Managerial Accounting Exam Practice Tests
Course Introduction
Managerial Accounting focuses on the use of accounting information by managers within organizations to inform and support decision-making, planning, and performance evaluation. The course covers the principles and methods of cost classification, budgeting, variance analysis, and pricing decisions, emphasizing how these tools contribute to efficient resource allocation and strategic management. Students will learn to interpret financial data, prepare internal reports, and apply accounting insights to real-world business scenarios, with an emphasis on ethical considerations and the impact of managerial choices on organizational success.
Recommended Textbook
Financial Accounting 15th Edition by Carl Warren
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17 Chapters
3465 Verified Questions
3465 Flashcards
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Page 2
Chapter 1: Introduction to Accounting and Business
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233 Flashcards
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Sample Questions
Q1) Financial accounting provides information to all users,while the main focus for managerial accounting is to provide information to the management.
A)True
B)False
Answer: True
Q2) The excess of revenue over the expenses incurred in earning the revenue is called capital.
A)True
B)False
Answer: False
Q3) The monetary value charged to customers for the performance of services sold is called a (n)
A)asset
B)net income
C)capital
D)revenue
Answer: D
Q4) Prepare an income statement for the current year ended March 31.
Answer: 11ea8d32_2887_7aa9_b445_4930253f6350_TB6239_00
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Chapter 2: Analyzing Transactions
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Sample Questions
Q1) The classification and normal balance of the drawing account are
A)expense, credit balance
B)expense, debit balance
C)liability, credit balance
D)owner's equity, debit balance
Answer: D
Q2) The increase side of an account is also the side of the normal balance.
A)True
B)False
Answer: True
Q3) Office supplies purchased by Janer's Cleaning Service on account were returned.Which of the following entries for Janer's Cleaning Service records this transaction?
A)Cash, debit; Office Supplies, credit
B)Office Supplies, debit; Accounts Receivable, credit
C)Accounts Payable, debit; Office Supplies, credit
D)Office Supplies, debit; Accounts Payable, credit
Answer: C
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4
Chapter 3: The Adjusting Process
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Sample Questions
Q1) Which of the following accounts would likely be included in a deferral adjusting entry?
A)Interest Revenue
B)Unearned Revenue
C)Salaries Payable
D)Accounts Receivable
Answer: B
Q2) On January 1,DogMart Company purchased a two-year liability insurance policy for $22,800 cash.The purchase was recorded to Prepaid Insurance.Prepare the January 31 adjusting entry.
Answer: $22,800/24 = $950 per month 11ea8d32_2869_448c_b445_b52828d45bdc_TB6239_00
Q3) On December 15,Great Designs Company hired an independent contractor for a project.The contractor completed the project on December 29 and submitted an invoice for $2,425 which was due on January 15.The amount was duly paid on January 15.
(a) Prepare the journal entry or entries necessary to record these transactions.
(b) Explain why you prepared this/these journal entries.
Answer: 11ea8d32_286b_4075_b445_2bffe0b44563_TB6239_00
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Page 5
Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) Which of the following accounts would appear in the Income Statement columns of the end-of-period spreadsheet?
A)Cash
B)Prepaid Insurance
C)Unearned Revenue
D)Net Loss
Q2) The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings.
A)True
B)False
Q3) After all of the account balances have been extended to the Balance Sheet columns of the work sheet,the totals of the Debit and Credit columns show debits of $37,686 and credits of $41,101.This indicates that
A)neither net income nor loss can be calculated because it is found on the income statement
B)the company has a net loss of $3,415 for the period
C)the company has a net income of $3,415 for the period
D)the amounts are out of balance and need to be corrected
Q4) Describe a classified balance sheet.
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Chapter 5: Accounting Systems
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Sample Questions
Q1) Record payment received from customer
A)Purchases journal
B)Revenue journal
C)Cash receipts journal
D)Cash payments journal
E)Accounts receivable subsidiary ledger
F)Accounts payable subsidiary ledger
G)General journal
Q2) Which of the following statements is false?
A)Most computerized accounting systems use principles from manual systems.
B)Subsidiary ledgers and special journals are only useful when a business doesn't have a large number of similar transactions.
C)Even small companies use computerized accounting systems.
D)Large companies often integrate their accounting system with their automated business systems.
