Managerial Accounting Mock Exam
Course Introduction
Managerial Accounting focuses on the use of accounting information for internal planning, control, and decision-making within organizations. The course covers key concepts such as cost behavior, budgeting, performance evaluation, and cost-volume-profit analysis. Students learn to prepare and interpret financial data, develop budgets, and utilize various analytical tools for effective management decisions. Emphasis is placed on the strategic role of managerial accounting in supporting business objectives and improving organizational efficiency, making it essential for those aspiring to leadership positions in finance, operations, or general management.
Recommended Textbook
Introduction to Accounting An Integrated Approach 6th Edition by Penne Ainsworth
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Page 2
Chapter 1: Accounting and Business
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Q1) It has been said that the periodicity concept "causes all the in accounting".What is the periodicity concept and how does it "cause "?
Answer: The periodicity concept requires business to measure its performance at regular intervals,rather than waiting until the business ceases to operate and then measuring whether it made money.Periodically measuring performance can create measurement when the time period measured does not capture a firm's long-term performance.For example,if a business signs a significant contract just days after the end of the fiscal year that event will not be reported on in financial statements.However,in the long-run the sum of the periodic measures will sum to the performance of the company over time. Therefore,periodic measurement should not be viewed as a single assessment but part of a collection of assessments over time.
Q2) All of the following are external stakeholders except:
A)employees
B)suppliers
C)customers
D)creditors
Answer: A
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Chapter 2: Business Processes and Accounting Information
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Q1) When a company operates in an uncertain environment that has rapidly changing products it is more likely to have an
A)Mechanistic organizational structure with an efficiency strategy
B)Organic organizational structure with a flexible strategy
C)Holistic organizational structure with an organic strategy
D)Synthetic organizational structure with an decentralized strategy
Answer: B
Q2) When a company operates in a more certain environment it tends to focus inward and have a
A)Flexible strategy
B)Rigid strategy
C)Loose strategy
D)Efficiency strategy
Answer: D
Q3) Which of the following are the three phases of a business?
A)start-up,development and decline
B)operating,investing and financing
C)planning,performing and evaluating
D)revenue,expenditure and conversion
Answer: C
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Chapter 3: Operating Processes: Planning and Control
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Sample Questions
Q1) A cost that is constant per unit but varies in total is called a(n):
A)Activity cost
B)Variable cost
C)Fixed cost
D)Mixed cost
Answer: B
Q2) The formula for a mixed cost is:
A)Y = b
B)Y = m(X)
C)Y = m(X)+ b
D)Y = m(X)+ b(X)
Answer: C
Q3) Determining the credit and payment policies for customers is part of the:
A)Revenue process
B)Collection process
C)Expenditure process
D)Conversion Process
Answer: A
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Chapter 4: Short-Term Decision Making
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Q1) Salaries of product-line managers are an example of a/an
A)unit-related cost.
B)batch-related cost.
C)facility-sustaining cost.
D)product-sustaining cost.
Q2) Assuming Knockdown has no way of purchasing any additional gloves,and,that accepting this order will mean losing an equivalent quantity of sales to regular customers,Knockdown should:
A)reject the offer since income will decrease by $7,500
B)accept the offer since income will increase by $7,500
C)reject the offer since income will decrease by $52,500
D)accept the offer since income will increase by $52,500
Q3) The change in total revenue,if one alternative is implemented instead of another,is referred to as:
A)sales revenue
B)joint revenue
C)operating revenue
D)incremental revenue
Q4) Explain why contribution margin is all profit above the breakeven point.
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Chapter 5: Strategic Planning Regarding Operating Processes
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Q1) If a product has a cost of the $250 and a selling price of $450,what is the products markup percentage?
A)200%
B)80%
C)44.4%
D)Not enough information to calculate
Q2) Capital Industries' president receives a bonus equal to 6% of net income.This bonus is included in the determination of net income.If the company's income before bonus was $3,800,000,the amount of the bonus is:
A)$215,094
B)$228,000
C)$242,553
D)cannot be determined from the information given
Q3) Which of the following is not involved in Pure Competition
A)Cotton farmer in Texas
B)National Basketball Association franchise
C)Starbucks
D)Macy's
Q4) What is the distinction between penetrating and predatory pricing?
