Managerial Accounting Exam Solutions
Course Introduction
Managerial Accounting focuses on the internal use of accounting information by managers to plan, control, and make strategic decisions within an organization. The course covers key topics such as cost behavior, budgeting, performance evaluation, and decision-making processes. Students learn to analyze financial data, prepare internal reports, and apply accounting techniques to solve business problems. Emphasis is placed on using accounting information to support operational efficiency, optimize resource allocation, and contribute to overall organizational goals. Through real-world case studies and practical exercises, students develop the skills necessary to interpret accounting data and implement effective management strategies.
Recommended Textbook
Financial Accounting Information for Decisions 7th Edition by John J Wild
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17 Chapters
3226 Verified Questions
3226 Flashcards
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Chapter 1: Introducing Financial Accounting
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253 Verified Questions
253 Flashcards
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Sample Questions
Q1) Operating activities:
A)Are the means organizations must use to pay for resources like land,buildings,and equipment.
B)Involve using resources to research,develop,purchase,produce,distribute,and market products and services.
C)Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.
D)Are also called asset management.
E)Are also called strategic management.
Answer: B
Q2) Internal users of accounting information include lenders,shareholders,brokers,and managers.
A)True
B)False Answer: False
Q3) Ownership of a corporation is divided into units called shares or stock.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Accounting System and Financial Statements
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226 Verified Questions
226 Flashcards
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Sample Questions
Q1) _____________________________ requires that the impact of each transaction be recorded in at least two accounts.It also means that total amounts debited must equal total amounts credited for each transaction.
Answer: Double-entry accounting
Q2) A column in journal and ledger accounts used to cross reference journal and ledger entries is the:
A)Account balance column
B)Debit column
C)Posting reference column
D)Credit column
E)Description column
Answer: C
Q3) An account balance is the difference between the debits and credits for an account including any beginning balance.
A)True
B)False
Answer: True
Q4) Revenues and expenses are two categories of ____________________ accounts.
Answer: equity
Page 4
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Chapter 3: Adjusting Accounts for Financial Statements
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241 Verified Questions
241 Flashcards
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Sample Questions
Q1) The current portion of long-term debt is classified with the _________________________.
Answer: current liabilities
Q2) An asset that cost $50,000 was purchased on January 1.The asset has an estimated useful life of three years and an estimated salvage value of $3,200.Using the straight-line method,prepare the necessary adjusting journal entry for the end of the year.
Answer: 11ed5da8_0845_bb8b_bc14_2fec2565bf30_TB6947_00
Q3) On January 1,Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500,and an estimated useful life of five years.Using the straight-line method,what is the amount that should be recorded as depreciation on December 31?
A)$27,000
B)$24,900
C)$29,100
D)$135,000
E)$10,500
Answer: B
Q4) Profit margin equals ___________________ divided by net sales.
Answer: net income
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Chapter 4: Reporting and Analyzing Merchandising Operations
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) A buyer did not take advantage of a supplier's credit terms of 2/10,n/30,but instead paid the invoice in full at the end of 30 days.By not taking the discount,the buyer lost the equivalent of 18% annual interest on the amount of the purchase.
A)True
B)False
Q2) Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.
Q3) Distinguish between selling expenses and general and administrative expenses.
Q4) Cash sales shorten the operating cycle for a merchandiser; credit purchases lengthen operating cycles.
A)True
B)False
Q5) Multiple-step income statements:
A)Are required by the FASB.
B)Contain more detail than a simple listing of revenues and expenses.
C)Are required for the perpetual inventory system.
D)List cost of goods sold as an operating expense.
E)Can only be used in perpetual inventory systems.
Q6) What is gross margin ratio? How is it used as an indicator of profitability?
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Chapter 5: Reporting and Analyzing Inventories
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209 Flashcards
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Sample Questions
Q1) Whether prices are rising or falling,FIFO always will yield the highest gross profit and net income.
A)True
B)False
Q2) The ____________________ ratio reflects how much inventory is available in terms of days' sales.
Q3) Days' sales in inventory is calculated as:
A)Ending inventory divided by sales times 365.
B)Cost of goods sold divided by ending inventory.
C)Ending inventory divided by cost of goods sold times 365.
D)Cost of goods sold divided by ending inventory times 365.
E)Ending inventory divided by cost of goods sold.
Q4) The ______________________ method of assigning costs to inventory and cost of goods sold is usually only practical for companies with expensive,custom-made inventory.
Q5) If the seller is responsible for paying freight charges,then ownership of inventory passes when goods arrive at their destination.
A)True B)False
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Chapter 6: Reporting and Analyzing Cash and Internal Controls
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Sample Questions
Q1) Bonding does not discourage employees from stealing from the company as employees know that bonding is an insurance policy against loss from theft.
