Managerial Accounting Pre-Test Questions
Course Introduction
Managerial Accounting focuses on the processes and techniques used by managers to make informed business decisions. This course covers budgeting, cost analysis, performance evaluation, and financial planning with an emphasis on the use of accounting information for internal organizational purposes. Students will learn how to analyze financial statements, apply costing methods, prepare operating budgets, and utilize various accounting tools to support strategic decision making and improve business operations. Designed for future managers, the course emphasizes the application of accounting data to solve real-world business problems, enhance efficiency, and contribute to achieving organizational goals.
Recommended Textbook
Introduction to Management Accounting 16th Edition by Charles T. Horngren
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17 Chapters
2438 Verified Questions
2438 Flashcards
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Chapter 1: Managerial Accounting,the Business
Organization,and Professional Ethics
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) Many companies derive their competitive advantage from their information,not their physical facilities.
A)True
B)False
Answer: True
Q2) ________ is the field of accounting that develops information for external parties such as stockholders,suppliers,banks and governmental regulatory bodies.
A) Auditing
B) Internal auditing
C) Management accounting
D) Financial accounting Answer: D
Q3) One of a controller's responsibilities is risk management.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Introduction to Cost Behavior and Cost Volume
Profit Relationships
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149 Flashcards
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Sample Questions
Q1) A cost-volume-profit graph has a line for ________ and a line for ________.
A) revenues; variable costs only
B) revenues; fixed costs only
C) revenues; total costs
D) net profit; net loss
Answer: C
Q2) If a company faces declining sales over time,it must restructure its costs to break-even at a lower volume.In order to carry this out,what costs can be reduced?
A) variable costs only
B) fixed costs only
C) variable and fixed costs
D) step costs only
Answer: C
Q3) The horizontal axis on the CVP graph is the dollars of cost and revenue.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Measurement of Cost Behavior
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136 Flashcards
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Sample Questions
Q1) In relation to a cost function,the term reliability means ________.
A) whether the costs and activities can be easily observed
B) whether the cost function conforms to a given mathematical model
C) how well the cost function predicts future costs
D) how well the cost function explains past cost behavior
Answer: D
Q2) The use of high-technology methods rather than labor in manufacturing products usually means a much greater fixed-cost component to total costs.
A)True
B)False
Answer: True
Q3) Managers can eliminate ________ costs entirely for a given year in dire times such as a major recession.However,managers cannot eliminate ________ costs.
A) discretionary variable costs; committed variable costs
B) discretionary fixed costs; committed fixed costs
C) discretionary variable costs; committed fixed costs
D) committed fixed costs; committed variable costs
Answer: B
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5
Chapter 4: Cost Management Systems and Activity-Based Costing
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Which of the following costs is NOT an inventoriable cost for a manufacturing firm?
A) Marketing Expense
B) Factory Supervisor's Salary Expense
C) Wages Expense for security guard in factory
D) Wages Expense for forklift operator in factory
Q2) A cost accounting system called GPK uses ________ cost pools to allocate
A) 10-20; indirect manufacturing costs
B) 1-10; direct manufacturing costs
C) 400 to 2000; indirect manufacturing costs
D) 1-20; direct manufacturing costs
Q3) A century ago,a large proportion of labor costs were direct costs.
A)True
B)False
Q4) Determining the key components of an Activity-Based Costing (ABC)system is the first step in the design of an ABC system.
A)True
B)False
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Chapter 5: Relevant Information for Decision Making With a
Focus on Pricing Decisions
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Which of the following items is usually NOT important to special order decisions?
A) affect of special order on regular business
B) whether idle capacity is available
C) total fixed costs
D) increase in variable costs per unit due to special order
Q2) Discriminatory pricing is the act of charging different prices to different customers for the same product or service.
A)True
B)False
Q3) If perfectly accurate and relevant information is not available for decision making,the accountant should consider using information that is ________.
A) precise but irrelevant
B) imprecise but irrelevant
C) imprecise but relevant
D) imprecise but timely
Q4) Prices based on variable costs represent a contribution approach to pricing. A)True
B)False
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Chapter 6: Relevant Information for Decision Making With a
Focus on Operational Decisions
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Inverness Company is considering the replacement of a machine that is presently used in production.The following data are available:
\(\begin{array}{lll}&\text { Old Machine }&\text { NEW Machine }\\
\text { Original cost } & \$ 57,000 & \$ 35,000 \\
\text { Useful life in years } & 17 & 5 \\
\text { Current age in years } & 12 & 0 \\
\text { Book value } & \$ 39,000 & -\\
\text { Disposal value now } & \$ 8,000 & - \\
\text { Disposal value in } 5 \text { years } & 0 & 0 \\
\text { Annual cash operating costs } & \$ 7,000 & \$ 4,000 \end{array}\)
Adding all five years together,what is the difference in total relevant costs between the old machine and the new machine?
