Managerial Accounting Exam Solutions
Course Introduction
Managerial Accounting focuses on the process of identifying, measuring, analyzing, and interpreting accounting information for internal decision-making purposes. This course explores topics such as cost behavior, budgeting, performance evaluation, and strategic planning, providing students with the tools required to help organizations plan, control operations, and make informed business decisions. Emphasis is placed on the application of quantitative and qualitative information in managing resources efficiently and supporting the achievement of organizational goals.
Recommended Textbook
Financial and Managerial Accounting 11th Edition by Carl
S. Warren
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15 Chapters
2679 Verified Questions
2679 Flashcards
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Chapter 1: Introduction to Accounting and Business
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194 Verified Questions
194 Flashcards
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Sample Questions
Q1) The accounting equation can be expressed as Assets - Liabilities = Owners' Equity.
A)True
B)False
Answer: True
Q2) All financial statements are identified by the name of the business, the title of the statement, and the date or period of time.
A)True
B)False
Answer: True
Q3) Profit is the difference between
A) assets and liabilities
B) the incoming cash and outgoing cash
C) the assets purchased with cash invested by stockholders and the cash spent to operate the business
D) the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services
Answer: D
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Page 3
Chapter 2: Analyzing Transactions
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Sample Questions
Q1) The chart of accounts should be the same for each business.
A)True
B)False
Answer: False
Q2) Expenses use up assets or consume services in the process of generating revenues.
A)True
B)False
Answer: True
Q3) The chart of accounts classifies the accounts to make identification of the accounts easier. This is done by way of assigning a number to each account. The first number identifies the classification of the type of account. Which of the following indicates the use of this classification?
A) 1-Assets, 2-Liabilities, 3-Stockholders' Equity, 4-Expenses, 5-Revenues
B) 1-Assets, 2-Liabilities, 3-Stockholders' Equity, 4-Revenues, 5-Expenses
C) 1-Assets, 2-Stockholders' Equity, 3-Revenues, 4-Expenses, 5-Dividends
D) 1-Stockholders' Equity, 2-Dividends, 3-Revenues, 4-Expenses
Answer: B
Q4) Prepare a journal entry on October 12 for the fees earned on account, $14,600. Answer: 11ea9299_7dcd_eb7d_85c7_2f00c9568000_TB6235_00
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Chapter 3: The Adjusting Process
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179 Flashcards
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Sample Questions
Q1) Which account would normally not require an adjusting entry?
A) Wages Expense
B) Accounts Receivable
C) Accumulated Depreciation
D) Retained Earnings
Answer: D
Q2) If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be understated.
A)True
B)False
Answer: True
Q3) A company pays an employee $3,000 for a five day work week, Monday - Friday. The adjusting entry on December 31, which is a Wednesday, is debit Wages Expense, $1,800 and credit Wages Payable, $1,800.
A)True
B)False
Answer: True
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Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) The dividends account is a temporary account.
A)True
B)False
Q2) On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would
A) increase a liability account
B) decrease an asset account
C) decrease a revenue account
D) decrease a liability account
Q3) When a work sheet is complete, the adjustment columns should have
A) total credits greater than total debits if a net income was earned
B) total debits greater than total credits if a net loss was incurred
C) total debits greater than total credits if a net income was earned
D) total debits equal total credits
Q4) All companies must use a calendar year as their fiscal year.
A)True B)False
Q5) Explain the differences between a nonclassified balance sheet and a classified balance sheet.
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Chapter 5: Accounting for Merchandising Businesses
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221 Verified Questions
221 Flashcards
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Sample Questions
Q1) Which account will be included in both service and merchandising companies closing entries?
A) Sales
B) Cost of Merchandise Sold
C) Purchase Discounts
D) Sales Returns and Allowances
Q2) A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to
A) $12,670
B) $9,070
C) $8,420
D) $17,230
Q3) Which of the following accounts has a normal debit balance?
A) Accounts Payable
B) Sales Returns and Allowances
C) Sales
D) Interest Revenue
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Chapter 6: Inventories
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Sample Questions
Q1) Under the _________ inventory method, accounting records maintain a continuously updated inventory value.
A) retail
B) periodic
C) physical
D) perpetual
Q2) Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.
A)True
B)False
Q3) A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are in the possession of the consignor.
A)True
B)False
Q4) Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.
A)True
B)False
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Chapter 7: Sarbanes-Oxley, Internal Control, and Cash
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174 Flashcards
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Sample Questions
Q1) Distinguish preventive controls from detective controls and give examples of each as they relate to cash.
Q2) Jamison Company developed the following reconciling information in preparing its June bank reconciliation: \(\begin{array}{ll}
\$ 13,000 & \text { Cash balance per bank, } 6 / 30 \\ 4,000 & \text { Note receivable collected by bank } \\
7,000 & \text { Outstanding checks } \\
2,500 & \text { Deposits-in-transit } \\
35 & \text { Bank service charge } \\
1,900 & \text { NSF check }
\end{array}\) Using the above information, determine the cash balance per books (before adjustments) for the Jamison Company.
