Managerial Accounting
Textbook Exam Questions
Course Introduction
Managerial Accounting provides students with an understanding of how accounting information is used by managers for decision making, planning, and controlling business operations. The course covers key topics such as cost behavior, budgeting, performance evaluation, and the use of accounting data in operational and strategic decision-making. Through case studies, problem-solving exercises, and real-world examples, students learn to analyze financial information, develop budgets, assess costs and profitability, and apply relevant data to improve organizational effectiveness. Emphasis is placed on internal business processes and the manager's role in applying accounting principles to achieve organizational goals.
Recommended Textbook
Introduction to Financial Accounting 11th Edition by Charles T. Horngren
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12 Chapters
1592 Verified Questions
1592 Flashcards
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Chapter 1: Accounting: the Language of Business
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) The auditor's opinion is included with the annual report issued by the corporation.
A)True
B)False Answer: True
Q2) Which of the following describes a liability?
A)Future economic benefit
B)Economic obligations to creditors
C)Paid-in capital
D)Investment by owners
E)Present value of customer future payments Answer: B
Q3) The balance sheet equation is assets = liabilities - owner's equity.
A)True
B)False Answer: False
Q4) The auditor's opinion is also called an independent opinion.
A)True
B)False Answer: True
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Chapter 2: Measuring Income to Assess Performance
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Sample Questions
Q1) The operating cycle begins with
A)the acquisition of goods.
B)the receipt of cash from customers.
C)the payment for goods.
D)the initial investment by owners.
E)the sales to customers.
Answer: A
Q2) ________ requires all companies in an industry to follow similar accounting principles and methods.For example,most companies in the department store industry use the same inventory method.
A)Validity
B)Verifiability
C)Faithful representation
D)Consistency
E)Comparability
Answer: E
Q3) Net income appears on the income statement and balance sheet.
A)True
B)False
Answer: False
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Chapter 3: Recording Transactions
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126 Flashcards
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Sample Questions
Q1) The accumulated depreciation is sometimes referred to as the allowance for depreciation.
A)True
B)False
Answer: True
Q2) Bethany Industries purchased $3,000 of merchandise inventory,paying cash for 20% of the purchase,with the remainder on account.The entry would include a A)debit to Cash for $600,debit to Accounts Payable for $2,400,and credit to Merchandise Inventory for $3,000.
B)debit to Cash for $800,debit to Notes Payable for $2,200,and credit to Merchandise Inventory for $3,000.
C)debit to Merchandise Inventory for $3,000,credit to Cash for $600,and credit to Notes Payable for $2,400.
D)debit to Merchandise Inventory for $3,000,credit to Cash for $600,and credit to Accounts Payable for $2,400.
E)debit to Merchandise Inventory for $600,and credit to Cash for $600.
Answer: D
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Page 5
Chapter 4: Accrual Accounting and Financial Statements
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Sample Questions
Q1) An income statement without any intermediate subtotals is referred to as a multiple-step income statement.
A)True
B)False
Q2) Gross profit is defined as
A)net income before the effect of income taxes.
B)the income generated by the company after subtracting all operating expenses.
C)the difference between total assets and total liabilities.
D)net income less the dividends declared during the period.
E)sales minus cost of goods sold.
Q3) Stake,Inc.,records the payment of $200 cash for a previously accrued expense and the accrual of $625 for another expense.The impact of these two entries is to decrease net income by $825.
A)True
B)False
Q4) If the adjusting entry to record the current period's prepaid rent that is expired is omitted,current assets will be overstated.
A)True
B)False
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Chapter 5: Statement of Cash Flows
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128 Flashcards
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Sample Questions
Q1) Both the direct and indirect methods yield the same net cash flow from operations.
A)True
B)False
Q2) One of the purposes of a statement of cash flows is to determine a company's ability to pay its debts when they become due.
A)True
B)False
Q3) The indirect method of preparing the statement of cash flows
A)is seldom used by companies because of the extra effort required to gather cash flow information.
B)calculates only the cash effect of each operating activity.
C)is the method preferred by the FASB.
D)begins with net income,adds back non cash expenses,and adjusts for changes in the current asset and current liability accounts.
E)can be used to determine cash flows from operating,investing,and financing activities.
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Chapter 6: Accounting for Sales
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Sample Questions
Q1) An aging schedule reveals $6,500 of uncollectible accounts.The Allowance for Uncollectible Accounts currently has a credit balance of $250.The adjusting entry amount should be $6,250.
A)True
B)False
Q2) In the aging of accounts receivable method,one would expect the bad debts percentages to increase as the age of the accounts receivable increases.
A)True
B)False
Q3) The days to collect accounts receivable is calculated by dividing credit sales by the average accounts receivable.