A)True
B)False
Q2) A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.
A)True
B)False
Q3) Cash includes currency,coins,and the deposits in most checking accounts.
A)True
B)False
Q4) Vouchers should be used only for purchases.Other expenditures do not need to go through the voucher system.
A)True
B)False
Q5) The document the purchasing department sends to the vendor that is used to place an order is the __________________________.
Page 8
Q6) What is the purpose of the days' sales uncollected ratio?
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Chapter 7: Reporting and Analyzing Receivables
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174 Flashcards
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Sample Questions
Q1) It is never good practice to accept a note receivable in exchange for an overdue account receivable.
A)True
B)False
Q2) A company allows its customers to use bank credit cards to charge purchases.When customers use the credit cards,the net amount is deposited in the company's checking account.The company also is charged a 2.5% service charge for these credit card sales.Assume that on April 13,the company sold $25,000 worth of merchandise to customers who used credit cards.Prepare the company's journal entry to record the credit card sales for April 13 assuming the company deposited the receipts that same day.
Q3) The buyer who pays cash for an account receivable is referred to as a:
A)Payor.
B)Pledgor.
C)Factor.
D)Payee.
E)Pledgee.
Q4) Define a note receivable and explain how interest is calculated on a short-term note receivable.
Q5) How does Kevin Plank of UnderArmour,view decisions involving sales on credit?
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Chapter 8: Reporting and Analyzing Long-Term Assets
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Sample Questions
Q1) Amortization is the process of allocating the cost of natural resources to periods when they are consumed.
A)True
B)False
Q2) A company purchased a music distributor's collection of lyrics and songs for $1,425,000.The copyrights are expected to last another 30 years.Prepare the journal entry to record the amortization expense for the first year.
Q3) The original cost of a machine was $60,000.After $45,000 of depreciation was recorded,the machine was traded in on a new machine of like purpose priced at $75,000.A $10,500 trade-in allowance was received on the old machine and the balance of $64,500 was paid in cash.Prepare the general journal entry to record this trade-in.
Q4) Why is the useful life of a plant asset so difficult to predict?
Q5) On September 30 of the current year,a company acquired and placed in service a machine at a cost of $700,000.It has been estimated that the machine has a service life of five years and a salvage value of $40,000.Using the double-declining-balance method of depreciation,prepare a schedule showing depreciation amounts for the current year and the next four years (round answers to the nearest dollar).The company closes its books on December 31 of each year.
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Chapter 9: Reporting and Analyzing Current Liabilities
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Sample Questions
Q1) Conner Company borrows $185,600 cash on November 1,2013,by signing a 120-day,8% note.What is the total amount of interest that Conner will recognize for this note?
A)$4,949.
B)$14,848.
C)$2,467.
D)$0,no interest expense is recognized.
E)$1485.
Q2) Federal depository banks are authorized to accept deposits of amounts payable to the federal government.
A)True
B)False
Q3) If Jefferson Company paid a bonus equal to 6.5% of net income after bonuses and the total bonus distributed was $560,000,how much was net income for the year?
Q4) A liability does not exist if there is any uncertainty about whom to pay,when to pay,or how much to pay.
A)True
B)False
Q5) Gross pay less all deductions is called ____________________.
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Chapter 10: Reporting and Analyzing Long-Term Liabilities
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192 Verified Questions
192 Flashcards
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Sample Questions
Q1) Describe the journal entries required to record the issuance of bonds and the payment of bond interest.
Q2) The debt to equity ratio is calculated by dividing total liabilities by total assets.
A)True
B)False
Q3) A bond with a par value of less than $1,000 is called a ______________ bond.
Q4) A company issued 10-year,9% bonds,with a par value of $500,000 when the market rate was 9.5%.The issuer received $484,087 in cash proceeds.Prepare the issuer's journal entry to record the issuance of the bonds.
Q5) On January 1,2013,a company issued 10%,10-year bonds payable with a par value of $720,000.The bonds pay interest each July 1 and January 1.The bonds were sold for $817,860 cash,which provides the holders an annual yield of 8%.Prepare the issuer's general journal entry to record the first semiannual interest payment assuming the effective interest method is used.
Q6) Most mortgage contracts grant the lender the right to _______________ on the property if the borrower fails to pay in accordance with the terms of the debt agreement.
Q7) What methods can a company use to retire its bonds?
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Chapter 11: Reporting and Analyzing Equity
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206 Flashcards
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Sample Questions
Q1) What is the effect of dividend preferences on preferred stock? Explain how a dividend is distributed in the case of cumulative preferred stock with dividends in arrears.