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Chapter 6: Planning, The Balanced Scorecard, and Budgeting
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Sample Questions
Q1) Describe how the sales budget is related to the production budget.
Q2) Lichti Industries sold 50,000 ice chests at $20 each during April of 2010.Unit sales are projected to increase 10% in May and June while the selling price will be increased by $1.00 for May and another $1 in June.The estimated sales revenue for June of 2010 is:
A)$1,331,000
B)$1,210,000
C)$1,270,500
D)$1,155,000
Q3) Lyle Industries sold 80,000 ice chests at $30 each during April of 2010.Unit sales are projected to increase 5% in May and June while the selling price will be increased by $2.00 for May and another $1 in June.The estimated sales revenue for June of 2010 is:
A)$2,772,000
B)$2,910,600
C)$2,822,400
D)$2,640,000
Q4) What information must a firm have to prepare a sales budget? How does it get this information?
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Chapter 7: Accounting Information Systems
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Sample Questions
Q1) Prepare journal entries to record the following transactions:
(a.) Purchased $12,500 of inventory on account.
(b.) Paid $1,800 for office supplies.
(c.) Performed a service and immediately collected $600.
(d.) Paid the monthly rent, $1,150.
(e.) Paid twenty percent of the amount owed for the inventory purchased in (a) above.
(f.) Sold products for $8,000 on account that cost $4,500.
(g.) Borrowed $12,000 by signing a note payable.
(h.) Received the amount owed from the customer of (f) above.
Q2) Debiting an account always means
A)entering an amount on the right side of the account
B)entering an amount on the left side of the account
C)increasing the account balance
D)decreasing the account balance
Q3) Which of the following accounts would be closed at the end of a period?
A)Sales
B)Retained Earnings
C)Unearned Revenue
D)Prepaid Expense
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Page 9
Chapter 8: Purchasinghuman Resourcespayment Process:
Recording and Evaluating Expenditure Process Activities
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Q1) Kinsey Company had beginning inventory of $50,000,ending inventory of $54,000,and cost of goods sold of $240,000.What was the cost of goods purchased?
A)$294,000
B)$290,000
C)$244,000
D)$236,000
Q2) Explain the difference between a periodic inventory system and a perpetual one.If a firm uses a perpetual inventory system,it still has to physically count the inventory on hand at least once a year.Why?
Q3) Which of the following payroll items is an expense to the employer?
A)Federal income taxes
B)Union dues
C)State unemployment taxes
D)United way contributions by employee
Q4) Which of the following payroll items is not used to determine net pay?
A)Federal income taxes
B)Union dues
C)Social security taxes
D)State unemployment taxes
10
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Chapter 9: Recording and Evaluating Conversion Process Activities
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Sample Questions
Q1) Which of the following is not associated with the manufacture and sale of a product?
A)Finished Goods Inventory
Work-in-Process
B)Cost of Goods Sold
Finished Goods Inventory
A/R Sales
C)Work-in-Process
Raw Material Inventory
D)Manufacturing Overhead
Work-in-Process
Q2) Describe the flow of costs through the conversion cycle.[This can also be stated as: Draw a picture showing the flow of costs through the conversion cycle.]
Q3) The direct labor usage variance is:
A)$2,850U
B)$2,925F
C)$4,125F
D)$4,200U
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Chapter 10: Recording and Evaluating Revenue Process
Activities
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Sample Questions
Q1) In periods of rising prices LIFO result in lower income tax expense than FIFO? Explain why this occurs.
Q2) Voyager Products,Inc.reported sales revenue of $295,000,beginning and ending accounts receivable of $24,600 and $31,800,respectively,and beginning and ending customer deposits of $18,600 and $14,500,respectively.Cash collections from customers during the year were:
A)$306,300
B)$295,000
C)$283,700
D)$277,700
Q3) Anthony Company sold merchandise on account to a customer at a price of $5,000.The merchandise cost Anthony $4,200.The terms of the sale were 3/10,n/30.If the customer paid within the discount period,by how much did this transaction increase Anthony's net income?
