Managerial Accounting Exam Practice Tests
Course Introduction
Managerial Accounting focuses on the internal use of accounting information by managers for planning, decision-making, and control within organizations. This course covers the analysis and interpretation of cost behavior, budgeting, performance evaluation, and relevant cost concepts. Students will learn how managerial accounting supports strategic objectives, enhances operational efficiency, and facilitates informed business decisions. Topics include cost-volume-profit analysis, standard costing, variance analysis, and the use of accounting data in short-term and long-term planning. Emphasis is placed on practical applications and problem-solving using real-world business scenarios.
Recommended Textbook Cornerstones of Managerial Accounting 5th Edition by Maryanne M. Mowen
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2824 Verified Questions
2824 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Accountants that have a Certificate in Public Accounting (CPA):
A) are the only accountants permitted to serve as external auditors.
B) must pass a national examination and be licensed by the state in which they practice.
C) may be held responsible to provide assurance concerning the reliability of a firm's financial statements.
D) all of these statements are true.
Answer: D
Q2) Which of the following areas is not emphasized on the CMA examination?
A) external auditing and business law
B) economics, finance, and management
C) decision analysis and information systems
D) financial accounting and reporting
Answer: A
Q3) Managerial Accounting is designed primarily for internal users.
A)True
B)False
Answer: True
Q4) The ____________________ is responsible for the finance function.
Answer: treasurer
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Chapter 2: Basic Managerial Accounting Concepts
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247 Flashcards
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Sample Questions
Q1) The unit cost
A) is the total product costs divided by the number of units produced.
B) includes period costs.
C) is the total prime costs divided by the number of units produced.
D) is the total conversion costs divided by the number of units produced.
Answer: A
Q2) Operating income equals
A) sales revenue - cost of goods sold - selling and administrative expense
B) gross margin - selling expenses
C) sales revenue - cost of goods sold
D) sales revenue - selling and administrative expenses
Answer: A
Q3) If beginning work-in-process inventory is $120,000, ending work-in-process inventory is $160,000, cost of goods manufactured is $400,000 and direct materials used are $100,000, what are the conversion costs?
A) $140,000
B) $280,000
C) $300,000
D) $340,000
Answer: D
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Chapter 3: Cost Behavior
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237 Flashcards
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Sample Questions
Q1) factory supplies
A)variable
B)fixed
Answer: A
Q2) Which of the following would probably be a fixed cost in a fast-food restaurant?
A) cost of hamburger
B) cost of french fries
C) shift manager's salary
D) utility cost
Answer: C
Q3) A fixed cost within the relevant range
A) increases in total as output decreases.
B) does not change in total as output changes.
C) decreases in total as output increases.
D) All of these are correct.
Answer: B
Q4) factory insurance
A)variable
B)fixed
Answer: B
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) The _________________________ is the proportion of each sales dollar available to cover fixed costs and provide for profit.
Q2) Refer to Figure 4-6. What is Shorter's revised expected operating income for the coming year?
A) $192,400
B) $156,000
C) $312,000
D) $130,000
E) $62,400
Q3) It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.
A)True
B)False
Q4) The quantity at which two systems produce the same operating income is referred to as the ___________________.
Q5) The _________________ is the units sold or the revenue earned above the break-even volume.
Page 6
Q6) __________ is the relative combination of products being sold by a firm.
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) There are other source documents besides the time ticket and the material requisition form used to fill out the job-order cost sheet.
A)True
B)False
Q2) A __________________________ is used by the cost accounting department to enter the cost of direct materials onto the correct job-order cost sheet.
Q3) Brady Corporation has estimated overhead to be $250,000 for the year based on an estimated amount of direct labor hours of 40,000. Actual direct labor hours for the year are 41,500 and actual overhead is $258,900.
Required:
A.) Calculate the predetermined overhead rate.
B.) Calculate how much overhead has been applied.
C.) Calculate the overhead variance.
D.) Assuming that the variance is immaterial, prepare the journal entry to close the variance.
Q4) Actual overhead is used to arrive at the cost of goods manufactured.
