Managerial Accounting Test Preparation
Course Introduction
Managerial Accounting focuses on the strategic use of accounting information by managers for planning, controlling, and decision-making within organizations. This course covers essential topics such as cost behavior, budgeting, performance evaluation, and variance analysis. Students will learn how to interpret and utilize financial data to enhance organizational efficiency, allocate resources effectively, and support long-term business objectives. By understanding concepts such as activity-based costing, cost-volume-profit analysis, and internal reporting, students gain practical skills essential for effective management and leadership in various business environments.
Recommended Textbook
Financial Accounting 11th Edition by Belverd E. Needles
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15 Chapters
2808 Verified Questions
2808 Flashcards
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Chapter 1: Uses of Accounting Information and the Financial Statements
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181 Verified Questions
181 Flashcards
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Sample Questions
Q1) For reporting purposes,the personal assets and debts of a business owner should not be combined with the assets and debts of the business.
A)True
B)False
Answer: True
Q2) Corporate governance is the oversight of a company's management performance and ethics by its board of directors.
A)True
B)False
Answer: True
Q3) Most business enterprises in the United States are
A) government units.
B) partnerships.
C) sole proprietorships.
D) corporations.
Answer: C
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Page 3
Chapter 2: Analyzing Business Transactions
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204 Verified Questions
204 Flashcards
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Sample Questions
Q1) Which of the following accounts will not affect stockholders' equity?
A) Rent Expense
B) Dividends
C) Equipment
D) Sales Revenue
Answer: C
Q2) The primary purpose of the trial balance is to test the
A) recording of transactions.
B) analysis of transactions.
C) equality of debit and credit balances in the ledger.
D) equality of debit and credit entries in the journal.
Answer: C
Q3) When a company purchases goods that it will resell,it must record the goods in an asset account.
A)True
B)False
Answer: True
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Chapter 3: Measuring Business Income
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235 Verified Questions
235 Flashcards
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Sample Questions
Q1) Machinery might be depreciated over 10 years because
A) it will lose most of its market value in 10 years.
B) it will be paid for in 10 years.
C) it will help to generate revenue for the company over 10 years.
D) income tax provisions require depreciation over 10 years.
Answer: C
Q2) Which of the following is an application of accrual accounting?
A) Depreciating a building as quickly as allowed by income tax regulations
B) Recording utilities expense in the accounting period when the bill is paid
C) Expensing a machine in its entirety when purchased
D) Recording revenue at the time services are rendered
Answer: D
Q3) Revenues are increases in stockholders' equity and result from
A) selling goods.
B) rendering services.
C) both selling goods and rendering services.
D) neither selling goods nor rendering services.
Answer: C
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5
Chapter 4: Supplement - Closing Entries and the Work Sheet
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Sample Questions
Q1) Despite the many uses of microcomputers,they cannot be used to prepare work sheets.
A)True
B)False
Q2) In preparing adjustments on the work sheet,which of the following accounts most likely would be added to the Account Name column?
A) Telephone Expense
B) Retained Earnings
C) Income Taxes Payable
D) Accumulated Depreciation-Equipment
Q3) A work sheet is more useful for a large company than for a small one.
A)True
B)False
Q4) When the Income Statement columns of the work sheet are initially footed,they should be out of balance by the amount of net income or net loss.
A)True
B)False
Q5) Why would a large company probably benefit more from a work sheet than would a very small company?
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Chapter 5: Financial Reporting and Analysis
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) Why is it important for a company to maintain the same accounting methods and practices from period to period?
Q2) The Securities and Exchange Commission instituted rules requiring the chief executive officers and chief financial officers of all publicly traded companies to certify that,to their knowledge,the quarterly and annual statements that their companies file with the SEC are
A) 100 percent accurate and contain no misstatements,errors,or mistakes.
B) accurate and complete.
C) subject to interpretation due to the many accounting rules and regulations.
D) not to be used except by individuals working for the company.
