Managerial Accounting Review Questions
Course Introduction
Managerial Accounting focuses on the use of accounting information by managers within organizations for the purpose of planning, controlling, and decision-making. The course covers key topics such as cost behavior, budgeting, performance evaluation, and cost-volume-profit analysis. Students learn how to analyze financial data, prepare internal reports, and use various accounting tools to make informed business decisions. Emphasis is placed on practical applications, ethical considerations, and strategies for optimizing organizational performance in dynamic business environments.
Recommended Textbook
Corporate Financial Accounting 12th Edition by Carl S. Warren
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15 Chapters
2628 Verified Questions
2628 Flashcards
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Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) The initials GAAP stand for
A)General Accounting Procedures
B)Generally Accepted Plans
C)Generally Accepted Accounting Principles
D)Generally Accepted Accounting Practices
Answer: C
Q2) The assets section of the balance sheet normally presents assets in
A)alphabetical order
B)order of largest to smallest dollar amounts
C)in the order that they will be converted into cash or used in operations
D)any order
Answer: C
Q3) Accounting information users need reports about the economic activities and condition of businesses.
A)True
B)False
Answer: True
Q4) What information does the income statement give to business users?
Answer: The income statement reports the revenues and expenses for a period of time. The result is either a net income or a net loss.
Page 3
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Chapter 2: Analyzing Transactions
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Sample Questions
Q1) The erroneous arrangement of digits,such as writing $45 as $54,is called a slide.
A)True
B)False
Answer: False
Q2) A debit may signify a(n)
A)decrease in an asset account
B)decrease in a liability account
C)increase in the retained earnings account
D)decrease in the dividends account
Answer: B
Q3) The recording of cash payments from the cash account is done by entering the amount as a credit.
A)True
B)False
Answer: True
Q4) On January 8th,JumpStart purchased $20,000 worth of office equipment.Prepare the journal entry to record this transaction.
Answer: 11ea906a_d1c4_0937_aec7_0b3a01d72d2a_TB2051_00
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Chapter 3: The Adjusting Process
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Sample Questions
Q1) If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted,the assets at the end of the period will be understated.
A)True
B)False
Answer: False
Q2) Explain the difference between accrual-basis accounting and cash-basis accounting.
Answer: Accrual-basis accounting reports revenues and expenses in the period in which the event happened regardless of when cash was received.Cash-basis accounting reports revenues and expenses when cash is received or paid.
Q3) The adjusted trial balance verifies that total debits equals total credits before the adjusting entries are prepared.
A)True
B)False
Answer: False
Q4) The estimated amount of depreciation on equipment for the current year is $5,300.Journalize the adjusting entry to record the depreciation.
Answer: 11ea906a_d1cd_7f83_aec7_ffc0b708e978_TB2051_00
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Page 5
Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) The balance in the retained earnings account on the work sheet will equal the amount presented in the balance sheet.
A)True
B)False
Q2) Balance sheet accounts
A)represent amounts accumulated during a specific period of time
B)are called real accounts
C)have zero balances after the closing entries have been posted
D)are equal to assets and liabilities
Q3) When a work sheet is complete,the adjustment columns should have
A)total credits greater than total debits if a net income was earned
B)total debits greater than total credits if a net loss was incurred
C)total debits greater than total credits if a net income was earned
D)total debits equal total credits
Q4) Explain the differences between a nonclassified balance sheet and a classified balance sheet.
Q5) The accounting cycle begins with preparing an unadjusted trial balance.
A)True
B)False
Q6) Explain how net income or loss is determined by using the work sheet.
Page 6
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Chapter 5: Accounting for Merchandising Businesses
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Sample Questions
Q1) Merchandise with an invoice price of $3,000 is purchased on September 2 subject to terms of 2/10,n/30,FOB destination.Freight costs paid by the seller totaled $200.What is the cost of the merchandise if paid on September 12,assuming the discount is taken?
A)$3,140
B)$3,136
C)$2,744
D)$2,940
Q2) Merchandise with a sales price of $6,000 is sold on account with term 2/10,n/30.The journal entry to record the sale would include a
A)debit to Cash for $6,000
B)Debit to Sales Discounts for $120
C)Credit to Sales for $6,000
D)Debit to Accounts Receivable for $5,880
Q3) Discounts taken by the buyer for early payment of an invoice are credited to Sales Discounts by the buyer.
A)True
B)False
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Chapter 6: Inventories
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Sample Questions
Q1) List three different security measures taken by stores to safeguard inventory.
Q2) Which of the following companies would be more likely to use the specific identification inventory costing method?
A)Gordon's Jewelers
B)Lowe's
C)Best Buy
D)Wal-Mart
Q3) During periods of increasing costs,an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.
A)True
B)False
Q4) For the year ended December 31,2014 Depot Max's cost of merchandise sold was $56,900.Inventory at the beginning of the year was $6,540.Ending inventory was $7,250.Compute Depot Max's inventory turnover for the year.
A)8.7
B)7.8
C)8.3
D)44
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Chapter 7: Sarbanes-Oxley, internal Control, and Cash
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Sample Questions
Q1) Which of the following would be deducted from the balance per books on a bank reconciliation?
A)Service charges
B)Outstanding checks
C)Deposits in transit
D)Notes collected by the bank
Q2) Money market accounts,commercial paper,and United States Treasury Notes are examples of cash equivalents.
A)True
B)False
Q3) Journal entries based on the bank reconciliation are required in the company's accounts for
A)outstanding checks
B)deposits in transit
C)bank errors
D)book errors
Q4) A check outstanding for two consecutive months will appear only on the first month's bank reconciliation.
A)True
B)False
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Chapter 8: Receivables
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Sample Questions
Q1) Allowance for Doubtful Accounts is a liability account.
