Managerial Accounting Mock Exam
Course Introduction
Managerial Accounting focuses on the use of accounting information by managers within organizations to inform decision-making, strategy, and operational control. The course covers core topics such as cost behavior, budgeting, standard costing, variance analysis, performance evaluation, and capital budgeting. Students learn how to analyze financial data, prepare reports for internal audiences, and utilize various analytical tools to improve organizational efficiency and effectiveness. Emphasis is placed on both the quantitative and qualitative aspects of managerial decision-making, as well as ethical considerations in the management accounting process.
Recommended Textbook
Financial and Managerial Accounting Information for Decisions 5th Edition by John J Wild
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Page 2
Chapter 1: Introducing Accounting in Business
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Sample Questions
Q1) How would the accounting equation of Boston Company be affected by the billing of a client for $10,000 of consulting work completed?
A) +$10,000 accounts receivable, -$10,000 accounts payable.
B) +$10,000 accounts receivable, +$10,000 accounts payable.
C) +$10,000 accounts receivable, +$10,000 cash.
D) +$10,000 accounts receivable, +$10,000 consulting revenue.
E) +$10,000 accounts receivable, -$10,000 consulting revenue.
Answer: D
Q2) Ethical behavior requires:
A) That an auditor's pay not depend on the figures in the client's reports.
B) Auditors to invest in businesses they audit.
C) Analysts to report information favorable to their companies.
D) Managers to use accounting information to benefit themselves.
E) That an auditor provides a favorable opinion.
Answer: A
Q3) Identify several opportunities in accounting and its related fields.
Answer: The traditional areas of accounting include financial accounting,managerial accounting,and tax accounting.Work in related fields includes lending,underwriting,market research,and business valuation.
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Page 3
Chapter 2: Analyzing and Recording Transactions
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Sample Questions
Q1) An account used to record the owners' investments in the business is called:
A) Dividends
B) Common Stock
C) Revenue
D) Expense
E) Liability
Answer: B
Q2) Indicate whether a debit or credit entry would be made to record the following changes in each account:
a.To decrease Cash.
b.To increase Common Stock.
c.To decrease Accounts Payable.
d.To increase Salaries Expense.
e.To decrease Supplies.
f.To increase Revenue.
g.To decrease Accounts Receivable.
h.To increase Retained Earnings.
Answer: a.Credit,b.Credit,c.Debit,d.Debit,e.Credit,f.Credit,g.Credit,h.Credit
Q3) Revenues and expenses are two categories of ____________________ accounts.
Answer: equity
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Chapter 3: Adjusting Accounts and Preparing Financial Statements
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Sample Questions
Q1) Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.
A)True
B)False
Answer: True
Q2) Compute the missing amounts:
(1)The Prepaid Insurance account had a $455 debit balance at the beginning of the current year; $650 of insurance premiums were paid during the year; and the year-end balance sheet showed $420 of prepaid insurance; consequently,the income statement for the year must have shown $______________ of insurance expense.
(2)The Office Supplies account began the current year with a $235 debit balance; the income statement for the year showed $475 of office supplies expense; and the year-end balance sheet showed the current asset,office supplies,at $225; consequently,if all supplies were accounted for,$____________ of office supplies must have been purchased during the year.
Answer: (1)$685 = $455 + $650 - $420
(2)$465 = $225 + $475 - $235
Q3) Profit margin equals ___________________ divided by net sales.
Answer: net income
Page 5
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Chapter 4: Accounting for Merchandising Operations
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Sample Questions
Q1) The gross margin ratio equals net sales less ___________ divided by net sales.
Q2) Assets tied up in inventory are referred to as nonproductive assets.
A)True
B)False
Q3) Accounting and reporting for merchandise purchases and sales are treated identically under both GAAP and IFRS.
A)True
B)False
Q4) The current period's ending inventory is:
A) The next period's beginning inventory.
B) The current period's cost of goods sold.
C) The prior period's beginning inventory.
