Managerial Accounting Pre-Test Questions
Course Introduction
Managerial Accounting is a course designed to provide students with an in-depth understanding of how accounting information is used by managers to make informed business decisions. The course covers fundamental concepts such as cost behavior, budgeting, performance evaluation, and internal controls. Students learn to analyze financial data, prepare management reports, and apply various costing methods to support strategic planning and operational efficiency. Emphasis is placed on the practical application of accounting tools and techniques for decision-making, planning, and control in a dynamic business environment.
Recommended Textbook
Atrills Accounting for Business Students 1st Australian Edition by Atrill McLaney
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14 Chapters
893 Verified Questions
893 Flashcards
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Page 2
Chapter 1: Introduction to Accounting
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Sample Questions
Q1) An objective of a business could be:
A)financial survival.
B)maximise profit.
C)maximise sales.
D)all of the above.
Answer: D
Q2) Which of these is a reason why achieving the maximum possible profit in a particular year may not be in the best interests of a business?
A)Concentrating on the short-term may have detrimental effects in the long-term.
B)It may be achieved by causing environmental problems, which give the business a bad reputation.
C)If it is achieved with high-risk strategies, such as excessive reliance on borrowings, it could lead to disaster in the longer term.
D)All of the above
Answer: D
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Chapter 2: Measuring and Reporting Financial Position
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Sample Questions
Q1) What is the overall effect on the statement of financial position when the business sells inventory for a profit of $5 000?
A)Increase total assets $3 000; decrease total equity $3 000
B)Increase total assets $5 000; increase total equity $5 000
C)No change in total assets; no change in total equity
D)None of the above
Answer: B
Q2) Calculate the profit for the year if capital at the beginning is $45 000, capital at the end is $40 000 and during the year the owner withdrew $15 000.
A)$5 000
B)$15 000
C)$10 000
D)$20 000
Answer: C
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Chapter 3: Measuring and Reporting Financial Performance
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Sample Questions
Q1) Calculate cost of sales if stock at start is $2 450, purchases are $19 000 and stock at end is $1 000.
A)$21 450
B)$20 450
C)$22 550
D)$22 450
Answer: B
Q2) The recognition criteria that must be satisfied under the Conceptual Framework for income to be included in the profit report is:
A)probable that the inflow of resources has occurred.
B)inflow of resources able to be reliably measured.
C)income must be matched with expenses.
D)Both A and B.
Answer: D
Q3) Which statement is not correct?
A)A loss is incurred when expenses > income
B)A profit is earned when income < expenses
C)A loss is incurred when income < expenses
D)A profit is earned when income > expenses
Answer: B
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Chapter 4: Recording Transactionsthe Journal and Ledger Accounts
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Sample Questions
Q1) In the trial balance of a firm's accounting records, Inventory has a balance of $40 000 and Purchases has a balance of $1 000 000. The count of ending inventory is $50 000. Cost of sales is:
A)$1 040 000
B)$1 050 000
C)$ 990 000
D)$ 910 000
Q2) On the worksheet, a loss would appear as a credit in the profit and loss columns.
A)True
B)False
Q3) When the owner of a business withdraws money from the business for her own use:
A)the cash account is debited.
B)the cash account is credited.
C)the drawings account is credited.
D)the equity account is credited.
Q4) Doubtful debts provision is a contra asset account.
A)True
B)False
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Chapter 5: Accounting Systems and Internal Control
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) The columns to the right of the total in a petty cash book represent:
A)all of the company's expense accounts.
B)the accounts for which petty cash was spent.
C)the amounts of petty cash spent.
D)the balances in the petty cash account.
Q2) The records for all accounts are kept in a single, large book called the ledger.
A)True
B)False
Q3) Which of the following is true of a computerised accounting system?
A)Card files are used for employees, creditors and debtors.
B)A coding system is used which does not require linkage to the chart of accounts.
C)A computerised accounting system eliminates the need for internal controls.
D)Because a computerised accounting system updates automatically, the files do not need to be backed up.
Q4) The control account for receivables has a balance of $150 000. The receivables ledger account has a debit balance of $150 000. This agreement shows that the account is error free.
A)True
B)False
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Chapter 6: Introduction to Limited Companies
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Sample Questions
Q1) Which of the following is unlikely to be a reserve found in a company's statement of financial position?
A)Asset replacement
B)Foreign currency
C)Acquisition
D)All of the above are likely to be found
Q2) Small proprietary companies are relieved of many of the reporting requirements to which public companies are subject. A company is deemed to be 'small' if it satisfies two of three specified criteria. Which of the following is not one of the criteria?
A)It has consolidated gross profits of less than $30 million.
B)Its consolidated gross assets at the end of the financial year are less than $12.5 million.
C)It employs fewer than 50 employees at the end of the financial year.
D)It has consolidated gross operating revenue of less than $25 million
Q3) Which statement relating to preference shares is not correct?
A)They are often non-voting shares.
B)They are generally more risky for shareholders to own than ordinary shares.
C)They are entitled to receive a dividend before the ordinary shareholders.
D)They normally have a fixed rate of dividend attached.
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Page 8
Chapter 7: Regulatory Framework for Companies
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Sample Questions
Q1) Incorrect capitalisation of expenses is a means of creative accounting that:
A)overstates revenues.
B)understates revenues.
C)understates net income.
D)overstates net income.
Q2) How would trade debtors normally be classified in a statement of financial position?
