Managerial Accounting Exam Practice Tests
Course Introduction
Managerial Accounting explores the principles and techniques used by managers to make informed business decisions. The course covers key topics such as cost behavior analysis, budgeting, standard costing, performance evaluation, and decision-making processes specific to operational planning and control. Students learn how to interpret financial data, prepare internal reports, and utilize accounting information for strategic planning, resource allocation, and the enhancement of organizational efficiency. Emphasis is placed on the application of accounting concepts to real-world business scenarios, enabling students to develop critical thinking and problem-solving skills relevant to managerial roles.
Recommended Textbook
Survey of Accounting 5th Edition by Thomas P Edmonds
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16 Chapters
1698 Verified Questions
1698 Flashcards
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Chapter 1: An Introduction to Accounting
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Glavine Company repaid a bank loan with cash. The cash flow from this event should be shown on the horizontal statements model as:
A) an operating activity that decreases cash, decreases equity, and decreases net income.
B) a financing activity that decreases cash and decreases liabilities.
C) a financing activity that decreases cash, decreases equity, and decreases net income.
D) an investing activity that decreases cash and decreases liabilities.
Answer: B
Q2) Which of the following is not an asset use transaction?
A) Paying cash dividends
B) Paying cash expenses
C) Paying off the principal of a loan
D) Paying cash to purchase land
Answer: D
Q3) The value created by a business may be called assets.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Accounting for Accruals and Deferrals
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77 Flashcards
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Sample Questions
Q1) Adjusting entries never affect a business's cash account.
A)True
B)False
Answer: True
Q2) Which of the following would cause net income on the accrual basis to be different from (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?
A) Purchased land for cash.
B) Purchased supplies for cash.
C) Paid advertising expense.
D) Paid dividends to stockholders.
Answer: B
Q3) Revenues and expenses are temporary accounts.
A)True
B)False
Answer: True
Q4) Accrual-basis accounting often fails to match expenses with revenues.
A)True
B)False
Answer: False
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Chapter 3: Accounting for Merchandising Businesses
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) A common size income statement is prepared by dividing all amounts on the statement by net income.
A)True
B)False
Answer: False
Q2) Faust Company uses the perpetual inventory method. Faust sold goods that cost $2,300 for $3,600. If the sale was made on account, the net effect of the sale will:
A) increase total assets by $2,300.
B) increase total equity by $3,600.
C) increase total assets by $1,300.
D) increase total assets by $3,600.
Answer: C
Q3) Which of the following account titles is normally used in a periodic inventory system?
A) Transportation-in
B) Purchases
C) Purchase Returns and Allowances
D) All of these answer choices are normally used.
Answer: D
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5
Chapter 4: Internal Controls, Accounting for Cash, and Ethics
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79 Flashcards
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Sample Questions
Q1) In establishing a strong internal control system at Banks Company, management is concerned with administrative controls. Administrative controls include:
A) performance evaluation.
B) accuracy of the recording procedures.
C) keeping cash in a safe.
D) maintenance of accurate inventory records.
Q2) Which of the following is not a primary role of an independent auditor?
A) Assume legal and professional responsibilities to the public
B) Advise client on tax strategies
C) Determine whether a company's financial statements are materially correct
D) All of these answer choices are correct.
Q3) A savings account or certificate of deposit that imposes a substantial penalty for early withdrawals should not be classified as Cash on the balance sheet.
A)True
B)False
Q4) An error is considered material if it would trigger an IRS audit.
A)True
B)False
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Chapter 5: Accounting for Receivables and Inventory Cost Flow
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) The Internal Revenue Service allows a company to use LIFO for income tax purposes only if it also uses LIFO for financial reporting.
A)True
B)False
Q2) Indicate whether each of the following statements is true or false.
_____ a) To compute cost of goods sold under the weighted average method, it is necessary to first compute the weighted-average cost per unit.
_____ b) The weighted average cost per unit is computed by dividing the total cost of goods purchased by the number of units sold.
_____ c) Under the FIFO method, each time units are sold the unit cost of the oldest inventory is applied to the number of units sold.