D) The current period's net purchases.
E) The current period's beginning inventory.
Q5) In a perpetual inventory system,the merchandise inventory account reflects the cost of goods available for sale.
A)True B)False
Q6) The acid-test ratio reflects the ___________ of a company.
Q7) What is inventory shrinkage? How do managers account for shrinkage?
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Chapter 5: Inventories and Cost of Sales
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Sample Questions
Q1) Given the following information,determine the cost of goods sold for December 31 using the FIFO perpetual inventory method.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit.
December 15: 20 units were purchased at $10.15 per unit.
December 22: 18 units were sold at $35 per unit.
A) $282.15
B) $332.10
C) $281.25
D) $290.70
E) $210.30
Q2) If the _______________ is responsible for paying the freight,ownership of merchandise inventory passes when goods are loaded on the transport vehicle.
Q3) If damaged goods can be sold at a reduced price,they are included in inventory at their ________________________.
Q4) How do the consistency concept and the full disclosure principle affect inventory valuation?
Q5) Explain why the lower of cost or market rule is used to value inventory.
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Chapter 6: Cash and Internal Controls
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Sample Questions
Q1) Why is it a matter of good internal control to deposit all cash receipts daily and make all payments for goods and services by check?
A) When no paper documents are required, there is increased convenience and lower cost
B) These actions control the access to cash and create an independent record of all cash activities.
C) These procedures result in a more extensive testing of a company's records.
D) The Sarbanes-Oxley Act requires these steps be taken by each publicly traded company.
E) These procedures allow management to determine if projected cash receipts and disbursements came in over or under budgeted amounts.
Q2) _______________________ are deposits made and recorded by the depositor but not yet recorded on the bank statement.
Q3) _________________________ is the electronic transfer of cash from one party to another.
Q4) An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.
Q5) List the main principles of internal controls.
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Chapter 7: Accounts and Notes Receivable
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Sample Questions
Q1) What is the maturity date of a six-month note receivable dated February 5?
Q2) It is never good practice to accept a note receivable in exchange for an overdue account receivable.
A)True
B)False
Q3) If a customer owes interest on accounts receivable,the company should debit Interest Revenue and credit Accounts Receivable.
A)True
B)False
Q4) Accounts receivable occur from credit sales to customers.
A)True
B)False
Q5) The person to whom a note is payable to is known as the ______________.
Q6) The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when the company determines it to be uncollectible.
A)True
B)False
Q7) How does Jarrett Pumphrey of ClearCorrect,view decisions involving sales on credit?
Page 9
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Chapter 8: Long-Term Assets
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Sample Questions
Q1) 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.
Q2) The total depreciation expense over an asset's useful life will be identical across all methods of depreciation.
A)True
B)False
Q3) ___________________ are additional costs of plant assets that do not materially increase the asset's life or productive capabilities.
Q4) Total asset cost plus depreciation expense equals book value.
A)True
B)False
Q5) How is the cost principle applied to plant asset acquisitions,including lump-sum purchases?
Q6) What are the general accounting procedures for recording asset disposals?
Q7) Why is the useful life of a plant asset so difficult to predict?
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Chapter 9: Current Liabilities
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Sample Questions
Q1) The full disclosure principle requires the reporting of contingent liabilities that are reasonably possible.
A)True
B)False
Q2) A high value for the times interest earned ratio means that a company is of high risk to the borrower.
A)True
B)False
Q3) The rate for FICA Social Security is 6.2% and the rate for FICA Medicare is 1.45%.Calculate the total amount of FICA withholding for an employee whose pay is $2,400 and is entirely subject to these FICA taxes.
Q4) Uncertainties such as natural disasters that could happen in the future:
A) Are not contingent liabilities because they are future events not arising out of past transactions or events.
B) Are contingent liabilities because they are future events arising from past transactions or events.
C) Should be disclosed because of their usefulness to financial statements.
D) Are estimated liabilities because the amounts are uncertain.