A)True
B)False
Q4) A compensating balance is the required minimum cash balance on deposit when money is borrowed from the bank.
A)True
B)False
Q5) Name four internal controls specific to the cash account.
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Chapter 7: Inventories and Cost of Goods Sold
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Sample Questions
Q1) Resale Sports had inventory of $8,000 on Jan 1,20X3,and $12,000 on Dec 31,20X3.Sales for 20X3 were $250,000 and the company's gross profit percentage was 35%.What was the inventory turnover for Resale Sports for 20X3?
A)7)29 times
B)8)75 times
C)13.54 times
D)16.25 times
E)25.00 times
Q2) Assuming inflation,FIFO will result in a higher net income than LIFO.
A)True
B)False
Q3) Inventory valuation is linked to gross profit because the inventory valuation involves allocating the cost of goods available for sale between cost of goods sold and ending inventory as of the balance sheet date.
A)True
B)False
Q4) Under the FIFO method,ending inventory is valued based on the oldest unit costs.
A)True B)False
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Chapter 8: Long-Lived Assets
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Sample Questions
Q1) Goodwill occurs when the purchase price of a company exceeds the fair value of all identifiable individual assets less total liabilities.
A)True
B)False
Q2) The expenditure for an improvement to equipment that would increase output is journalized by
A)crediting accumulated depreciation.
B)crediting depreciation expense.
C)debiting depreciation expense.
D)debiting equipment.
E)debiting repair expense.
Q3) Research and development costs are expensed on the income statement as opposed to being capitalized on the balance sheet.
A)True
B)False
Q4) An operating expense is the cost that is added to an asset account.
A)True
B)False
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Chapter 9: Liabilities and Interest
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Sample Questions
Q1) The market interest rate is affected by general economic conditions.
A)True
B)False
Q2) On January 1,20X3,Nets n' Hoops issued $5,000,000 of 9%,10-year bonds dated January 1,20X3,with annual interest payments on December 31.The bonds were issued for $4,692,570 yielding an effective interest rate of 10%.Nets n' Hoops uses the effective-interest method of amortization.
a.Prepare the necessary journal entries to record the issuance of the bonds and the first interest payment.
b.Determine the ending net liability of the bonds on December 31,20X3.
Q3) Interest expense will increase each period if a company uses the effective-interest method of amortization and the bonds are issued at a discount.
A)True
B)False
Q4) Zero coupon notes do not provide interest payments.
A)True
B)False
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Page 11
Chapter 10: Stockholders Equity
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Sample Questions
Q1) A preemptive right is
A)the right of stockholders to acquire a proportional amount of any new issues of common stock.
B)the right of stockholders to fire and replace the board of directors.
C)the right of the corporation to enter into legally binding contracts without the direct approval of the shareholders.
D)the right of stockholders to supersede the actions of top management.
E)the right of top management to act on behalf of the stockholders.
Q2) A market value well above book value may be appropriate for a company if it has many unrecorded assets.
A)True
B)False
Q3) Before a liquidating company can distribute any assets to common stockholders,it must pay the full liquidating value of the preferred stock to all preferred stockholders.
A)True
B)False
Q4) In general,what are the principal rights of shareholders?
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Chapter 11: Intercorporate Investments and Consolidations
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Sample Questions
Q1) Recorded goodwill is considered to exist unless impaired.
A)True
B)False
Q2) On September 1,2X12,Yelter Oil purchased trading securities consisting of common and preferred stocks.The portfolio consists of:
\(\begin{array} { l l l l }
\text { Company } & \# \text { of shares } & \text { purchase price/Share } & \text { market value (9/30/2X12) } \\
\text { Haring } & 400 & \$ 24 & \$ 20 \\
\text { jacker } & 200 & \$ 16 & \$ 19
\end{array}\) What will be the net gain or loss recorded on Yelter Oil's income statement for the quarter ended September 30,2X12?
Q3) List and explain why a company would create subsidiaries instead of integrating the smaller companies into the larger parent to create a single entity.
Q4) Describe reasons and benefits to corporate mergers.
Q5) When ownership of another company is greater than 50%,consolidation is required.
A)True
B)False
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) The disclosure practices that have evolved in the United States have the specific and only purpose of providing information to tax authorities.
A)True
B)False
Q2) Trend analysis prompts investors to ask themselves what could cause the trends to end.
A)True
B)False
Q3) A change in accounting principle occurs when a company voluntarily changes from one acceptable accounting principle to another and when a standard-setting authority issues a new accounting standard that requires the change in accounting principle.
A)True
B)False
Q4) The cornerstone of financial statement analysis is the use of ratios.
A)True
B)False
Q5) Each element on a common-size balance sheet is compared to total liabilities. A)True
B)False
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