_____ d) Under a perpetual inventory system, it is not possible to use the LIFO method of cost flow.
_____ e) A U.S. company can use LIFO for income tax purposes only if it also uses LIFO for financial reporting purposes.
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Page 7
Chapter 6: Accounting for Long-Term Operational Assets
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Sample Questions
Q1) Which of the following terms is used to identify the expense recognition for intangible assets?
A) Allocation.
B) Depletion.
C) Depreciation.
D) Amortization.
Q2) On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $36,000. The cab has an expected salvage value of $2,000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 45,000 miles the first year and 48,000 the second year. What would be the depreciation expense reported on the Year 2 income statement and the book value of the taxi, respectively, at the end of Year 2?
A) $8,640 and $19,260
B) $8,640 and $17,260
C) $8,160 and $20,190
D) $8,160 and $18,190
Q3) Tangible assets include land, equipment, and goodwill.
A)True
B)False
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Page 8
Chapter 7: Accounting for Liabilities
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126 Flashcards
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Sample Questions
Q1) On January 1, Year 1, The Hanover Corporation issued $70,500 of 8%, 5-year bonds at 97. Hanover uses the straight-line method of bond discount amortization. The interest payments are due on December 31 each year. How much interest expense will Hanover report on its income statement on December 31, Year 1?
A) $423
B) $2,115
C) $5,640
D) $6,063
Q2) Which of the following is a claims exchange transaction?
A) Accrued interest on a note payable.
B) Issued a note to purchase equipment.
C) Repaid principal on a note payable.
D) Paid interest on a note payable.
Q3) Vogle Company purchased $8,000 of equipment by making a $500 down payment and issuing a note for the remainder. As a result of this event, assets increased by $8,000.
A)True
B)False
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Chapter 8: Proprietorships, Partnerships, and Corporations
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94 Flashcards
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Sample Questions
Q1) Which of the following is not considered an advantage of the corporate form of business organization?
A) Ability to raise capital.
B) Continuity of existence.
C) Ease of transferability of ownership.
D) Lack of government regulation.
Q2) Proprietorships are not separate legal entities; their earnings are taxable to the owners and not to the business itself.
A)True
B)False
Q3) Weller Corporation issued 10,000 shares of no-par common stock for $25 per share. This event increases the common stock account by $250,000.
A)True
B)False
Q4) Preferred stockholders' claims to a corporation's assets take precedence over the claims of some creditors.
A)True
B)False
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Chapter 9: Financial Statement Analysis
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108 Flashcards
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Sample Questions
Q1) Which of the following statements regarding the quick ratio is incorrect?
A) The quick ratio is also known as the acid-test ratio.
B) The quick ratio ignores some current assets that are less liquid than others.
C) The quick ratio is a conservative variation of the current ratio.
D) The quick ratio equals quick assets divided by total liabilities.
Q2) A limitation of financial statement analysis stems from the discretion of management to choose accounting procedures that cast the best light on the firm's performance.
A)True
B)False
Q3) Solvency ratios are used to assess a company's:
A) Long-term debt paying ability.
B) Profitability.
C) Short-term debt paying ability.
D) Efficiency in use of its assets.
Q4) The accounts receivable turnover ratio can be used to asses a firm's solvency.
A)True
B)False
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Chapter 10: An Introduction to Management Accounting
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111 Flashcards
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Sample Questions
Q1) During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit. What is the amount of gross margin for the first year?
A) $15,000
B) $24,000
C) $20,000
D) $45,000
Q2) The philosophy of encouraging workers to achieve zero defects and high customer satisfaction is known as total quality management.
A)True
B)False
Q3) A merchandising business paid $2,500 to purchase inventory and $50 to have the inventory delivered to its customers. Its product costs were $2,550.
A)True
B)False
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Page 12
Chapter 11: Cost Behavior, Operating Leverage, and Profitability Analysis
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) The magnitude of operating leverage for Perkins Corporation is 4.5 when sales are $100,000. If sales increase to $110,000, profits would be expected to increase by what percent?