Q3) Each individual entry in the revenue journal is posted to the
A)accounts receivable controlling account
B)accounts receivable subsidiary ledger
C)revenue controlling account
D)accounts receivable subsidiary ledger and the controlling account
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Chapter 6: Accounting for Merchandising Businesses
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Sample Questions
Q1) Purchased goods in transit,shipped FOB destination,should be excluded from ending inventory of the buyer.
A)True
B)False
Q2) Informs the seller of the reasons for the return of merchandise or the request for a price allowance.
A)Freight
B)Delivery Expense
C)Merchandise Inventory
D)Sales discount
E)Purchases Returns and Allowances
F)Debit memo
G)Purchase discount
H)Trade discount
Q3) Discuss the following statement:"Operating cycles for all merchandising businesses are the same,with similar profit margins."Include an example (s)to illustrate your explanation.
Q4) On March 29,customers who owe $10,500 on account to Sonic Sales Company submit payments of $4,250.Journalize this event.
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Chapter 7: Inventories
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Sample Questions
Q1) Inventory turnover measures the length of time it takes to acquire,sell,and replace the inventory.
A)True
B)False
Q2) If ending inventory for the year is overstated,owner's equity reported on the balance sheet at the end of the year is understated.
A)True B)False
Q3) Assuming that the company uses the perpetual inventory system,determine the gross profit for the month of May using the LIFO cost method.
A)$348
B)$452
C)$444
D)$356
Q4) The value of ending inventory using LIFO is
A)$1,250
B)$1,350
C)$1,375
D)$1,150
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Chapter 8: Internal Control and Cash
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Sample Questions
Q1) The Sarbanes-Oxley Act requires that financial statements of all public companies report on management's conclusions about the effectiveness of the company's internal control procedures.
A)True
B)False
Q2) List the principal advantages of electronic funds transfers.
Q3) EFT deposit from a customer
A)Added to the company's books
B)Subtracted from the company's books
C)Added to the bank statement balance
D)Subtracted from the bank statement balance
Q4) Control environment
A)Provides reasonable assurance that business goals will be achieved
B)Used by management for guiding operations and ensuring compliance with requirements
C)Overall attitude of management and employees
D)Used to locate weaknesses and improve controls
E)Identify, analyze, and assess likeliness of vulnerabilities
Q5) Why would a bank require a company to maintain a compensating balance?
Q6) List and define each of the five elements of internal control.
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Chapter 9: Receivables
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Sample Questions
Q1) Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.Feb.20 Received $1,000 from Andrew Warren and wrote off the remainder owed of $4,000 as uncollectible.May 10 Reinstated the account of Andrew Warren and received $4,000 cash in full payment.
Q2) At the end of the current year,Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000.An analysis of receivables estimates uncollectible receivables as $25,000.Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance for Doubtful Accounts.)
A)$550,000
B)$544,500
C)$525,000
D)$575,000
Q3) When the allowance method for accounting for uncollectible receivables is used,net income is reduced when a specific receivable is written off.
A)True
B)False
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11
Chapter 10: Long-Term Assets: Fixed and Intangible
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Sample Questions
Q1) The accumulated depletion account is
A)an expense account
B)an intangible asset account
C)reported on the income statement as other expense
D)reported on the balance sheet as a deduction from the cost of the mineral deposit
Q2) As a company records depreciation expense for a period of time,cash is accumulated to replace fixed assets as they wear out.
A)True
B)False
Q3) The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is
A)amortization
B)depletion
C)depreciation
D)allocation
Q4) A gain can be realized when a fixed asset is discarded.
A)True
B)False
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Chapter 11: Current Liabilities and Payroll
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Sample Questions
Q1) Martin Jackson receives an hourly wage rate of $30,with time-and-a-half pay for all hours worked in excess of 40 hours during a week.Payroll data for the current week are as follows: hours worked,46; federal income tax withheld,$350; social security tax rate,6.0%; and Medicare tax rate,1.5%.What is the net amount to be paid to Jackson?
A)$1,470.00
B)$1,009.75
C)$1,097.95
D)$460.25
Q2) The journal entry a company uses to record partially funded pension rights for its salaried employees at the end of the year is
A)debit Salaries Expense; credit Cash
B)debit Pension Expense; credit Unfunded Pension Liability
C)debit Pension Expense; credit Unfunded Pension Liability and Cash
D)debit Pension Expense; credit Cash
Q3) The proceeds from discounting a $20,000,60-day note payable at 6% is $20,200.
A)True B)False
Q4) List five internal controls that relate directly to payroll.
Q5) Kelly Howard has the following transactions.Prepare the journal entries.
