MBA Foundations in Accounting Exam Materials
Course Introduction
MBA Foundations in Accounting provides a comprehensive introduction to the essential principles and practices of financial and managerial accounting relevant to business decision-making. The course covers fundamental topics such as the accounting cycle, preparation and analysis of financial statements, basic cost concepts, and internal controls. Students will learn how to interpret and utilize accounting information to assess organizational performance, plan and control operations, and make strategic financial decisions. Through case studies and practical examples, the course emphasizes the role of accounting in supporting business strategy and communicating financial information to stakeholders.
Recommended Textbook Managerial Accounting 4th Edition by John Wild
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16 Chapters
2594 Verified Questions
2594 Flashcards
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Page 2
Chapter 1: Managerial Accounting Concepts and Principles
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196 Verified Questions
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Sample Questions
Q1) What are raw materials inventory turnover and days' sales in raw materials inventory? What is the purpose of these measures?
Answer: To assess how effectively a company manages its raw materials inventory, a business manager can compute raw materials inventory turnover.This computation takes raw materials used divided by average raw materials inventory for a given period.In general a high ratio of raw materials inventory turnover is preferred as long as the company's demand for raw materials is being met. Days' sales in raw materials inventory computes how much raw materials inventory is available in terms of the number of days' sales.The computation for this measure is end raw materials inventory divided raw materials used during the year multiplied by 365.It is a measure of how long it takes raw materials to be used in production.
Q2) What is fraud as it relates to the business environment?
Answer: Fraud involves the use of one's job for personal gain through deliberate misuse of the employer's assets.
Q3) The focus of managerial accounting is on providing ________________ reports while the focus of financial accounting is on providing _____________reports.
Answer: internal; external
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Page 3
Chapter 2: Job Order Costing and Analysis
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) A job order manufacturing system would be appropriate for a company that produces which one of the following items?
A)A landscaping design for a new hospital.
B)Seedlings for sale in a nursery.
C)Sacks of yard fertilizer.
D)Packets of flower seeds.
E)Small gardening tools, including rakes, shovels, and hoes.
Answer: A
Q2) How does job order cost accounting affect the company Astor and Black?
Answer: Astor and Black sell custom-made men's suits, a product that can track costs with a job order cost accounting system.Such a system tracks the cost of materials, labor, and overhead for each suit, enabling the company to make quick business decisions regarding costs and selling prices.
Q3) A manufacturing firm that produces large numbers of standardized units would normally use a job order cost accounting system.
A)True
B)False
Answer: False
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4
Chapter 3: Process Costing and Analysis
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185 Flashcards
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Sample Questions
Q1) Process manufacturing usually reflects a manufacturer that produces large quantities of identical products.
A)True
B)False
Answer: True
Q2) What are the four steps in accounting for production activity in a period?
Answer: Accounting for a department's activity for a period includes the four steps of analyzing: (1)physical flow, (2)equivalent units, (3)cost per equivalent unit, and (4)cost reconciliation.
Q3) Factory overhead costs can be allocated by a process cost accounting system to the output of production departments by using a predetermined overhead allocation rate.
A)True
B)False
Answer: True
Q4) What total cost should be assigned to the units that were in process at the end of August?
Answer: 11ed5a87_a3e9_3d85_a655_735e53a921b6_TB6311_11
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5
Chapter 4: Activity-Based Costing and Analysis
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171 Flashcards
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Sample Questions
Q1) A _______________________ overhead rate is a single overhead rate determined by using volume-related measures.
Q2) Which of the following statements is true with regard to activity-based costing rates?
A)The premise of ABC is that activities are what cause costs to be incurred.
B)ABC is another way to refer to a multiple departmental rate situation.
C)There one basic stage to ABC.
D)ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs.
E)All cost drivers used to determine the rates will be unit-level drivers.
Q3) Refer to the data above.How much overhead cost will be assigned to each unit of product using activity-based costing (ABC)?
A)Dog food: $4.62; cat food: $4.62.
B)Dog food: $2.64; cat food: $2.64.
C)Dog food: $8.60; cat food: $0.33.
D)Dog food: $0.26; cat food: $8.60.
E)Dog food: $0.12; cat food: $3.85.
Q4) The ________________________ overhead rate method uses a single rate for allocating overhead costs to products.
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Chapter 5: Cost Behavior and Cost-Volume-Profit Analysis
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179 Flashcards
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Sample Questions
Q1) Using the high-low method and the Willco data above, what is the approximate fixed cost component of the monthly maintenance costs?