A) 4.5%
B) 14.5%
C) 45%
D) 10%
Q2) Newton Company currently produces and sells 4,000 units of a product that has a contribution margin of $6 per unit. The company sells the product for a sales price of $20 per unit. Fixed costs are $18,000. The company is considering investing in new technology that would decrease the variable cost per unit to $8 per unit and double total fixed costs. The company expects the new technology to increase production and sales to 9,000 units of product. What sales price would have to be charged to earn a $99,000 desired profit assuming the investment in technology is made?
A) $22
B) $23
C) $15
D) $13
Q3) Operating leverage
Page 13
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Chapter 12: Cost Accumulation, Tracing, and Allocation
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103 Flashcards
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Sample Questions
Q1) Which of the following is not a true statement regarding the pooling of indirect costs?
A) Costs that have been pooled for one purpose may require disaggregation for a different purpose.
B) Pooling costs that have different cost drivers may result in unreliable cost allocation.
C) A single cost pool will have more than one cost driver for different cost objects.
D) Pooled costs may require disaggregation when allocating costs for different purposes.
Q2) The first step in cost accumulation is to identify cost objects.
A)True
B)False
Q3) Indirect costs are often pooled, and not allocated individually because:
A) individual allocation would be more timely.
B) individual allocation would be more accurate.
C) individual allocation would be tedious.
D) the benefits of individual allocation of indirect costs are greater than the costs.
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Chapter 13: Relevant Information for Special Decisions
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104 Flashcards
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Sample Questions
Q1) Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living's variable manufacturing costs. Variable selling and administrative costs would be unaffected. What is the minimum price that Outdoor Living should accept for the special order?
A) A price equivalent to the hammock's variable manufacturing cost per unit
B) A price equivalent to the hammock's unit contribution margin
C) The same price that Outdoor Living charges its existing customers
D) None of the above.
Q2) Which of the following costs is an example of a batch-level cost?
A) Assembly setup costs
B) Materials handling costs
C) Shipping and handling costs to ship an order to a customer
D) All of the above.
Q3) Equipment should be evaluated for possible replacement only as it nears the end of its useful life.
A)True
B)False
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15
Chapter 14: Planning for Profit and Cost Control
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Sample Questions
Q1) Select the correct statement regarding the selling and administrative (S&A) expense budget.
A) The S&A budget is prepared after the sales budget.
B) The S&A budget is prepared before the cash budget.
C) The S&A budget is prepared before the pro forma income statement.
D) All of the answers are correct.
Q2) Although only 20 units are on hand at the beginning of the year, World Company plans to sell 100 units during Year 2. Assuming the company desires an ending inventory of 10 units, it should plan to purchase 110 units.
A)True
B)False
Q3) What information does the sales budget provide for pro forma financial statements?
A) Total budgeted sales to be used on the pro forma income statement
B) Cash collections from customers to be used on the pro forma balance sheet
C) The ending balance in accounts payable which appears on the pro forma balance sheet
D) All of the answers are correct.
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Chapter 15: Performance Evaluation
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Sample Questions
Q1) Volume variances are computed for which of the following costs?
A) Fixed manufacturing costs only
B) Variable selling and administrative costs only
C) Variable manufacturing and selling and administrative costs
D) Variable manufacturing costs only
Q2) The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units and average selling price was $6.12. The sales revenue flexible budget variance was:
A) $6,120 favorable.
B) $6,000 unfavorable.
C) $17,880 favorable.
D) $17,880 unfavorable.
Q3) The research and development department of Apple Computers would likely be organized as:
A) A profit center.
B) A cost center.
C) A revenue center.
D) An investment center.
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17
Chapter 16: Planning for Capital Investments
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Sample Questions
Q1) Which of the following is not a major cash inflow from a capital investment?
A) Incremental revenue
B) Increase in working capital
C) Cost savings
D) Salvage value
Q2) The review of a capital budgeting decision to determine whether a project was accepted that should have been rejected is referred to as:
A) an audit.
B) a preaudit.
C) a postaudit.
D) a capital review.
Q3) The cost of capital represents the maximum acceptable rate of return that a capital investment should earn.
A)True
B)False
Q4) When a capital investment is expected to provide unequal annual cash inflows, the payback period cannot be calculated.
A)True
B)False
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