Q2) A corporation can issue both common and preferred stock.
A)True
B)False
Q3) What is the amount of dividends that the common stockholders receive for all years presented?
A)$177,000
B)$276,000
C)$214,250
D)$326,000
E)$287,750
Q4) Prior period adjustments are reported in the:
A)Income statement.
B)Balance sheet.
C)Statement of retained earnings.
D)Statement of cash flows.
E)Notes to the financial statements.
Q5) Identify and describe the two main components of stockholders' equity.
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Chapter 12: Reporting and Analyzing Cash Flows
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171 Flashcards
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Sample Questions
Q1) The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:
A)Historical cost principle
B)Materiality principle
C)Full disclosure principle
D)Going concern principle
E)Business entity principle
Q2) A spreadsheet can help organize the information needed to prepare a statement of cash flows.
A)True
B)False
Q3) When using a spreadsheet to prepare the statement of cash flows,a decrease in accounts payable is entered in the Analysis of Changes column with a debit in the statement of cash flows section and a credit in the balance sheet section.
A)True
B)False
Q4) Financing activities include the purchase and sale of long-term assets.
A)True
B)False
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Chapter 13: Analyzing and Interpreting Financial Statements
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183 Verified Questions
183 Flashcards
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Sample Questions
Q1) What is the company's gross margin ratio for 2013?
A)65%
B)35%
C)67%
D)33%
E)39%
Q2) A company had a market price of $8.22 per share,earnings per share of $1.01,and dividends per share of $0.32.Its price-earnings ratio is equal to:
A)8.14.
B)25.69.
C)6.18.
D)0.039.
E)0.123.
Q3) The four building blocks of financial analysis are (1) ____________________, (2)
(3)
and (4)
Q4) Describe ratio analysis including its purpose,application,and interpretation.
Q5) The measurement of key relationships between financial statement items is known as _____________________________.
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Chapter 14: Applying Present and Future Values
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Sample Questions
Q1) You hope to retire in 10 years.Regrettably you are only just now beginning to save money for this purpose.You expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you retire?
Q2) Sandra has a savings account that is now $50,000.She started with $28,225 and earned interest at 10% compounded annually.It took five years to accumulate the $50,000.
A)True B)False
Q3) The number of periods in a future value calculation can only be expressed in years. A)True B)False
Q4) _____________ is a borrower's payment to the owner of an asset for its use.
Q5) The present value of $5,000 per year for three years at 12% compounded annually is $12,009.
A)True B)False
Q6) Explain the concept of the present value of a single amount.
Q7) What is interest?
Q8) The interest rate is also called the __________________ rate.
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Chapter 15: Investments and International Operations
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Sample Questions
Q1) A company had net income of $2,785,000,net sales of $250,000,000,average total assets of $6,000,000,and equity investments of $40,000.Its return on total assets equals:
A)$3,215,000
B)41.67%
C)21.54%
D)69.63%
E)46.42%
Q2) Short-term investments in held-to-maturity debt securities are accounted for using the:
A)Market value method with market adjustment to income.
B)Market value method with market adjustment to equity.
C)Cost method with amortization.
D)Cost method without amortization.
E)Equity method.
Q3) Cash equivalents are investments that are readily converted to known amounts of cash that mature within three months.
A)True
B)False
Q4) Return on total assets is computed by dividing ___________ by __________.
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Chapter 16: Accounting for Partnerships
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Sample Questions
Q1) In closing the accounts at the end of a period,the partners' capital accounts are credited for their share of the partnership loss or debited for their share of the partnership net income.
A)True
B)False
Q2) The life of a partnership is ____________________ in duration.
Q3) 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.
Q4) Assets invested by a partner into a partnership remain the property of the individual partner.
A)True
B)False
Q5) The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.
A)True
B)False
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Chapter 17: Accounting With Special Journals
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Sample Questions
Q1) The _______________________ ratio is a measure of a segment's profitability and is calculated as segment operating income divided by segment average assets.
Q2) What is the segment return on assets ratio? What is it used for?
Q3) __________________ processing accumulates source documents for a period of time and then processes them all at once such as daily,weekly,or monthly.
Q4) The Asian segment of a multinational company had a segment return on assets of 60%.If the revenues and operating income of this segment were $17,000 million and $14,586 million,respectively,what is the segment's average total assets amount?
A)$24,310 million
B)$28,333 million
C)$52,643 million
D)$10,200 million
E)$8,751 million
Q5) Discuss how technology-based information systems affect accounting.
Q6) _______________________________________ refers to the programs that help managers direct a company's vital operations.
Q7) Describe the posting process for special journals.
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