E) Arise out of transactions such as debt guarantees.
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Chapter 10: Long-Term Liabilities
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Sample Questions
Q1) GAAP criteria for identifying a lease as a capital lease are more general than the criteria under IFRS.
A)True
B)False
Q2) Explain the accounting procedures when a bond's interest period does not coincide with the issuer's accounting period.
Q3) Identify and explain the advantages and disadvantages of bond financing.
Q4) A company has bonds outstanding with a par value of $600,000.The unamortized discount on these bonds is $3,000.The company retired these bonds by buying them on the open market at 98.What is the gain or loss on this retirement?
A) $0 gain or loss
B) $9,000 gain
C) $9,000 loss
D) $14,500 gain
E) $14,500 loss
Q5) A bond's par value is not necessarily the same as its market value.
A)True
B)False
Q6) What is an annuity?
Page 12
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Chapter 11: Corporate Reporting and Analysis
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Sample Questions
Q1) A corporation's minimum legal capital is often defined to be the total par value of the shares:
A) Issued
B) Authorized
C) Subscribed
D) Outstanding
E) In treasury
Q2) If a company discovers a mistake in 2013 that was made in 2012,the company records the adjustment in the year ________.
Q3) Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:
A) Participating preferred stock
B) Callable preferred stock
C) Cumulative preferred stock
D) Convertible preferred stock
E) Noncumulative preferred stock
Q4) ________________________ is the number of shares that a corporation's charter allows it to sell.
Q5) To what does Andrew Mason,the founder of Groupon,attribute his success?
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Chapter 12: Reporting Cash Flows
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Sample Questions
Q1) The cash flow on total assets ratio is defined as average total assets divided by operating income.
A)True
B)False
Q2) A company's income statement showed the following: net income,$124,000; depreciation expense,$30,000,and gain on sale of plant assets,$14,000.An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400.Calculate the net cash provided or used by operating activities.
A) $139,000
B) $141,000
C) $145,800
D) $155,000
E) $167,000
Q3) Explain how to determine cash flows from investing and financing activities.
Q4) A company reported operating cash flows of $57,000 and average total assets of $962,000.Calculate the company's cash flow on total assets ratio.
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Page 14
Chapter 13: Analysis of Financial Statements
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Sample Questions
Q1) Comparative calendar-year financial data for a company are shown below:
\[\begin{array} { | l | r | r | }
\hline & { 2014 } & 2013 \\
\hline \text { Sales } & \$ 720,000 & \$ 607,500 \\
\hline \text { Cost of goods sold } & 450,000 & 382,700 \\
\hline \text { Operating expenses } & 168,500 & 134,900 \\
\hline \text { Net income } & 51,200 & 51,700 \\
\hline & & \\
\hline & \text { December 31, } & \text { December 31, } \\
\hline & 2014 & 2013 \\
\hline \text { Accounts receivable (net } & \$ 157,500 & \$ 162,500 \\
\hline \text { Inventory } & 139,500 & 110,500 \\
\hline \text { Total assets } & 1,012,500 & 944,800 \\
\hline \end{array}\]
Calculate:
(1)Accounts receivable turnover for 2014.
(2)Days' sales uncollected for 2014.
(3)Inventory turnover for 2014.
(4)Days' sales in inventory for 2014.
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Page 15
Chapter 14: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) The management concept of customer orientation causes a company to spend large amounts on advertising to convince customers to buy the company's standard products.
A)True
B)False
Q2) The beginning and ending finished goods inventories of a company were $91,000 and $94,000 respectively.If cost of goods sold equaled $800,000,what is the amount of cost of goods manufactured for this period?
A) $706,000
B) $709,000
C) $797,000
D) $803,000
E) $3,000
Q3) ___________________ is the process of setting goals and making plans to achieve them.
Q4) Newly completed units are combined with beginning finished goods inventory to make up total ending goods in process inventory.
