are relevant?
Q3) The concept of incremental cost is the same as the concept of differential cost.
A)True
B)False
Q4) Which of the following should be classified as production costs?
A) Direct materials and selling costs.
B) Direct labor and administrative costs.
C) Manufacturing overhead and selling and administrative costs.
D) Direct materials, direct labor, and selling and administrative costs.
E) Direct materials, direct labor, and manufacturing overhead.
Q5) Relevant costs are also known as ___________________.
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Chapter 24: Capital Budgeting and Investment Analysis
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Q1) The process of restating future cash flows in terms of their present value is called
Q2) A company is considering the purchase of a new piece of equipment for $90,000.Predicted annual cash inflows from this investment are $36,000 (year 1); $30,000 (year 2); $18,000 (year 3); $12,000 (year 4); and $6,000 (year 5).The payback period is:
A) 4.50 years
B) 4.25 years
C) 3.50 years
D) 3.00 years
E) 2.50 years
Q3) Accounting rate of return is the simplest capital budgeting method.It gives managers an estimate of how soon they will recover their initial investment.
A)True
B)False
Q4) Capital budgeting is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell.
A)True
B)False
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Chapter 25: Accounting With Special Journals
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Q1) Individual transactions in the sales journal are regularly posted to customer accounts in the accounts payable ledger.
A)True
B)False
Q2) Under the perpetual inventory system,special journals are not required.
A)True
B)False
Q3) _______________________ are links among computers giving different users and different computers access to common databases and programs.
Q4) A ____________________ is a part of a company that is separately identified by its products or services or by the geographic market it serves.
Q5) A __________________ is an all-purpose journal that can record any transaction.
Q6) An advantage of online processing is up-to-date databases.
A)True
B)False
Q7) The difference in the sales journal between the perpetual and periodic inventory systems is a column to record ___________________________ and __________________ for each sale that is used in the perpetual system but not in the periodic.
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Chapter 26: Time Value of Money
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Q1) Crowe Company has acquired a building with a loan that requires payments of $20,000 every six months for five years.The annual interest rate on the loan is 12%.What is the present value of the building?
A) $72,096
B) $113,004
C) $147,202
D) $86,590
E) $200,000
Q2) A company has $50,000 today to invest in a fund that will earn 7%.How much will the fund contain at the end of eight years?
Q3) When you reach retirement age,you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702.The fund will earn 6% per year.For how many years will you be able to draw an even amount of $14,702?
Q4) Explain the concept of the present value of a single amount.
Q5) The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.
A)True
B)False
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Chapter 27: Investments and International Operations
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Sample Questions
Q1) A company paid $500,000 for 12% bonds with a par value of $500,000.The bonds pay 6% interest semiannually on September 1 and March 1.The company intends to hold the bonds until they mature.Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1)Bonds purchased on September 1,2012.
(2)Year-end adjusting entry,December 31,2012.
(3)Receipt of semiannual interest March 1,2013.
(4)Redemption of the bonds at maturity on August 31,2019.
Q2) Investments in trading securities are always classified as ______________ and are reported as _______________ on the balance sheet.
Q3) Detalo Co.held bonds of Schooner Corp.with a cost of $125,000 and a market value of $127,000.Detalo also held 1,500 shares of Tranco common stock with a cost of $25,000 and a market value of $24,700.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of December 31.
Q4) What is comprehensive income and how is it usually reported in the financial statements?
Q5) Return on total assets is computed by dividing ___________ by __________.
Q6) Explain how to record the sale of trading securities.
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Chapter 28: Accounting for Partnerships
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $35,000 cash.Lepley has exceptional talents that will enhance the partnership.Conley's and Liu's capital account balances are $55,000 each.The partners have agreed to share income or loss equally.Prepare the general journal entry to record the admission of Lepley to the partnership.
Q2) What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.
Q3) The withdrawals account of each partner is:
A) Closed to that partner's capital account with a credit.
B) Closed to that partner's capital account with a debit.
C) A permanent account that is not closed.
D) Credited with that partner's share of net income.
E) Debited with that partner's share of net loss.
Q4) The equity section of the balance sheet of a partnership can report the separate capital account balances of each partner.
A)True
B)False
Q5) The life of a partnership is ____________________ in duration.
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