A)$5,000
B)$ 800
C)$ 650
D)$ 300
Q4) If prices don't change over time,what will be the differences between LIFO and FIFO?
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Chapter 11: Time Value of Money
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Q1) The future value of a $20,000 investment at the end of 7 years,assuming 9% simple interest,is:
A)$ 36,560.00
B)$ 32,600.00
C)$ 10,940.00
D)$184,008.00
Q2) If compounding is changed from an annual to a semiannual basis,what happens to future value and present value? Future value Present value
A)Decreases Decreases
B)Decreases Increases
C)Increases Decreases
D)Increases Increases
Q3) Your client is 25 years old and wants to start receiving payments of $100,000 per year when she retires on her 60<sup>th</sup> birthday until her 89<sup>th</sup> birthday.As her financial advisor,how much must she invest every year staring today to achieve her goal if she can earn 7 percent annual interest?
Q4) How much must you invest today to receive ten,$6,000 payments every 3 months (quarterly)if you can earn 10% annual interest?
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Page 13
Chapter 12: Planning Investments: Capital Budgeting
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Q1) After computing a net present value that indicated that the return would be in excess of the cost of capital,you presented an investment proposal to the CFO of your company.The CFO notices that you assumed that the cost of the asset would be written off evenly over its economic life.She comments that the firm often uses accelerated depreciation (a method under which more depreciation is recorded in the early years of an asset's life and less later).How will this change in depreciation methods affect the net present value? Explain.
Q2) Donnelly Company is considering investing in a sizable piece of equipment and their analysis yielded a positive NPV of $23,500.Which of the following statements is not True?
A)The new equipment will increase net income by $23,500
B)Donnelly should buy the machine
C)The new equipment is likely to generate a return greater than Donnelly's cost of Capital.
D)The Donnelly Company should recover the cost of the new equipment.
Q3) Explain how performance evaluation based on accrual accounting may lead to investment decisions that are not in the best interests of the firm.
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Chapter 13: Planning Equity Financing
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Q1) John,Doe and Smitty are partners in the NoName Company.Their profit and loss sharing relationship is 7:5:3.Doe's share of a $75,000 partnership loss would be:
A)$(37,500)
B)$(25,000)
C)$(20,000)
D)$(15,000)
Q2) When stipulated cumulative preferred stock dividends have not been paid for a given period of time,they are referred to as:
A)participating dividends
B)dividends in arrears
C)dividends payable
D)stock dividends
Q3) On which of the following dates is no accounting entry made?
A)Date of payment
B)Date of record
C)Date of declaration
D)Entries are made on all three dates
Q4) Does the term "preferred" mean that preferred stock is a better investment than common stock?
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Chapter 14: Planning Debt Financing
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Q1) Bonds with a face interest rate receive cash proceeds equal to the present value of the
A)principal to be paid at the maturity date
B)interest to be paid over the term of the bonds
C)interest to be paid over the term of the bonds plus the present value of the principal to be paid at the maturity date
D)interest to be paid over the term of the bonds minus the present value of the principal to be paid at the maturity date
Q2) Documented restrictions that lenders place in the debt agreements for firms using their funds are called:
A)covenants
B)debentures
C)subordinates
D)preemptive rights
Q3) When a note is issued at a discount which of the following is not true?
A)Borrower gets less cash than the face value
B)Interest expense is greater than cash paid for interest during a period
C)Cash repaid at maturity is less than face value of the note
D)Market rate of interest is greater than face rate of interest on note
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Page 16
Chapter 15: Recording and Evaluating Capital Resource
Process Activities: Financing
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Q1) Which of the following is true about a stock dividend.
A)Assets decrease and owners' equity decreases
B)Assets increase and Liabilities increase
C)Contributed Capital increases and Retained earnings decreases
D)Liabilities decrease and Contributed Capital Increases
Q2) The premium on Notes Payable account is a(n):
A)adjunct liability account
B)contra liability account
C)contributed liability account
D)equity account
Q3) A common stock dividend results in a decrease in:
A)assets
B)common stock
C)retained earnings
D)both assets and retained earnings
Q4) If a firm buys its own stock,how would the stock be reported on the balance sheet? Why is it reported that way?
