Principles of Managerial Accounting Practice Questions
Course Introduction
Principles of Managerial Accounting introduces the fundamental concepts and techniques vital for internal business decision-making. The course covers cost behavior, cost-volume-profit analysis, budgeting, variance analysis, and performance evaluation.
Students learn how accounting information supports planning, directing, controlling, and evaluating organizational operations, enabling managers to make informed financial decisions. The course emphasizes the use of accounting data for strategic management, operational efficiency, and effective resource allocation within businesses.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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9 Chapters
1673 Verified Questions
1673 Flashcards
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Page 2
Chapter 18: Introduction to Managerial Accounting
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210 Verified Questions
210 Flashcards
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Sample Questions
Q1) Which of the following is true of service companies?
A) All costs of service companies are product costs.
B) Service companies modify and resell products they buy from manufacturers.
C) Revenues of service companies are only recorded on cash receipt.
D) Service companies carry no inventories of products for sale.
Answer: D
Q2) Damsel,Inc.is a large manufacturer of auto tires.Damsel has provided the following information: \[\begin{array} { | l | r | }
\hline \text { Sales Revenue } & \$ 55,000 \\
\hline \text { Beginning Finished Goods Inventory } & 18,500 \\
\hline \text { Cost of Goods Sold } & 33,000 \\
\hline \text { Cost of Goods Manufactured } & 52,000 \\
\hline
\end{array}\] Calculate the amount of ending Finished Goods Inventory reported on Damsel's balance sheet.
A) $3,000
B) $70,500
C) $37,500
D) $19,000
Answer: C
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Page 3
Chapter 19: Job Order Costing
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170 Flashcards
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Sample Questions
Q1) The journal entry to record indirect labor costs incurred involves a debit to the
A) Manufacturing Overhead account
B) Wages Payable account
C) Finished Goods Inventory account
D) Work-in-Process Inventory account
Answer: A
Q2) During the year,a company incurred $533,000 of manufacturing overhead costs and allocated $463,000 of manufacturing overhead costs.At year-end,the adjustment entry needed to adjust the Manufacturing Overhead account balance to zero will include a debit to Cost of Goods Sold.
A)True
B)False
Answer: True
Q3) Which one of the following companies is most likely to use job order costing?
A) a gold refinery
B) a law firm
C) a surfboard manufacturer
D) a soft drink company
Answer: B
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Chapter 20: Process Costing
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167 Flashcards
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Sample Questions
Q1) Under the first-in,first-out (FIFO)method,the current period equivalent units of production for the units in the beginning inventory are always 100% complete.
A)True
B)False
Answer: False
Q2) When indirect materials are issued to production,the Raw Materials Inventory account is credited.
A)True
B)False
Answer: True
Q3) Production cost reports prepared using the first-in,first-out (FIFO)method determine the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.
A)True
B)False
Answer: True
Q4) Provide the formula for (1)To account for and (2)Accounted for.
Answer: (1)To account for = Beginning balance + Amount started or added
(2)Accounted for = Completed and transferred out + In process
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Chapter 21: Cost-Volume-Profit Analysis
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238 Flashcards
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Sample Questions
Q1) Drenning Timber Products has estimated the following amounts for its next fiscal year: \[\begin{array} { | l | r | }
\hline \text { Total fixed expenses } & \$ 834,500 \\
\hline \text { Sale price per unit } & 41 \\
\hline \text { Variable expenses per unit } & 30 \\
\hline
\end{array}\] What will happen to the breakeven point (in units)if Drenning can reduce fixed expenses by $22,500?
A) The breakeven point will decrease by 2,046 units.
B) The breakeven point will decrease by 549 units.
C) The breakeven point will decrease by 750 units.
D) The breakeven point will increase by 549 units.
Q2) Period costs under the variable costing method include ________.
A) variable manufacturing overhead
B) variable selling and administrative costs
C) direct materials
D) direct labor
Q3) Fixed cost per unit is inversely proportional to the volume of units produced.