A)True
B)False
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Chapter 15: Job Order Costing and Analysis
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Sample Questions
Q1) In a job order cost accounting system,the total balances of all of the job cost sheets for unfinished jobs equal the balance in the Goods in Process Inventory account.
A)True
B)False
Q2) Materials requisitions and time tickets are cost accounting source documents.
A)True
B)False
Q3) A company has an overhead application rate of 125% of direct labor costs.How much overhead would be allocated to a job if it required total labor costing $20,000?
A) $5,000
B) $16,000
C) $25,000
D) $125,000
E) $250,000
Q4) In a job order cost accounting system,raw materials requisitioned as direct materials are debited to ______________________; indirect materials are debited to ___________________.
Q5) How does job order cost accounting affect the company Astor and Black?
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Chapter 16: Process Costing
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Sample Questions
Q1) The following data are available for a company's manufacturing activities: \(\begin{array}{ll}
\text { Beginning goods in process inventory } & 5,000 \text { units, } 1 / 4 \text { of the labor added this } \\ & \text { period } \\
\text { Units started and completed } & 15,000\\
\text { Ending goods in process inventory}& 6,000 \quad 6,000 \text { units, \( 1 / 2 \) of the labor added this }\\ &\text { period} \end{array}\)
Assume the company uses FIFO inventory.If materials are added when the production process begins and direct labor is applied uniformly throughout the process,what are the equivalent units for direct materials and for direct labor,respectively?
A) 16,250; 19,250
B) 16,250; 21,750
C) 21,000; 19,250
D) 19,250; 18,750
E) 21,000; 22,250
Q2) What was the cost of the beginning inventory of finished goods?
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Page 18
Chapter 17: Activity-Based Costing and Analysis
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Sample Questions
Q1) Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?
A) Plantwide overhead rate method and departmental overhead rate method.
B) Cost pool overhead rate method and plantwide overhead rate method.
C) Departmental overhead rate method and activity-based costing.
D) Activity-based costing and plantwide overhead rate method.
E) Departmental overhead rate method and cost pool overhead rate method.
Q2) The departmental overhead rate method allows each department to have its own overhead rate and its own allocation base.
A)True B)False
Q3) A company estimates that overhead costs for the next year will be $3,600,000 for indirect labor,$200,000 for factory utilities,and $21,500 for depreciation on factory machinery.The company uses machine hours as its overhead allocation base.If 764,300 machine hours are planned for this next year,what is the company's plantwide overhead rate?
Q4) In activity-based costing,an activity can involve several related tasks.
A)True B)False
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Chapter 18: Cost-Volume-Profit Analysis
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Sample Questions
Q1) A company manufactures a product and sells it for $120 per unit.The total fixed costs of manufacturing and selling the product are expected to be $155,250,and the variable costs are expected to be $75 per unit.What is the company's break-even point in (a)units and (b)dollar sales?
Q2) Unit contribution ratio is calculated by dividing sales price per unit by the unit contribution margin.
A)True
B)False
Q3) A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:
A) Margin of safety line.
B) Break-even line.
C) Contribution margin line.
D) Estimated line of cost behavior.
E) Standard cost line.
Q4) There are at least three different methods to estimate costs.These methods are the _______________,_______________,and _______________methods.
Q5) Define variable cost,fixed cost,and mixed cost.
Q6) Discuss how CVP analysis can be useful in planning.
Page 20
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Chapter 19: Variable Costing and Performance Reporting
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Sample Questions
Q1) ________________________ costing treats fixed overhead as a period cost.
Q2) Blackbird,Incorporated reports the following information regarding its production cost:
\(\begin{array}{ll}
\text { Units produced } & 39,000 \text { units } \\
\text { Direct labor } & \$ 13 \text { per unit } \\
\text { Direct materials } & \$ 17 \text { per unit } \\
\text { Variable overhead } & \$ 7,800,000 \text { in total } \\
\text { Fixed overhead } & \$ 9,750,000 \text { in total }
\end{array}\)
a.Compute production cost per unit under variable costing.
b.Compute production cost per unit under absorption costing.