A)$33,860
B)$24,500
C)$32,755
D)$32,715
E)$30,686
Q2) A product is sold for $45 and has variable costs of $33 per unit.The total fixed costs for the firm are $180,600.If the firm desires to earn a pretax income of $77,400, how many units must be sold?
Q3) A graph used to analyze past cost behaviors by displaying costs and volume levels for each period as points on the diagram is called a:
A)Least-squares diagram.
B)Step-wise diagram.
C)Scatter diagram.
D)Break-even diagram.
E)Composite diagram.
Q4) What is the high-low method? Briefly describe how it is applied.
Q5) Discuss how CVP analysis can be useful in planning.
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Chapter 6: Variable Costing and Performance Reporting
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Swola Company reports the following annual cost data for its single product. \(\begin{array}{ll}
\text { Normal production level } & 75,000 \text { units } \\
\text { Direct materials } & \$ 1.25 \text { per unit } \\
\text { Direct labor } & \$ 2.50 \text { per unit } \\
\text { Variable overhead } & \$ 3.75 \text { per unit } \\
\text { Fixed overhead } & \$ 300,000 \text { in total }
\end{array}\) This product is normally sold for $25 per unit.If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing?
A)$187,500 increase.
B)$112,500 increase.
C)There will be no change in gross margin.
D)$112,500 decrease.
E)$187,500 decrease.
Q2) _______________________ is the amount remaining from sales revenues after all variable expenses have been deducted.
Q3) How does contribution margin differ from gross margin?
Q4) What is the formula to compute break-even volume in units?
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Chapter 7: Master Budgets and Performance Planning
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160 Flashcards
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Sample Questions
Q1) The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:
A)Participatory budgeting
B)Capital budgeting
C)Balanced budgeting
D)Continuous budgeting
E)Primary budgeting
Q2) Budget preparation is best determined in a top-down managerial approach.
A)True
B)False
Q3) What is a production budget?
Q4) A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):
A)Sales budget
B)Operating budget
C)Capital expenditures budget
D)Selling expense budget
E)Purchases budget
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Chapter 8: Flexible Budgets and Standard Costing
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards.
A)True
B)False
Q2) If Blue Jay Enterprises actual overhead incurred during a period was $49,050 and the company reported an unfavorable overhead controllable variance of $1,800 and a favorable overhead volume variance of $1,350, how much standard overhead cost was assigned to the products produced during the period?
Q3) Standard costs are:
A)Actual costs incurred to produce a specific product or perform a service.
B)Preset costs for delivering a product or service under normal conditions.
C)Established by the IMA.
D)Rarely achieved.
E)Uniform among companies within an industry.
Q4) Cost variances are ignored under management by exception.
A)True
B)False
Q5) A management approach that emphasizes significant differences from plans is known as ___________________.
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Chapter 9: Performance Measurement and Responsibility Accounting
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) A responsibility accounting system:
A)Is designed to measure the performance of managers in terms of uncontrollable costs.
B)Assigns responsibility for costs to the top managerial level.
C)Is designed to hold a manager responsible for costs over which the manager has no influence.
D)Can be applied at any level of an organization.
E)Is well suited to work in an environment without clear lines of responsibility and authority.
Q2) Midwest Rocks receives and produces an order.What is the company's value-added time assuming the following times were measured during production of this order? Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days
A)1.8 days
B).7 days
C).95 days
D)2 days
E)2.5 days
Q3) What is a cost center?
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Chapter 10: Relevant Costing for Managerial Decisions
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Sample Questions
Q1) Rocko Inc.has a machine with a book value of $50,000 and a five-year remaining life.A new machine is available at a cost of $85,000 and Rocko can also receive $38,000 for trading in the old machine.The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life.Should the machine be replaced?
A)Yes, because income will increase by $14,000 per year.
B)Yes, because income will increase by $23,000 in total.
C)No, because the company will be $23,000 worse off in total.
D)No, because the income will decrease by $14,000 per year.
E)Rocko will be not be better or worse off by replacing the machine.
Q2) What is a sunk cost? When would it be relevant to a short-term managerial decision?
Q3) __________________________ costs are amounts that will continue even if a segment is eliminated.
Q4) Additional power for operating machines, extra supplies, and added cleanup costs are examples of incremental overhead costs.
A)True
B)False
Q5) Are relevant costs useful to management in determining long-run pricing decisions?
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Chapter 11: Capital Budgeting and Investment Analysis
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146 Flashcards
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Sample Questions
Q1) The accounting rate of return is calculated as:
A)The after-tax income divided by the total investment.