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Chapter 12: Accounting for Partnerships and Limited Liability Companies
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Sample Questions
Q1) Based on this information,the statement of partners' equity would show what amount in the capital account for Marti on December 31?
A)$216,000
B)$164,000
C)$380,000
D)$52,000
Q2) In a partnership liquidation,if a partner has a debit capital balance in his or her capital account,he or she is responsible for contributing personal assets sufficient to eliminate the deficit.
A)True
B)False
Q3) Gleason invested $90,000 in the James and Kirk Partnership for ownership equity of $90,000.Prior to the investment,land was revalued to a market value of $425,000 from a book value of $200,000.James and Kirk share net income in a 1:2 ratio.
(a) Provide the journal entry for the revaluation of land.
(b) Provide the journal entry to admit Gleason.
Q4) What is a partnership? List three advantages and three disadvantages of the partnership form of business organization.
Page 14
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Chapter 13: Corporations: Organization, stock Transactions, and Dividends
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Sample Questions
Q1) A corporation has 10,000 shares of $100 par stock outstanding.If the corporation issues a 5-for-1 stock split,the number of shares outstanding after the split will be 40,000.
A)True
B)False
Q2) The par value of common stock must always be equal to its market value on the date the stock is issued.
A)True
B)False
Q3) The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired.What is the amount of cash dividends to be paid if a $2-per-share dividend is declared?
A)$80,000
B)$10,000
C)$90,000
D)$100,00
Q4) The retained earnings statement may be combined with the income statement. A)True
B)False
Page 15
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Chapter 14: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) Callable bonds are redeemable by the issuing corporation within the period of time and at the price stated in the bond indenture.
A)True
B)False
Q2) Premium on bonds payable may be amortized by the straight-line method if the results obtained by its use do not materially differ from the results obtained by use of the interest method.
A)True
B)False
Q3) The journal entry a company records for the payment of interest,interest expense,and amortization of bond premium is
A)debit Interest Expense, credit Cash and Premium on Bonds Payable
B)debit Interest Expense, credit Cash
C)debit Interest Expense and Premium on Bonds Payable, credit Cash
D)debit Interest Expense, credit Interest Payable and Premium on Bonds Payable
Q4) (a) Prepare the journal entry to issue $500,000 bonds that sold for $490,000. (b) Prepare the journal entry to issue $500,000 bonds that sold for $515,000.
Q5) (a) Prepare the journal entry to issue $100,000 bonds that sold for $94,000. (b) Prepare the journal entry to issue $100,000 bonds that sold for $104,000.
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Chapter 15: Investments and Fair Value Accounting
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Sample Questions
Q1) The value assigned to held-to-maturity securities
A)Equity method
B)Parent company
C)Subsidiary company
D)Consolidated financial statements
E)Fair value
F)Unrealized gain or loss on investments.
G)Valuation allowance for investments
H)Dividend yield
I)Amortized cost
J)Cost method
Q2) As with other assets,the cost of a bond investment includes all costs related to the purchase.
A)True
B)False
Q3) If the bonds are purchased between interest dates,the purchase price includes accrued interest since the last interest payment.
A)True
B)False
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Page 17
Chapter 16: Statement of Cash Flows
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Sample Questions
Q1) Cash flows from investing activities,as part of the statement of cash flows,would include any receipts from the sale of land.
A)True
B)False
Q2) Decrease in accounts payable balance
A)Increase cash from operating activities
B)Decrease cash from operating activities
C)Increase cash from investing activities
D)Decrease cash from investing activities
E)Increase cash from financing activities
F)Decrease cash from financing activities
G)Noncash investing and financing supplement
Q3) In preparing the Cash flows from operating activities section of the statement of cash flows by the indirect method,the net decrease in inventories from the beginning to the end of the period is added to net income for the period.
A)True
B)False
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18
Chapter 17: Financial Statement Analysis
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Sample Questions
Q1) Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?
A)ratio of fixed assets to long-term liabilities
B)asset turnover ratio
C)number of days' sales in receivables
D)return on stockholders' equity
Q2) Reporting unusual items separately on the income statement allows investors to isolate the effects of these items on income and cash flows.
A)True B)False
Q3) The denominator of the return on total assets ratio is the average total assets.
A)True B)False
Q4) A balance sheet shows cash,$75,000; marketable securities,$115,000; receivables,$150,000; and inventories,$222,500.Current liabilities are $225,000.The current ratio is 2.5.
A)True B)False
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