Q3) Managers should accept special orders provided the special order price exceeds full cost.
A)True B)False
Q4) Sales less variable costs equals manufacturing margin.
A)True B)False
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Chapter 20: Master Budgets and Performance Planning
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Q1) In preparing a budget for the last three months of the current year,Urban Company is planning the units of merchandise it must order each month.The company's policy is to have 15% of the next month's sales in its inventory at the end of each month.Projected sales for October,November,and December are 27,000 units,29,500 units,and 32,500 units,respectively.How many units must be ordered in November?
Q2) The manufacturing budget shows only the direct materials needed for production.
A)True
B)False
Q3) Kyoto's budgeted production for May is:
A) 200 units
B) 212 units
C) 268 units
D) 280 units
E) 292 units
Q4) Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating nonvalue-added activities.
A)True
B)False
Q5) What is activity-based budgeting?
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Chapter 21: Flexible Budgets and Standard Costs
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Q1) The following company information is available:
\[\begin{array} { l l }
\text { Direct materials used for production } & 712 \text { pounds } \\
\text { Standard quantity for units produced } & 750 \text { pounds } \\
\text { Stardard cost per pound of direct material } & \$ 48 \\
\text { Actual cost per pound of direct material } & \$ 50 \end{array}\]
The direct materials quantity variance is:
A) $1,824 favorable
B) $1,424 favorable
C) $400 favorable
D) $1,824 unfavorable
E) $1,424 unfavorable
Q2) Whistler Company determined that in the production of their products last period,they had a favorable price variance and an unfavorable quantity variance for direct materials.What might be the cause of this pattern of variances?
Q3) The fixed overhead variance can be broken down into the _________________ variance and the _________________ variance.
Q4) What are sales variances? How are they used?
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Chapter 22: Decentralization and Performance Measurement
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Q1) Vaughn Co.operates three separate departments (A,B,C).The data below are provided for the current year:
\[\begin{array} { l r l }
\text { Total sales } & \$ 120,000 & ( \$ 40,000 \text { from each department) } \\ \text { Cost of goods sold } & 80,000 & ( 50 \% \text { from } A ; 25 \% \text { from } B ; 25 \% \text { from } C ) \\
\text { Direct expense } & 26,000 & \$ \$ 6,000 \text { from } A ; \$ 12,000 \text { from } B ; \$ 8,000 \\
& & \text { from } C ) \\
\text { Indirect expenses } & 9,000 & \end{array}\]
Required: Prepare an income statement showing the departmental contributions to overhead for the current year.
Q2) What is a transfer price and what methods are used to set its value?
Q3) Direct expenses must be allocated across departments. A)True B)False
Q4) What is the purpose of a responsibility accounting system?
Page 24
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Chapter 23: Relevant Costing for Managerial Decisions
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Q1) A company has the choice of either selling 750 defective units as scrap or rebuilding them.They have already spent $14 per unit making these items.The company could sell the defective units as they are for $8 per unit.Alternatively,it could rebuild them with incremental costs of $3 per unit for materials,$3per unit for labor,and $1per unit for overhead,and then sell the rebuilt units for $15.00 each.What should the company do?
A) Sell the units as scrap.
B) Rebuild the units.
C) It does not matter because both alternatives have the same result.
D) Neither sell nor rebuild because both alternatives produce a loss. Instead, the company should store the units permanently.
E) Throw the units away.
Q2) A company inadvertently produced 5,000 defective portable MP3 players.The players cost $22 each to be manufactured.A salvage company will purchase the defective units as they are for $18 each.The production manager reports that the defects can be corrected for $10 per unit,enabling the company to sell them at the regular price of $33.The repair operations would not affect other production operations.Prepare an analysis that shows which action should be taken.
Q3) Explain and give several examples of qualitative decision factors.
