Managerial Accounting Mock Exam
Course Introduction
Managerial Accounting focuses on the processes and techniques used by managers to make informed business decisions through the analysis and interpretation of financial data. The course covers topics such as cost behavior, budgeting, performance evaluation, and internal financial reporting, emphasizing how accounting information serves as a critical tool in planning, controlling, and evaluating organizational operations. Students will develop problem-solving and analytical skills necessary for effective management and strategic planning within various business environments.
Recommended Textbook Survey of Accounting 6th Edition by Carl S.
Warren
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15 Chapters
1713 Verified Questions
1713 Flashcards
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Chapter 1: The Role of Accounting in Business
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Sample Questions
Q1) Shares of ownership are evidenced by issuing:
A) shares payable.
B) commercial paper.
C) shares of stock.
D) notes payable.
Answer: C
Q2) A business stakeholder has an interest in the economic performance of a business.
A)True
B)False
Answer: True
Q3) Cash collected from sales during the normal course of business would be an example of which type of business activity?
A) Operating
B) Investing
C) Financing
D) None of these
Answer: A
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Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) Explain how the four financial statements are linked.
Answer: A financial accounting system is designed to produce four financial statements. The income statement, statement of retained earnings, and statement of cash flows are linked to an element of the balance sheet.
(1) The income statement shows the net effects of revenues and expenses, which affects the retained earnings on the balance sheet.
(2) The statement of retaine deamings reflects the net income and dividends paid and shows how ret ained eamings in the batance she et moves from the begining balance to the ending balance.
(3) The statement of cash flows explains how the cash balance in the balance sheet moves from the begining balance to the encling balance by looking at the cash effects of operating investing and financing activities.
Q2) When a notes payable account is paid in cash, the stockholders' equity in the business increases.
A)True
B)False
Answer: False
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Chapter 3: Accrual Accounting Concepts
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111 Flashcards
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Sample Questions
Q1) Which asset is not depreciated as it usually does not lose its ability to provide service?
A) Prepaid insurance
B) Equipment
C) Building
D) Land Answer: D
Q2) Current assets are assets that are expected to be converted to cash, sold or used up within 6 months.
A)True
B)False
Answer: False
Q3) On April 1, Bear, Inc. paid $2,400 for an insurance premium on a three-year insurance policy. At the end of December, Bear's fiscal year-end, what should be the balance in the prepaid insurance account?
A) $2,700
B) $3,000
C) $2,400
D) $1,800
Answer: D
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Chapter 4: Accounting for Merchandising Businesses
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) In a perpetual inventory system, merchandise returned to vendors reduces the merchandise inventory account.
A)True
B)False
Q2) The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities.
A)True
B)False
Q3) Expenses that cannot be traced directly to operations are identified as:
A) other income.
B) operating expenses.
C) cost of goods sold.
D) other expenses.
Q4) Interest expense is an example of an expense classified under "other expense."
A)True B)False
Q5) Sales discounts is used in accounting for transactions with customers. A)True B)False
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Chapter 5: Sarbanes-Oxley, Internal Control, and Cash
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110 Flashcards
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Sample Questions
Q1) Identify each of the following as related to (a) the control environment, (b) risk assessment, or (c) control procedures.
(1) Mandatory vacations
(2) Personnel policies
(3) Report of outside consultants on future market changes
Q2) Which of the following should not be considered cash by an accountant?
A) Money orders
B) Bank checking accounts
C) Postage stamps
D) Travelers' checks
Q3) In a computerized system, paid vouchers are transferred to a paid voucher file.
A)True
B)False
Q4) In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per books.
A)True
B)False
Q5) What is a special-purpose cash fund? What is its purpose? Give two examples.
Q6) Why would a bank require a company to maintain a compensating balance?
Q7) Discuss what would be included under personnel policies.
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Chapter 6: Receivables and Inventories
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Sample Questions
Q1) The maturity value of a 12%, 60-day note for $5,000 is $5,100. (Assume 360 days in a year)
A)True
B)False
Q2) Other than accounts receivable and notes receivable, name other receivables that might be included on the balance sheet.
Q3) Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales. If net sales are $950,000, the amount of the adjustment to record the provision for doubtful accounts is:
A) $9,500.
B) $500.
C) $8,500.
D) $9,000.
Q4) Of the three widely used inventory costing methods (FIFO, LIFO, and average), the FIFO method of costing inventory is based on the assumption that costs are charged against revenues in the order in which they were incurred.
A)True
B)False
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) The cost of a patent should be amortized :
A) over 10 years.
B) over its economic life.
C) over 20 years or its economic life, whichever is shorter.
D) only if an impairment occurs.
Q2) A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 12-year economic life. The entry to record amortization would include:
A) an increase in amortization expense for $33,500.
B) an increase in research and development expense for $670,000.
C) a decrease in patent for $55,833.
D) an increase in accumulated amortization for $670,000.
Q3) The accounting term depreciation measures:
A) the decline in an asset's market value.
B) the amount of cash a company sets aside for asset replacement.
C) the amount of asset cost allocated to expense over periods benefited.