A)True
B)False
Q2) To record estimated uncollectible receivables using the allowance method,the adjusting entry would be a
A)debit to Bad Debs Expense and a credit to Allowance for Doubtful Accounts.
B)debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
C)debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
D)debit to Loss on Credit Sales and a credit to Accounts Receivable.
Q3) Notes Receivable and Accounts Receivable can also be called trade receivables. A)True
B)False
Q4) An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $7,900.If Allowance for Doubtful Accounts has a $700 credit balance,the adjustment to record the bad debt expense for the period will require a
A)debit to Bad Debt Expense for $8,600.
B)debit to Bad Debt Expense for $7,900.
C)debit to Bad Debt Expense for $7,200.
D)credit to Allowance for Doubtful Accounts for $700.
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Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) Long-lived assets that are intangible in nature,used in the operations of the business,and not held for sale in the ordinary course of business are called fixed assets.
A)True
B)False
Q2) When a company replaces a component of property,plant and equipment,which statement below does not account for one of the steps in the process?
A)book value of the replaced component is written off to depreciation expense
B)the asset cost of the replaced component is credited
C)any cost to remove the old component is charged to expense
D)the identifiable direct costs associated with the new component are capitalized
Q3) The cost of replacing an engine in a truck is an example of ordinary maintenance.
A)True
B)False
Q4) Land acquired as a speculation is reported under Investments on the balance sheet.
A)True
B)False
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Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) On June 8,Alton Co.issued an $80,000,6%,120-day note payable to Seller Co.Assume that the fiscal year of Seller Co.ends June 30.Using the 360-day year in your calculations,what is the amount of interest revenue recognized by Seller in the following year?
A)$1,200.00
B)$1,208.89
C)$1,306.67
D)$1,600.00
Q2) During its first year of operations,a company granted employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000.The vacations are expected to be taken in the next year and the pension rights are expected to be paid in the future 5-30 years.What is the total cost of vacation pay and pension rights to be recognized in the first year?
A)$15,000
B)$36,500
C)$6,500
D)$21,500
Q3) Form W-2 is called the Wage and Tax Statement.
A)True
B)False
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Chapter 11: Corporations: Organization, stock Transactions,
and Dividends
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Sample Questions
Q1) If Everly Company issues 1,000 shares of $5 par value common stock for $75,000,the account
A)Common Stock will be credited for $75,000.
B)Paid-in Capital in excess of Par Value will be credited for $5,000.
C)Paid-in Capital in excess of Par Value will be credited for $70,000.
D)Cash will be debited for $70,000.
Q2) A restriction/appropriation of retained earnings
A)decreases total assets
B)increases total retained earnings
C)decreases total retained earnings
D)has no effect on total retained earnings
Q3) In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?
A)other expense on income statement
B)intangible asset on balance sheet
C)stockholders' equity on balance sheet
D)other income on income statement
Q4) On April 10,a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73.Journalize this transaction.
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Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) The present value of the periodic bond interest payments is the value today of the amount of interest to be received at the end of each interest period.
A)True
B)False
Q2) The present value of an annuity is the sum of the present values of each cash flow.
A)True
B)False
Q3) On the first day of the fiscal year,a company issues a $800,000,6%,5 year bond that pays semi-annual interest of $24,000 ($800,000 ´ 6% ´ 1/2),receiving cash of $690,960.Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method.
Q4) (a) Prepare the journal entry to issue $100,000 bonds which sold for $94,000. (b) Prepare the journal entry to issue $100,000 bonds which sold for $104,000
Q5) Bonds may be purchased directly from the issuing corporation or through one of the bond exchanges.
A)True
B)False
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Page 14
Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock.The market value of the common stock is $80 per share.Edison's dividend yield is:
A)5%
B)10%
C)25%
D)20%
Q2) Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1,2015.Marco reported net income of $95,000 and declared dividends of $35,000 during 2015.How much would Ramiro adjust their investment in Marco Company under the equity method?
Q3) Which of the following would be considered an "Other Comprehensive Income" item?
A)net income.
B)extraordinary loss related to flood.
C)gain on disposal of discontinued operations.
D)unrealized loss on available-for-sale securities.
Q4) Sutton Company purchased 10% of the outstanding stock of Roberts Company on January 1,2012.Roberts reported net income of $155,000 and declared dividends of $40,000 during 2012.How would these events be reported by Sutton using the cost method?
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) Cash flows from financing activities,as part of the statement of cash flows,include payments for dividends.
A)True
B)False
Q2) If a gain of $11,000 is realized in selling (for cash)office equipment having a book value of $55,000,the total amount reported in the cash flows from investing activities section of the statement of cash flows is
A)$44,000
B)$11,000
C)$55,000
D)$66,000
Q3) Lamar Corporation purchased land for $150,000.Later in the year the company sold land with a book value of $190,000 for $200,000.Show how the effects of these transactions are reported on the statement of cash flows using the indirect method. Adjustments to reconcile net income to net cash from operating activities: Gain on sale of land ($10,000)
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16
Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) Ratios and various other analytical measures are not a substitute for sound judgment,nor do they provide definitive guides for action.
A)True
B)False
Q2) Corporate annual reports typically do not contain which of the following?
A)management discussion and analysis
B)SEC statement expressing an opinion
C)accompanying foot notes
D)auditor's report
Q3) The purpose of an audit is to
A)determine whether or not a company is a good investment.
B)render an opinion on the fairness of the statements.
C)determine whether or not a company complies with corporate social responsibility.
D)determine whether or not a company is a good credit risk.
Q4) The numerator of the rate earned on total assets ratio is equal to
A)net income
B)net income plus tax expense
C)net income plus interest expense
D)net income minus preferred dividends
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