Q5) "If a firm issues bonds at more than face value,the difference is a gain which should be recognized in the period of issuance." Is this statement correct? Explain.
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Chapter 16: Recording and Evaluating Capital Resource
Process Activities: Investing
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Q1) Comptel Corporation purchased land,a building and equipment for a total cost of $525,000.The appraised values of the land,building and equipment were $150,000,$375,000 and $75,000,respectively.The purchase price allocated to the equipment should be:
A)$ 65,625
B)$ 75,000
C)$131,250
D)$150,000
Q2) Which of the following statements is correct?
A)firms must use the same depreciation methods for tax and financial reporting
B)return on assets based on reported values tends to be overstated
C)all the assets a firm owns are reported on its balance sheet
D)plant assets are reported at fair market value
Q3) Harold Lynd Corporation sold equipment with an original cost of $90,000 for $55,000 cash and recorded a gain of $5,000.What was the book value of the equipment on the date of the sale?
A)$50,000
B)$90,000
C)$60,000
D)$70,000
Page 18
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Chapter 17: Company Performance: Profitability
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Q1) Given the below data,create the inventory cost per unit using:
a.full-absorption costing
b.variable costing
c.throughput costing
Direct labor per part = $10.00
Direct materials per part = $ 6.00
Selling & Administration per part = $ 5.00
Shop Overhead per part = $ 30.00
Q2) The firm's net income for 2010 was:
A)$110,000
B)$102,000
C)$ 80,000
D)unable to determine from the information given
Q3) Kaiser Corporation's net income for 2010 is:
A)$3,001,700
B)$4,306,000
C)$4,450,000
D)$4,618,000
Q4) Explain how a firm can manipulate income by increasing inventory under full absorption costing.
19
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Chapter 18: Company Performance: Owners Equity and Financial Position
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Q1) Paid-in-Capital in Excess of Par would be reported on the balance sheet as:
A)a long-term investment
B)other owners' equity
C)contributed capital
D)retained earnings
Q2) What order are current assets classified?
A)liquidity
B)value
C)assets
D)age
Q3) In 2010 Townsend Inc discovered that its ending inventory in 2009 was too big by $95,000.How much will Townsend'ss beginning retained earnings (Jan.1,2010)need to be adjusted to correct this error given a tax rate of 30%.
A)Increase retained earnings $66,500
B)Do not adjust retained earnings
C)Decrease retained earnings by $95,000
D)Decrease retained earnings $66,500.
Q4) Create the current asset section of the balance sheet.Include a heading and a list of at least 5 accounts typically found in the current asset section of the balance sheet.
Page 20
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Chapter 19: Company Performance: Cash Flows
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Q1) Which of the following activities is correctly associated with its cash flow classification?
A)Operating - Sale of company's own common stock
B)Financing - Purchase of Treasury Stock
C)Investing - Payment of rent for next two months
D)Financing - Payment of interest on bonds payable
Q2) The issuance of common stock in exchange for a patent would be reported in the following section of the statement of cash flows:
A)investing activities
B)operating activities
C)financing activities
D)noncash investing and financing activities
Q3) The reporting format for the statement of cash flows which shows the actual cash inflows and outflows of operating activities is the:
A)direct format
B)indirect format
C)noncash format
D)allowance format
Q4) What are the four primary purposes of the statement of cash flows?
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Chapter 20: Company Performance: Comprehensive Evaluation
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Q1) Which of the following would be most useful in deciding whether or not to purchase a firm's common stock?
A)return on equity
B)return on assets
C)asset turnover
D)current ratio
Q2) In a common-sized income statement,each item is shown as a percentage of
A)income from continuing operations
B)comprehensive income
C)net income
D)net sales
Q3) Which of the following helps analysts understand the relationship between two financial statement items?
A)common-sized financial statements
B)performance analysis
C)ratio analysis
D)trend analysis
Q4) What is the role of auditors in capital markets? How is this role affected by the fact that auditors are paid by the firms they audit?
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