A)As a current liability
B)As a current asset
C)As a non-current liability
D)As a reserve
Q3) Which of the following is not included in an audit report?
A)An audit opinion on whether or not the financial statements are 'true and fair'
B)Identification of the financial reports audited
C)A statement on the sustainable strategies of the reporting entity
D)A statement that the financial reports were prepared in accordance with accounting standards
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Chapter 8: Measuring and Reporting Cash Flows
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Sample Questions
Q1) With what are operating activities concerned?
A)Borrowing or lending
B)The sale or disposal of non-current assets
C)The trading and/or service operations of the business
D)None of the above
Q2) The difference between operating profit or loss after tax and net cash provided by operating activities is due to:
A)changes in non-current liabilities.
B)changes in non-current assets.
C)changes in working capital items.
D)changes in equity items.
Q3) What does the statement of cash flows allow management to assess?
A)Efficiency in earning profit
B)Efficiency in controlling expenses
C)Efficiency in managing cash flows
D)Efficiency in managing industrial relations
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Chapter 9: Corporate Social Responsibility and Sustainability Accounting
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Sample Questions
Q1) Which of these is not one of the perspectives from which the balanced scorecard views the business?
A)Product
B)Financial
C)Customer
D)Business process
Q2) Why do organisations find corporate social responsibility (CSR)such a challenge?
A)The public view of CSR continues to change
B)There is no real definition of CSR
C)There is no CSR 'checklist' for businesses to tick off
D)Both A and C
Q3) For a business to be seen as socially responsible, the business must:
A)assess the social costs and benefits of the actions it takes.
B)develop and implement policies and practices in the area of social responsibility.
C)ensure the media is aware that it takes social responsibility seriously, even though there may be no real indicators.
D)Both A and B
Q4) Briefly outline the essence of the balance scorecard approach.
Page 11
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Chapter 10: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) A firm has total assets of $900 000 and total liabilities of $400 000. There are no preference shareholders. Earnings before interest and taxes are $100 000. Interest is $21 000 and taxes are $34 000. The return on ordinary shareholders' funds is:
A)8.0%
B)12.5%
C)9.0%
D)3.8%
Q2) Dividend yield on ordinary shares is calculated as:
A)dividends per share divided by market price per share.
B)annual dividend divided by issued capital.
C)annual dividend divided by earnings.
D)None of the above
Q3) Because a company's inventory is less liquid than its other current assets when investors are assessing liquidity, they should examine the:
A)debt-equity ratio.
B)accounts receivable turnover ratio.
C)acid test ratio.
D)current ratio.
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Chapter 11: Costvolumeprofit Analysis and Relevant Costing
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Sample Questions
Q1) Semi-fixed costs are best defined as:
A)having both fixed and variable elements.
B)varying over time.
C)costs ignored in cost-volume-profit analysis.
D)None of the above
Q2) The vertical axes on a break-even chart and a profit-volume chart respectively are:
A)profit: sales revenue and costs.
B)volume of output: volume of output.
C)sales revenue and costs: profit.
D)fixed costs: sales revenue.
Q3) On a profit-volume chart, the output where the graph line crosses the axis is the output where:
A)profit equals zero.
B)the firm breaks even.
C)fixed costs are zero.
D)Both A and B
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13
Chapter 12: Full Costing
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Sample Questions
Q1) Which of the following statements is correct?
A)Full costing takes into account all resources sacrificed to achieve a specific objective.
B)Full costing only takes into account manufacturing costs.
C)Only variable costs are required to determine the selling price for a product.
D)Full costing cannot be used in the service industries.
Q2) By the end of the 20th Century, the manufacturing sector had fundamentally altered from the sector in the 1920s. The sector is now characterised by the following features, except for:
A)low levels of depreciation.
B)a highly competitive international market.
C)capital-intensive and machine-paced production.
D)a high level of overheads relative to direct costs.
Q3) All of the statements regarding activity-based costing are correct except:
A)it provides better information for decision-making.
B)it provides more accurate product costs.
C)it is used by the majority of businesses in Australia.
D)it is costlier than alternative systems.
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Chapter 13: Planning and Budgeting
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Sample Questions
Q1) Benefits of Beyond Budgeting include all of the following except the fact that:
A)targets based on high level performance indicators is a much faster process than budgeting.
B)resources are managed on the basis of pre-negotiated budget amounts.
C)rewards are based on relative performance, not fixed targets.
D)strategy review is done by business units or front line teams.
Q2) The change in the price of raw materials multiplied by the actual materials bought calculates which variance?
A)Materials price variance
B)Sales price variance
C)Materials usage variance
D)Labour price variance
Q3) The debtor's budget shows the planned amount owing from credit sales. The closing balance of the accounts receivable account is calculated as follows:
A)(opening balance plus sales)less cash receipts.
B)(opening balance less sales)less cash receipts.
C)(opening balance less sales)plus cash receipts.
D)(opening balance plus sales)plus cash receipts.
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Which of the following would be a reason for preferring $100 now rather than $100 in one year's time?
A)Risk
B)Interest lost
C)The effects of inflation
D)All of the above
Q2) What investment decision method takes the average profit and expresses it as a percentage of the average investment?
A)Accounting rate of return
B)Net present value
C)Payback period
D)Internal rate of return
Q3) Which of the following are practical issues that need to be considered when using investment appraisal methods?
A)Irrelevant costs
B)Taxation
C)Interest payments
D)Both B and C
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