Q3) Bill Pierce owns several ice cream shops all within 50 miles of his home.He has plans to expand greatly the number of shops he owns.This planned expansion will require a large bank loan.Bill has always done his own accounting work and has prepared a set of financial statements for each of the past five years of operations to present to the bank.Because some periods were more profitable than others,Bill attempted to streamline his earnings by switching depreciation and inventory valuation methods frequently.This created the appearance that his company earnings were very consistent over the years.Discuss the merits of Bill's financial statements with regard to his streamlining decisions.
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Page 7
Chapter 6: The Operating Cycle and Merchandising Operations
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199 Verified Questions
199 Flashcards
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Sample Questions
Q1) Which of the following documents would not originate with the purchasing company?
A) Purchase order
B) Check authorization
C) Purchase requisition
D) Invoice
Q2) Bonding means insuring a company against employee theft.
A)True
B)False
Q3) A discount that buyers take for early payment of merchandise is called a
A) customer discount.
B) purchases discount.
C) sales discount.
D) trade discount.
Q4) Under the periodic inventory system,the Purchases account is used to accumulate all purchases of merchandise for resale.
A)True
B)False
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Q5) Why is the separation of duties an important control activity in a good system of internal control?
Chapter 7: Inventories
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Sample Questions
Q1) Which of the following is an inventory processing system?
A) Periodic
B) First-in,first,out
C) Lower-of-cost-or-market
D) Average-cost
Q2) In which of the following cases would the gross profit method most likely be used?
A) In a company with good accounting records
B) In applying the average-cost method
C) In estimating the market value of inventory for application of the lower-of-cost-or-market rule
D) In estimating an inventory loss from fire
Q3) For each of the following descriptive statements,indicate whether FIFO or LIFO is being described.
_____ 1.Preferable method for conforming to matching principle
_____ 2.Preferable method for tax purposes under rising prices
_____ 3.Results in more up-to-date ending inventory figure
_____ 4.Results in fictitious profits under rising prices
_____ 5.Produces higher income when prices are declining
_____ 6.Produces higher ending inventory when prices are rising
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Page 9
Chapter 8: Cash and Receivables
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188 Verified Questions
188 Flashcards
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Sample Questions
Q1) A company's acceptance of credit cards like Visa is an example of A) securitization.
B) factoring with recourse.
C) discounting.
D) factoring without recourse.
Q2) Which of the following methods of recording uncollectible accounts expense would be described best as a balance sheet method?
A) Accounts receivable aging method
B) Percentage of net sales method
C) Direct charge-off method
D) Both percentage of net sales method and direct charge-off method
Q3) Under the allowance method,Uncollectible Accounts Expense is recorded when an individual customer defaults.
A)True
B)False
Q4) Compensating balances are kept as part of the Cash account balance on the balance sheet.
A)True
B)False
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Chapter 9: Current Liabilities and Fair Value Accounting
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197 Verified Questions
197 Flashcards
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Sample Questions
Q1) If the net present value of a proposed investment is negative,it means that the investment should not be made.
A)True
B)False
Q2) A business accepts a 12 percent,$38,000 note due in three years.Assuming simple interest,how much will the business receive when the note falls due?
A) $42,560
B) $51,680
C) $47,120
D) $38,000
Q3) Which of the following is a tax borne by the employer but not the employee?
A) Federal income tax
B) State unemployment tax
C) Medicare tax
D) Social security tax
Q4) All factors in a future value table must be greater than or equal to 1.000.
A)True
B)False
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Chapter 10: Long Term Assets
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Sample Questions
Q1) Which of the following assets is not subject to depreciation,depletion,or amortization?
A) Buildings
B) Oil Fields
C) Land
D) Copyrights
Q2) In calculating the depletion of a natural resource,its useful life in years is irrelevant.
A)True
B)False
Q3) A truck was purchased for $80,000.It has a current carrying value of $52,000 and had a depreciable cost of $72,000.Its estimated residual value must have been
A) $8,000.