A)True
B)False
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Chapter 6: Process Costing
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177 Flashcards
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Sample Questions
Q1) Equivalent production expresses all activity of the period in terms of A) work in process
B) materials labor and overhead
C) fully completed units
D) partially completed units
Q2) valuation of inventories
A)step 1 in preparing a Production Report
B)step 2 in preparing a Production Report
C)step 3 in preparing a Production Report
D)step 4 in preparing a Production Report
E)step 5 in preparing a Production Report
Q3) Manufacturers that produce a large number of homogeneous products are most likely to use which of the following?
A) job-order costing
B) process costing
C) sequential costing
D) parallel costing
Q4) _________________________ are costs transferred from a prior process to a subsequent process.
Q5) ___________ costs are a type of raw material cost.
Page 8
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Chapter 7: Activity-Based Costing and Management
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178 Flashcards
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Sample Questions
Q1) Receiving provides 12,000 receiving hours and costs $60,000 per year. What is the activity rate for receiving?
A) $14 per receiving hour
B) $5 per receiving hour
C) $4 per receiving hour
D) $4.50 per receiving hour
E) cannot be determined from this information
Q2) An activity-based costing system first assigns costs to activities and then to cost objects.
A)True
B)False
Q3) Environmental costs are associated with the creation, detection, remediation, and prevention of environmental degradation.
A)True
B)False
Q4) The cost of recalls would be an example of a(n) ____________________.
Q5) Activity elimination focuses on nonvalue-added activities. A)True
B)False
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) Refer to Figure 8-11. What is the income for Tyler Company?
A) $101,000
B) $120,500
C) $99,000
D) $102,500
Q2) Product cost includes all costs of the company.
A)True
B)False
Q3) Refer to Figure 8-5. What is the cost of ending inventory for Sanders using the variable costing method?
A) $300,000
B) $280,000
C) $120,000
D) $260,000
Q4) When a company needs to place a new order for goods, they have reached the
Q5) Inventory taxes, obsolescence, and insurance are examples of
10
Q6) The _______________________ is the number of units in the optimal size order quantity.
Q7) Absorption costing treats fixed factory overhead as a ____________.
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Chapter 9: Profit Planning
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Sample Questions
Q1) A company expects the following sales for the coming year: \(\begin{array}{lrrrr}&\text { 1st Quarter }& \text { 2nd Quarter } &\text { 3rd Quarter } & \text { 4th Quarter }\\
\text { Units } & 40,000 & 30,000 & 60,000 & 80,000 \\ \text { Average selling price } & \$ 5 & \$ 5 & \$ 5 & \$ 6
\end{array}\) Budgeted sales revenue for the year is
A) $1,050,000
B) $1,260,000
C) $1,155,000
D) $1,130,000
E) it is impossible to tell from this information
Q2) A production budget is most important for which of the following?
A) retail stores
B) manufacturing firms
C) not-for-profit agencies
D) local government agencies
E) all of these
Q3) forces managers to plan
A)advantage
B)disadvantage
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Chapter 10: Standard Costing: a Managerial Control Tool
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180 Flashcards
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Sample Questions
Q1) The ___________________ measures the difference between the labor hours that were actually used and the labor hours that should have been used.
Q2) Which of the following is true regarding historical experience in standard setting?
A) It provides very rigorous guidelines.
B) Operating personnel may not be able to achieve operating standards based on historical experience.
C) It should be used with caution because it can perpetuate inefficiencies.
D) Standards based on historical experience are better than standards based on engineering studies.
E) None of these.
Q3) The sources of quantitative standards include
A) historical experience.
B) engineering studies.
C) input from operating personnel.
D) historical experience, engineering studies, and input from operating personnel.
E) None of these.
Q4) Explain the three potential sources of quantitative standards.
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) For a static activity budget in a company already using an ABC or ABM system, the activities within the organization must be identified.
A)True
B)False
Q2) The ________________ budget is based on the actual level of activity.
Q3) The variable overhead variance is affected by input price changes only.
A)True
B)False
Q4) Refer to Figure 11-6. Calculate the fuel budget for the year for moving materials.