A)True
B)False
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Chapter 22: Master Budgets
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172 Flashcards
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Sample Questions
Q1) Blake Sodas,Inc.has budgeted direct materials inventory purchases as follows:
October: $345,000
November: $370,000
December: $440,000
Blake Sodas,Inc.pays for 10% of their purchases during the month of purchase,70% during the month following the purchase,and the remaining 20% two months after the month of purchase.What is the budgeted accounts payable balance on December 31?
A) $396,000
B) $470,000
C) $440,000
D) $433,000
Q2) The inventory,purchases,and cost of goods sold budget determines cost of goods sold for the budgeted income statement,ending Merchandise Inventory for the budgeted balance sheet,and merchandise inventory purchases for the cash budget.
A)True
B)False
Q3) What is the final step in the master budget process?
Q4) What is a common method of accessing short-term financing?
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Sample Questions
Q1) Which of the following statements about management by exception is incorrect?
A) Managers concentrate on results that are outside the accepted parameters.
B) There is no need to investigate variances that are less than 10%.
C) Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount.
D) Many companies use a combination of percentages and dollar amounts.
Q2) A favorable direct materials cost variance occurs when the actual direct materials cost incurred is greater than the standard direct materials cost.
A)True
B)False
Q3) A favorable variance has a debit balance and is a contra revenue.
A)True
B)False
Q4) The total fixed overhead variance is the total of the variable overhead cost variance and fixed overhead volume variance.
A)True
B)False
Q5) List three ways in which using a standard cost system helps managers.
Q6) List the direct labor variances and briefly describe each.
Page 8
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Chapter 24: Cost Allocation and Responsibility Accounting
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189 Flashcards
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Sample Questions
Q1) Which of the following is the correct formula for calculating return on investment?
A) Net profit / Sales
B) Gross profit / Sales
C) Operating income / Average total assets
D) Earnings available to stockholders / Number of outstanding shares of stock
Q2) Which of the following statements is true of performance reporting?
A) Responsibility reports should focus on the person responsible for unfavorable variances, rather than information.
B) Managers should not be held accountable for uncontrollable variances.
C) Only unfavorable variances should be explained in the reports.
D) Every variance, regardless of magnitude, must be investigated by the managers.
Q3) Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.
A)True
B)False
Q4) How is the use of a balanced scorecard as a performance evaluation system helpful to companies?
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Chapter 25: Short-Term Business Decisions
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181 Flashcards
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Sample Questions
Q1) Valuable Electronics uses a standard part in the manufacture of different types of radios.The total cost of producing 29,000 parts is $105,000,which includes fixed costs of $50,000 and variable costs of $55,000.The company can buy the part from an outside supplier for $2 per unit and avoid 30% of the fixed costs.Assume that the company can use the freed manufacturing space to make another product that can earn a profit of $16,000.If Valuable outsources,what will be the effect on operating income?
A) increase of $28,000
B) decrease of $28,000
C) decrease of $15,000
D) increase of $16,000
Q2) When considering whether to replace the building roof,the total amount paid for previous roof repairs is relevant to the business decision.
A)True
B)False
Q3) Fixed costs are relevant to a special pricing decision if they are subject to change as a result of the special order.
A)True
B)False
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Chapter 26: Capital Investment Decisions
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Sample Questions
Q1) The net present value of future cash inflows received in earlier years is higher than future cash inflows received in later years.
A)True
B)False
Q2) Software Hub is deciding whether to purchase new accounting software.The cost of the software package is $68,000,and its expected life is ten years.The payback for this investment is four years.Assuming equal yearly cash flows,what are the expected annual net cash savings from the new software? (Assume the investment has no residual value.)
A) $6,800
B) $51,000
C) $17,000
D) $272,000
Q3) Which of the following is a capital budgeting method?
A) return on assets
B) net present value
C) inventory turnover
D) return on equity
Q4) What are the strengths of the net present value capital budgeting method?
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