B) $20,000.
C) $28,000.
D) impossible to determine from the facts given.
Q4) A natural resource is subject to a process called depletion.
A)True
B)False
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Page 12
Chapter 11: Long-Term Liabilities
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197 Flashcards
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Sample Questions
Q1) Regardless of whether the straight-line method or the effective interest method is used,the carrying value of a term bond issued at a discount will decrease continually over the life of the bond.
A)True
B)False
Q2) When a bond sells at a discount,what is probably true about the market interest rate versus the face interest rate? Discuss.
Q3) Premium
Q4) Registered bonds
Q5) Spencer Corporation issued 30-year term bonds at a premium in 2013.Interest is payable semi-annually.Which of the following statements is true,assuming that the effective interest method of amortization is used for the bond premium?
A) Interest expense decreases each six-month interest period.
B) Interest expense as a percentage of the bond's book value changes from period to period.
C) Interest expense increases each six-month interest period.
D) Interest expense remains constant in amount for each interest period.
Q6) Pension plan
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Chapter 12: Stockholders Equity
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Sample Questions
Q1) The par value of the common stock represents the A) corporation's legal capital.
B) liquidation value of the stock.
C) market value of a share of stock.
D) amount the corporation received in cash when the stock was issued.
Q2) Dividends on cumulative preferred stock become a liability of the corporation at the end of each year.
A)True
B)False
Q3) The concept of legal capital exists to protect the corporation's assets for the stockholders of the corporation.
A)True
B)False
Q4) A corporation is a separate entity for legal purposes.
A)True
B)False
Q5) The declaration of cash dividends will increase the book value per share of common stock.
A)True
B)False
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Chapter 13: The Statement of Cash Flows
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Sample Questions
Q1) For 2013,Dorchester Corporation had average total assets of $520,000,sales of $450,000,net income of $50,000,net cash flows from operating activities of $75,000,dividend payments of $25,000,purchases of plant assets of $60,000,and sales of plant assets of $55,000.Using this information,compute (a)cash flow yield,(b)cash flows to sales,(c)cash flows to assets,and (d)free cash flow.Round amounts to one decimal place.
Q2) If net cash flows from operating activities were $374,000,net income were $100,000,and net sales were $1,200,000,the cash flow yield would equal (Round amounts to one decimal place)
A) 3.2 times.
B) 26.7%
C) 3.7 times.
D) 31.2%
Q3) The indirect method of preparing a statement of cash flows
A) eliminates the need for a schedule of noncash investing and financing transactions.
B) provides a different result than the direct method.
C) adjusts net income for changes in current accounts.
D) shows collections from customers rather than the change in Accounts Receivable.
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Chapter 14: Financial Performance Measurement
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Sample Questions
Q1) The analysis of risk and return is important to both investors and creditors.
A)True
B)False
Q2) Which of the following is not a profitability ratio?
A) Return on equity
B) Return on assets
C) Asset turnover
D) Quick ratio
Q3) Free cash flow is measured in terms of A) a percentage.
B) dollars.
C) days.
D) times.
Q4) Trend analysis requires the establishment of a base year for comparison purposes.
A)True
B)False
Q5) In a common-size balance sheet,total assets are represented by 100 percent.
A)True
B)False
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Chapter 15: Investments
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Sample
Questions
Q1) A controlling investment is defined as owning what percent of the stock of another company?
A) More than 50 percent
B) 100 percent
C) More than 75 percent
D) 75 percent
Q2) The financial information of a foreign subsidiary should be included in the consolidated statements of the parent.
A)True
B)False
Q3) Which of the following is not a category of investments?
A) Held-to-maturity securities
B) Trading securities
C) Collateral securities
D) Available-for-sale securities
Q4) When a parent company and a 100 percent owned subsidiary company are consolidated using the purchase method,only the stockholders' equity of the parent company remains.
A)True
B)False
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