A) $12,000
B) $15,000
C) $22,000
D) $37,000
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Page 8
Chapter 7: Introduction to Budgets and Preparing the Master Budget
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Sebring Company has the following data: \(\begin{array}{ll}\text { Month }&\text { Budgeted Sales }\\
\text { April } & \$ 40,000 \\ \text { May } & 44,000 \\
\text { June } & 50,000 \\
\text { July } & 52,000 \\ \text { August } & 48,000 \end{array}\)
The cost of goods sold percentage is 70% of sales and the desired ending inventory level is 25% of next month's sales at cost.________ was the beginning inventory on May 1.
A) $3,300
B) $7,700
C) $8,750
D) $11,000
Q2) The sales budget should be the responsibility of line management.
A)True
B)False
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9
Chapter 8: Flexible Budgets and Variance Analysis
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143 Flashcards
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Sample Questions
Q1) Cornell Company had the following information available for its specialty product: Standards for one unit of product:
Direct Materials: 5 pounds at $2 per pound
Direct Labor: 0.50 hour at $16 per hour
Materials and Labor Used to produce 8,500 units:
Direct Materials: 46,000 pounds at $3 per pound
Direct Labor: 4,000 hours at ? per hour
If the Direct Labor Price Variance is $4,600 Unfavorable,what is the actual labor rate per hour?
A) $16.00
B) $16.50
C) $17.10
D) $17.15
Q2) The variable overhead spending variance combines ________ and ________ effects.
A) price; quantity
B) price; efficiency
C) efficiency; sales activity
D) rate; sales activity
Q3) ......
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Chapter 9: Management Control Systems and Responsibility Accounting
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148 Verified Questions
148 Flashcards
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Sample
Questions
Q1) A hotel has the following organizational goal: Increase employee satisfaction.Which one of the following is the best performance measure of the organizational goal?
A) number of new employees trained
B) turnover rate of hotel employees
C) overall rating on employee service on guest satisfaction survey
D) percent of guests writing complaints about employees
Q2) Key performance indicators for a balanced scorecard are usually grouped into two categories.
A)True
B)False
Q3) External failure costs associated with quality control do NOT include ________.
A) field repairs
B) rework
C) customer returns of goods
D) warranty expense
Q4) Managerial effort does not necessarily have to accompany goal congruence. A)True
B)False
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Chapter 10: Management Control in Decentralized Organizations
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149 Flashcards
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Sample Questions
Q1) Segment autonomy means that the activities of segment managers are directed by top managers.
A)True
B)False
Q2) The transfer price is revenue to the acquiring segment,and it is a cost to the segment producing the product.
A)True
B)False
Q3) In designing management control systems,top managers should consider the system's impact on the behavior of employees.
A)True
B)False
Q4) Higher-level managers have the best information concerning local conditions.
A)True
B)False
Q5) In cases of constrained capacity,the opportunity cost of transferring a product internally is zero.
A)True
B)False
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Chapter 11: Capital Budgeting
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149 Flashcards
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Sample Questions
Q1) The real rate of interest equals the risk-free rate plus the business-risk rate.
A)True
B)False
Q2) A five-year MACRS asset that cost $50,000 was sold at the end of its useful life for $20,000.The book value of the asset at the time of sale was $0.The asset had no expected terminal value.The tax rate is 20%.What is the net after-tax cash effect from the sale of the asset?
A) $16,000 cash inflow
B) $16,000 cash outflow
C) $24,000 cash inflow
D) $24,000 cash outflow
Q3) A plant asset of $270,000 is expected to generate $180,000 in operating cash savings (excluding depreciation expense)annually for three years.Assume straight-line depreciation is used.The useful life is three years.The asset has no expected residual value.Ignore income taxes.The accounting rate of return based on the average investment is ________.
A) 11.11%
B) 33.33%
C) 44.44%
D) 66.67%
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Chapter 12: Cost Allocation
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130 Flashcards
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Sample Questions
Q1) Service department costs can be assigned to ________.