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25
Chapter 24: Capital Budgeting and Investment Analysis
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Q1) A hurdle rate is the minimum acceptable rate of return for an investment.
A)True
B)False
Q2) A company can buy a machine that is expected to have a three-year life and a $30,000 salvage value.The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be received at the end of each year.If a table of present values of 1 at 12% shows values of 0.8929 for one year,0.7972 for two years,and 0.7118 for three years,what is the net present value of the cash flows from the investment,discounted at 12%?
Q3) Capital budgeting decisions usually involve analysis of:
A) Cash outflows only.
B) Short-term investments only.
C) Long-term investments only.
D) Investments with certain outcomes only.
E) Operating revenues.
Q4) Capital budgeting decisions are not affected by return on investment considerations.
A)True
B)False
Q5) Internal rate of return is expressed as a _________________.
Page 26
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Chapter 25: Accounting With Special Journals
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Q1) If the total balance of the accounts receivable ledger equals the total of the controlling Accounts Receivable account,then the accounts are presumed to be correct.
A)True
B)False
Q2) After posting is completed,there may be an error if:
A) The sum of the customer account balances does not equal the total in the sales journal.
B) The sum of the accounts receivable ledger does not equal the balance in the Sales account.
C) The sum of the customer account balances does not equal the Accounts Receivable controlling account balance.
D) The balance in the sales journal does not equal the Accounts Receivable account balance.
E) The sum of the accounts receivable ledger does not equal the balance in the sales journal.
Q3) The __________________ principle requires that an accounting information system conform to a company's activities,personnel,and structure and must adapt to a company's unique characteristics.
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Chapter 26: Time Value of Money
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Q1) A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years.The fund will earn 7% interest,and the company intends to put away a series of equal year-end amounts for seven years.What amount must the company deposit annually?
Q2) Crowe Company has acquired a building with a loan that requires payments of $20,000 every six months for five years.The annual interest rate on the loan is 12%.What is the present value of the building?
A) $72,096
B) $113,004
C) $147,202
D) $86,590
E) $200,000
Q3) Annette has a loan that requires a $25,000 payment at the end of three years.The interest rate on the loan is 5%,compounded annually.How much did Annette borrow today?
Q4) The present value factor for determining the present value of a single sum to be received three years from today at 10% interest compounded semiannually is 0.7462.
A)True B)False
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Chapter 27: Investments and International Operations
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176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/72496
Sample Questions
Q1) A company received dividends of $0.35 per share on 300 shares of stock.The journal entry to record this transaction would be to debit Cash for $105 and credit Dividend Revenue for $105.
A)True
B)False
Q2) An investing company that owns _________ of another (investee)company's voting stock (but not more than 50%)is presumed to have a significant influence over the investee.
Q3) The price of one currency stated in terms of another currency is called a(n):
A) Foreign exchange rate
B) Currency transaction
C) Historical exchange rate
D) International conversion rate
E) Currency rate
Q4) Explain the difference between short-term and long-term investments and give examples of each.
Q5) A company reported net income of $100,000 and average total assets of $425,000.Calculate its return on total assets.
Q6) Explain how to record the sale of trading securities.
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Chapter 28: Accounting for Partnerships
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126 Verified Questions
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Sample Questions
Q1) Jimmy Hayes is a partner in Sports Promoters.His beginning partnership capital balance for the current year $65,000 and his ending partnership capital balance for the current year is $62,000.His share of this year's partnership income was $5,250.What were his withdrawals for the period?
A) $8,250
B) $3,000
C) $2,250
D) $0
E) $5,250
Q2) Chad Forrester is a limited partner in a sports management firm.During the previous year his return on partnership equity was 16%.The beginning balance in his capital account was $450,000 and his partnership net income for this year was $75,000.What was the balance in Chad's capital account at the end of last year?
A) $525,000
B) $937,500
C) $487,500
D) $468,750
E) $37,500
Q3) How are partners' investments in a partnership recorded?
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