B)The after-tax income divided by the average investment.
C)The cash flows divided by the average investment.
D)The cash flows divided by the total investment.
E)The average investment divided by the after-tax income.
Q2) Capital budgeting decisions usually involve analysis of:
A)Cash outflows only.
B)Short-term investments only.
C)Long-term investments only.
D)Investments with certain outcomes only.
E)Operating revenues.
Q3) The net present value capital budgeting method considers all estimated cash flows for the project's expected life.
A)True
B)False
Q4) The process of restating future cash flows in terms of their present value is called
Q5) What is capital budgeting? Why are capital budgeting decisions often difficult and risky?
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Chapter 12: Reporting and Analyzing Cash Flows
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170 Flashcards
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Sample Questions
Q1) The appropriate section in the statement of cash flows for reporting the cash payment of wages is:
A)Operating activities.
B)Financing activities.
C)Investing activities.
D)Schedule of noncash investing or financing activity.
E)None of these as this is not reported on the statement of cash flows.
Q2) The gain or loss from retirement of debt is reported under cash flows from operations on the statement of cash flows using the direct method.
A)True
B)False
Q3) Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.
Q4) The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts the necessary items to calculate net cash provided or used by operating activities.
A)True
B)False
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14
Chapter 13: Analyzing Financial Statements
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Sample Questions
Q1) Describe ratio analysis including its purpose, application, and interpretation.
Q2) Describe the purpose of horizontal financial statement analysis and how it is applied.
Q3) General standards of comparisons (rules-of-thumb)are developed from:
A)Industry statistics from the government.
B)Past experience.
C)Analysis of competitors.
D)Relations between financial items.
E)Dun and Bradstreet.
Q4) Working capital is computed as current liabilities minus current assets.
A)True
B)False
Q5) Net income divided by average total assets is equal to the:
A)Profit margin
B)Total asset turnover
C)Return on total assets
D)Days' income in assets
E)Current ratio
Q6) A _____________________________ is a part of a company's operations that serves a particular line of business or class of customers.
Page 15
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Chapter 14: Time Value of Money
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Sample Questions
Q1) Sam has a loan that requires a single payment of $4,000 at the end of three years.The loan's interest rate is 6%, compounded semiannually.How much did Sam borrow?
A)$3,358.40
B)$4,000.00
C)$3,660.40
D)$4,776.40
E)$3,350.00
Q2) Future value can be found if the interest rate (i), the number of periods (n), and the present value (p)are known.
A)True
B)False
Q3) What is interest?
Q4) Annette has a loan that requires a $25,000 payment at the end of three years.The interest rate on the loan is 5%, compounded annually.How much did Annette borrow today?
Q5) An _____________ is a series of equal payments occurring at equal intervals.
Q6) _____________ is a borrower's payment to the owner of an asset for its use.
Q7) Explain the concept of the present value of an annuity.
Q8) Explain the concept of the future value of a single amount.
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Chapter 15: Basic Accounting for Transactions
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Sample Questions
Q1) Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:
\(\begin{array}{|l|r|r|}
\hline & \text { Assets } & \text { Liabilities } \\
\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \\
\hline \text { End of the year } & 135,000 & 73,000 \\
\hline
\end{array}\) If the owners invested an additional $12,000 in the business during the year, but no dividends were paid, what was the amount of net income earned by Josephine's Bakery during the current year?
Q2) A collection of all accounts (with account balances)used by a business is called a:
A)Journal
B)Book of original entry
C)General Journal
D)Balance column journal
E)General Ledger
Q3) A revenue account normally has a debit balance.
A)True
B)False
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Page 17
Chapter 16: Accounting for Partnerships
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Sample
Questions
Q1) A partnership designed to protect innocent partners from malpractice or negligence claims resulting from the acts of other partners is a ____________________________ partnership.
Q2) Baldwin and Tanner formed a partnership.Baldwin's initial capital account balance was $125,000 and Tanner's was $105,000.They agreed to share income and loss as follows: Baldwin 40%, Tanner 60%.Income was $102,000 in year 1 and $150,000 in year 2.Assume they each withdrew $10,000 per year.Calculate the capital balances for Baldwin and Tanner at the end of year 2.
Q3) Partners' withdrawals are credited to their separate withdrawals accounts. A)True
B)False
Q4) In a limited partnership the general partner has unlimited liability.
A)True
B)False
Q5) The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.
A)True
B)False
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