A) customers only
B) producing departments only
C) customers and producing departments
D) none of the above
Q2) Why do companies develop cost allocation methods to assign service department costs to producing departments?
A) to identify the total cost of production
B) to accurately determine the cost of a product
C) to develop transfer prices for products
D) A and B
Q3) Managers allocate the salaries of human resource personnel to a producing department.The salaries are considered to be a(n)________ for the producing department and a(n)________ for the human resource department.
A) direct cost; indirect cost
B) indirect cost; direct cost
C) indirect cost; indirect cost
D) traceable cost; common cost
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Chapter 13: Accounting for Overhead Costs
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152 Flashcards
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Sample Questions
Q1) The excess of applied overhead costs over the actual overhead costs is called
A) overapplied overhead
B) underapplied overhead
C) underbudgeted overhead
D) overestimated overhead
Q2) When the actual production volume exceeds the expected production volume,fixed overhead is underapplied.
A)True
B)False
Q3) Variable costing is also called ________.
A) functional costing
B) indirect costing
C) absorption costing
D) the contribution approach
Q4) There is no production volume variance when expected production volume equals actual production volume.
A)True
B)False
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Chapter 14: Job-Order Costing and Process-Costing Systems
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) Brown Company manufactures tape dispensers.The Assembly Department reported the follow data for the past month:
\(\begin{array} { l }
\text {Units started and completed }&70,000\\
\text {Units started and not complete }&10,000\\
\text {Units in beginning inventory }&0\\ \end{array}\)
\(\begin{array} { l }
\text {Direct materials costs }&\$560,000 \\
\text { Conversion costs}&\$240,000 \\ \end{array}\)
The partially complete units at the end of the month were 100 percent complete with respect to materials and 60 percent complete with respect to conversion costs.The unit cost of direct materials is ________.
A) $1.67
B) $3.32
C) $6.86
D) $7.00
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Chapter 15: Basic Accounting: Concepts, techniques, and Conventions
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150 Flashcards
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Sample Questions
Q1) Under the accrual basis of accounting,the impact of transactions is recorded when cash is received or paid.
A)True
B)False
Q2) In the United States,Generally Accepted Accounting Principles are developed primarily by ________.
A) International Accounting Standards Board
B) Financial Accounting Standards Board
C) Securities and Exchange Commission
D) International Accounting Federation
Q3) Jackson Company collected $1,200 on account.Jackson will ________.
A) Debit Cash $1,200 and Credit Accounts Payable $1,200
B) Debit Accounts Receivable $1,200 and Credit Cash $1,200
C) Debit Accounts Payable $1,200 and Credit Cash $1,200
D) Debit Cash $1,200 and Credit Accounts Receivable $1,200
Q4) Owners' equity represents the excess cash a company has made.
A)True
B)False
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Chapter 16: Understanding Corporate Annual Reports: Basic Financial Statements
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140 Flashcards
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Sample Questions
Q1) Under the direct method of preparing the statement of cash flows,the cash collected from customers is determined for the operating activities section.
A)True
B)False
Q2) The cash payment for the maturity value of bonds payable is included in the ________ section of the statement of cash flows.
A) operating
B) investing
C) financing
D) noncash
Q3) The account Unearned Revenue is a revenue account.
A)True
B)False
Q4) A payment on bonds payable will be reported in the ________ section of the statement of cash flows.
A) operating activities only
B) investing activities
C) financing activities
D) noncash investing and financing activities
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Chapter 17: Understanding and Analyzing Consolidated Financial Statements
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Sample Questions
Q1) An investor in securities accounted for by the equity method has the following information available at December 31,2012: Market value of securities \(\quad \$10,000\)
Acquisition cost of securities \(\quad \$8,000\)
How does the investor report the change in market value on the securities at December 31,2012?
A) adjustment to Investment account
B) unrealized gain of $2,000 on income statement
C) adjustment to " other comprehensive income" account
D) not reported
Q2) Branson Company purchased 40% of the outstanding shares of Missouri Company as a long-term investment.At the end of the year,the market value of the shares increased.The increase in market value of Missouri Company's shares will affect Branson Company in which of the following ways?
A) increasing assets and increasing stockholders' equity
B) decreasing investments and increasing cash
C) increasing investments and increasing stockholders' equity
D) no effect
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