D) the anticipated loss if asset is sold in the used-asset market.
Q4) Intangible assets do not exist physically.
A)True
B)False
Page 9
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Chapter 8: Liabilities and Stockholders Equity
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131 Flashcards
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Sample Questions
Q1) The total earnings of an employee during a payroll period, including bonuses and overtime pay, is referred to as:
A) take-home pay.
B) pay net of taxes.
C) net pay.
D) gross pay.
Q2) A corporation has 10,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be 40,000.
A)True
B)False
Q3) The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 75,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?
A) 10,000
B) 70,000
C) 50,000
D) 60,000
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) The terms acid-test ratio and quick ratio refer to the same ratio which measures the instant debt-paying ability of a company.
A)True
B)False
Q2) If a company has issued only one class of stock, the earnings per share is determined by dividing net income by the number of shares outstanding.
A)True B)False
Q3) Revenue and expense data for Reuters Company are as follows: \(\begin{array}{lrl} 2012&2013\\
\$ 18,000 & \$ 24,750 & \text { Administrative expense } \\
375,000 & 500,000 & \text { Cost of goods sold } \\
12,000 & 11,600 & \text { Income tax } \\
600,000 & 750,000 & \text { Net sales } \\
154,800 & 182,250 & \text { Selling expenses } \end{array}\)
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Chapter 10: Accounting Systems for Manufacturing Businesses
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Sample Questions
Q1) Compute factory overhead cost from the following costs: \(\begin{array}{|l|l|}
\hline 20,000 & \text { Depreciation on factory buildings } \\
\hline 25,000 & \text { Depreciation on office equipment } \\
\hline 70,000 & \text { Direct materials used } \\
\hline 3,000 & \text { Indirect labor } \\
\hline & \\ \hline \end{array}\)
A) $23,000
B) $43,000
C) $70,000
D) $113,000
Q2) Which of the following is not a product cost?
A) direct materials.
B) sales and administrative expenses.
C) direct labor.
D) factory overhead.
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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140 Flashcards
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Sample Questions
Q1) Which of the following statements is true regarding fixed and variable costs?
A) Both costs are constant when considered on a per-unit basis.
B) Both costs are constant when considered on a total basis.
C) Fixed costs are fixed in total, and variable costs are fixed per unit.
D) Variable costs are fixed in total, and fixed costs vary in total.
Q2) If sales are $820,000, variable costs are 68% of sales, and operating income is $260,000, what is the contribution margin ratio?
A) 53%
B) 38%
C) 47%
D) 32%
Q3) Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the profit-volume chart.
A)True
B)False
Q4) If sales total $1,000,000, fixed costs total $200,000, and variable costs are 55% of the sales, the contribution margin ratio is 55%.
A)True
B)False
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) The revenue that is forgone from an alternative use of an asset, such as cash, is called an opportunity cost.
A)True
B)False
Q2) Manufacturers must conform to the Robinson-Patman Act, which prohibits price discrimination within the United States unless differences in prices can be justified by different costs.
A)True
B)False
Q3) What cost concept used in applying the cost-plus approach to product pricing covers selling expenses, administrative expenses, and desired profit in the "markup"?
A) Total cost concept
B) Product cost concept
C) Variable cost concept
D) Sunk cost concept
Q4) Eliminating a product or segment will usually eliminates all of the product's or segment's variable costs.
A)True
B)False
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Chapter 13: Budgeting and Standard Cost Systems
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168 Flashcards
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Sample Questions
Q1) Kohlman Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred with the balance to be paid in the following month. Refer to the information provided for Kohlman Company. The cash payments for manufacturing in the month of June are:
A) $294,000.
B) $235,200.
C) $183,200.
D) $381,500.
Q2) Which of the following would not lend itself to applying direct labor variances?
A) Computer help desk operator
B) Administrative assistant
C) Customer service personnel
D) Telemarketer
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Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) The excess of divisional income from operations over a minimum amount of desired income from operations is termed residual income.
A)True
B)False
Q2) The three common types of responsibility centers are referred to as asset centers, liabilities centers, and equity centers.
A)True
B)False
Q3) A responsibility center in which the authority and responsibility for costs and revenues is vested on the department manager is termed an investment center.
A)True
B)False
Q4) Budget performance reports prepared for the vice-president of production would generally contain less detail than the reports prepared for the various plant managers.
A)True
B)False
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) Using the following partial table of present value of $1 at compound interest, determine the present value of $20,000 to be received three years hence, with earnings at the rate of 10% a year. \[\begin{array} { |
\hline 12 \% & 10 \% & 6 \% & \text { Year } \\
\hline 0.893 & 0.909 & 0.943 & 1 \\
\hline 0.797 & 0.826 & 0 .890 & 2 \\
\hline 0.712 & 0.751 & 0.840 & 3 \\
\hline 0.636 & 0.683 & 0.792 & 4 \\
\hline & & & \end{array}\]
A) $14,240
B) $16,800
C) $15,020
D) $15,840
Q2) In net present value analysis for a proposed capital investment, the expected future net cash flows are reduced to their present values.
A)True
B)False
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