A) $8,065
B) $10,565
C) $15,065
D) $6,435
Q3) The bank reconciliation is an important part of the system of internal controls.
A)True
B)False
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Page 9
Chapter 8: Receivables
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Sample Questions
Q1) Other than accounts receivable and notes receivable, name other receivables that might be included in the general ledger.
Q2) Allowance for Doubtful Accounts has a debit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $15,000. Which of the following entries records the proper adjusting entry for bad debt expense?
A) debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800 B) debit Bad Debt Expense, $14,200; credit Allowance for Doubtful Accounts, $14,200
C) debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800
D) debit Bad Debt Expense, $15,800; credit Allowance for Doubtful Accounts, $15,800
Q3) The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.
A)True B)False
Q4) Allowance for Doubtful Accounts is a liability account. A)True B)False
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Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) The method used to calculate the depletion of a natural resource is the straight line method.
A)True
B)False
Q2) Identify the following as a Fixed Asset (FA), or Intangible Asset (IA), or Natural Resource (NR), or Neither (N) (a)computer
(b)patent
(c)oil reserve
(d)goodwill
(e)U.S. Tressuly note
(f)land used for employe parlang
(g)gold mine
Q3) The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
A) depletion
B) deferral
C) amortization
D) depreciation
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Page 11
Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) Another name for the quick ratio is
A) quick cash ratio
B) current ratio
C) working capital ratio
D) acid-test ratio
Q2) The amount of money a borrower receives from the lender is called discount rate.
A)True
B)False
Q3) An employee receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $300; cumulative earnings for year prior to current week, $90,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the net amount to be paid the employee?
A) $1,470
B) $1,059.75
C) $1,381.80
D) $1,249.50
Q4) List five internal controls that relate directly to payroll.
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Page 12
Chapter 11: Corporations: Organization, Stock Transactions, and Dividends
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Sample Questions
Q1) When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.
A)True
B)False
Q2) If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account
A) Common Stock will be credited for $75,000.
B) Paid-in Capital in excess of Par Value will be credited for $5,000.
C) Paid-in Capital in excess of Par Value will be credited for $70,000.
D) Cash will be debited for $70,000.
Q3) Merritt Company acquired a building valued at $190,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Merritt Company?
A) $60,000
B) $180,000
C) $190,000
D) $10,000
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Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) If $1,000,000 of 8% bonds are issued at 103 1/2, the amount of cash received from the sale is
A) $1,080,000
B) $965,000
C) $1,000,000
D) $1,035,000
Q2) A bond is usually divided into a number of individual bonds of $500 each.
A)True
B)False
Q3) When the market rate of interest is less than the contract rate for a bond, the bond will sell for a premium.
A)True
B)False
Q4) The present value of $40,000 to be received in one year, at 6% compounded annually, is (rounded to nearest dollar)
A) $37,736
B) $42,400
C) $40,000
D) $2,400
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Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) In order to maintain the original value of a trading security, the fair value adjustments are debited or credited to the account Valuation Allowance for Trading Investments.
A)True
B)False
Q2) Most companies invest excess cash in bonds as investments in order to profit long-term from the growth of the investment. A)True
B)False
Q3) Compare and contrast why companies invest cash in short-term temporary investments vs. long-term investments.
Q4) The investor carrying an investment by the equity method records cash dividends received as an increase in the carrying amount of the investment. A)True
B)False
Q5) Sutton Company purchased 10% of the outstanding stock of Roberts Company on January 1, 2012. Reyes reported net income of $155,000 and declared dividends of $40,000 during 2012. How would these events be reported by Sutton using the cost method?
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) Operating expenses other than depreciation for the year were $400,000. Prepaid expenses increased by $17,000 and accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be
A) $353,000
B) $413,000
C) $447,000
D) $383,000
Q2) The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total
A) $49,000
B) $47,000
C) $51,000
D) $53,000
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) The numerator of the rate earned on total assets ratio is equal to
A) net income
B) net income plus tax expense
C) net income plus interest expense
D) net income minus preferred dividends
Q2) Hsu Company reported the following on its income statement: \(\begin{array}{ll}
\$ 420,000 & \text { Income before income taxes } \\
120,000 & \text { Income tax expense } \\
\$ 300,000 & \text { Net income }
\end{array}\) An analysis of the income statement revealed that interest expense was $80,000. Hsu Company's times interest earned was
A) 8 times.
B) 6.25 times.
C) 5.25 times.
D) 5 times.
Q3) When you are interpreting financial ratios, it is useful to compare a company's ratios to some form of standard.
A)True
B)False
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