A) $436,090
B) $228,300
C) $496,050
D) $312,100
E) $437,760
Q5) A _______________ is a budget created in advance that is based on a particular level of activity.
Q6) Practical capacity is always used to calculate fixed overhead rates
A)True
B)False
Page 14
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) Economic value added (EVA) is similar to ROI in that it links net income to capital employed.
A)True
B)False
Q2) Last night, Shirley worked on her accounting homework for one and one half hours. During that time, she completed 6 problems. What is the cycle time for one problem?
A) 4 minutes
B) 90 minutes
C) 15 minutes
D) 10 minutes
E) 6 minutes
Q3) Refer to Figure 12-4. Assume that Style and LeatherStuff have agreed on a transfer price of $3.25. What is the total benefit for Style?
A) $243,000
B) $292,500
C) $168,300
D) $69,000
E) $81,000
Q4) _________________ emphasizes only effectiveness of implementation.
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Differential cost
A)the difference in total cost between the alternatives in a decision
B)determine whether or not a segment should be kept or dropped
C)limited resources and limited demand for each product
D)a specific set of procedures that produces a decision
E)the point that products that have common processes and costs of production become distinguishable
F)method of determining the cost of a product based on the price that customers are willing to pay
G)decisions involving a choice between internal and external production
H)products that have common processes and costs of production up to a point
I)past costs that cannot be affected by future decisions
J)a percentage applied to the base cost to cover other costs plus profit
K)determine whether a specially priced order should be accepted or rejected
L)determine whether it is more profitable to process a joint product further
Q2) "The accounting decision making model is not useful in real life because it only looks at the numbers." Critique this statement and give an example for which it does not hold true.
Q3) _______________________ focuses on whether a product should be processed beyond the split-off point.
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) When choosing among competing alternatives the ________________ model may choose an inferior project.
Q2) When choosing among competing projects, the ___________________ model correctly identifies the best investment alternative.
Q3) What is a postaudit? What are the advantages and disadvantages of the postaudit?
Q4) Refer to Figure 14-6. Roman Knoze is considering two investments. Each will cost $20,000 initially. Project 1 will return annual cash flows of $10,000 in each of three years. Project 2 will return $5,000 in year 1, $10,000 in year 2, and $15,000 in year 3. Roman requires a minimum rate of return of 10%. What is the net present value of Project 2?
A) $5,670
B) $20,000
C) $2,530
D) $24,070
E) $4,070
Q5) Which model of capital investment decision making is most widely used? Why?
Q6) A disadvantage of the payback period is that it ignores the time value of money.
A)True B)False
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Chapter 15: Statement of Cash Flows
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Sample Questions
Q1) There are five basic steps that are followed in preparing a statement of cash flows. List the five steps and briefly describe what takes place in each step.
Q2) The amount for "net cash from operating activities" will be different depending on if the direct method or the indirect method is used to construct the statement of cash flows.
A)True
B)False
Q3) An advantage to using a worksheet to organize the information of preparation of the statement of cash flows is that it uses a spreadsheet format allowing the preparer to use a PC and spreadsheet software.
A)True
B)False
Q4) Which of the following would be added to net income using the indirect method?
A) loss on sale of equipment
B) gain on sale of a long-term investment
C) an increase in accounts receivable
D) proceeds from the sale of a patent
Q5) All firms that are registered with the ______________________ must issue a statement of cash flows.
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Chapter 16: Financial Statement Analysis
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Sample Questions
Q1) Times-interest-earned ratio
A)Liquidity Ratio
B)Leverage Ratio
C)Profitability Ratio
Q2) If year one equals $800,000, year two equals $840,000, and year three equals $896,000, the percentage to be assigned for year three in a trend analysis, assuming that year 1 is the base year, is
A) 100%.
B) 89%.
C) 105%.
D) 112%.
Q3) The _________________ is a measure of liquidity that compares only the most liquid assets with current liabilities.
Q4) The ________________ is a measure of the ability of a company to pay its short-term liabilities out of short-term assets.
Q5) Creditors would like the debt-to-equity ratio to be _______, indicating that stockholders have financed most of the assets of the firm.
Q6) For meaningful analysis, ratios should be compared with a ____________.
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