Accounting for Decision Making
Chapter Exam Questions
Course Introduction
Accounting for Decision Making provides students with an understanding of how accounting information is used by managers to support effective business decision-making. The course introduces fundamental concepts in management accounting, such as cost behavior, budgeting, performance evaluation, and relevant cost analysis. Students learn to interpret financial data, assess the financial implications of various business scenarios, and make informed decisions that align with organizational objectives. Emphasis is placed on real-world applications, ethical considerations, and the integration of accounting information with broader strategic planning.
Recommended Textbook
Survey of Accounting 5th Edition by Thomas P Edmonds
Source URL: https://quizplus.com/study-set/3398
Page 2
Chapter 1: An Introduction to Accounting
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/67418
Sample Questions
Q1) The stockholders of a business have a priority claim to its assets in the event of liquidation.
A)True
B)False
Answer: False
Q2) In a market, a company that manufactures cars would be referred to as a conversion agent.
A)True
B)False
Answer: True
Q3) The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000; Liabilities = ?; Common Stock = $15,000; Revenue = $22,000; Dividends = $1,500; Beginning Retained Earnings = $3,500; Ending Retained Earnings = $7,500. The amount of liabilities reported on the end-of-period balance sheet was:
A) $27,500.
B) $31,500.
C) $35,000.
D) $42,500.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Accounting for Accruals and Deferrals
Available Study Resources on Quizplus for this Chatper
77 Verified Questions
77 Flashcards
Source URL: https://quizplus.com/quiz/67417
Sample Questions
Q1) The balance in a revenue account at the beginning of an accounting period will always be
A) zero.
B) last period's ending balance.
C) higher than the previous periods beginning balance.
D) equal to the amount of retained earnings for the previous period.
Answer: A
Q2) Which of the following events would not require an end-of-year adjusting entry?
A) Purchasing supplies for cash
B) Paying for one year's rent on July 1
C) Providing services on account
D) Each of these answer choices would require an end-of-year adjustment
Answer: C
Q3) The matching concept most significantly influences which financial statement?
A) Balance sheet
B) Income statement
C) Statement of changes in stockholders' equity
D) Statement of cash flows
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Accounting for Merchandising Businesses
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/67416
Sample Questions
Q1) The adjusting entry to record the amount of inventory shrinkage affects both the balance sheet and the income statement.
A)True
B)False
Answer: True
Q2) With a periodic inventory system, the cost of goods sold is recorded at the time of a sale of merchandise.
A)True
B)False
Answer: False
Q3) Anchor Company sold merchandise with a cost of $560 to a customer for $890 on account. Due to an error, this sale was never recorded in the accounting records. What effects will the failure to make the necessary entries have on the company's accounting equation?
A) Total assets and total equity will be overstated.
B) Total assets will be overstated and total equity will be understated.
C) Total assets and total equity will be understated.
D) The accounting equation will not be affected.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Internal Controls, Accounting for Cash, and Ethics
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/67415
Sample Questions
Q1) After the check is signed, the third employee is the one who records the check in the company's records and examines the appropriate supporting documents.
A)True
B)False
Q2) The usual form for a bank reconciliation begins with the ending cash balance shown on the bank statement and reconciles it to the ending cash balance on the company's books.
A)True
B)False
Q3) Which of the following is not considered an accounting control?
A) Requiring employees to take vacations
B) Performance evaluations
C) Bonding of employees
D) Use of prenumbered documents
Q4) In preparing a bank reconciliation, typical adjustments to the bank balance are deposits in transit and outstanding checks.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Accounting for Receivables and Inventory Cost Flow
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/67414
Sample Questions
Q1) During a period of rising prices, a company's cost of goods sold would be higher using the LIFO cost flow method than with FIFO.
A)True
B)False
Q2) Generally accepted accounting principles do not allow the cost flow pattern for merchandise inventory to differ from the physical flow of merchandise within the business.
A)True
B)False
Q3) One of the disadvantages of the specific identification inventory cost flow method is that it can allow managers of a business to manipulate the amount of income the business reports.
A)True
B)False
Q4) In most businesses, the physical flow of goods occurs on a FIFO basis, but a different cost flow method is allowed under generally accepted accounting principles.
A)True
B)False
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Accounting for Long-Term Operational Assets
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/67413
Sample Questions
Q1) Recognizing depreciation expense on equipment or a building is an asset use transaction.
A)True
B)False
Q2) Tangible assets include land, equipment, and goodwill.
A)True
B)False
Q3) On January 1, Year 1, Eller Company purchased an asset that had cost $24,000. The asset had an 8-year useful life and an estimated salvage value of $1,000. Eller depreciates its assets on the straight-line basis. On January 1, Year 5, the company spent $6,000 to improve the quality of the asset. Based on this information, the recognition of depreciation expense in Year 5 would:
A) increase total assets by $4,375.
B) reduce total equity by $4,375.
C) reduce total assets by $4,625.
D) increase total equity by $4,625.
Q4) Land differs from other property because it is not subject to depreciation.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Accounting for Liabilities
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/67412
Sample Questions
Q1) Davis Corporation borrowed $50,000 on January 1, Year 1. The loan is for a ten-year period and has an annual interest rate of 9%. At the end of each year, Davis will make a payment of $7,791, which includes both principal and interest. The amount of the payment for Year 1 that is reduction of principal is $3,587.
A)True
B)False
Q2) On January 1, Year 1, The Hanover Corporation issued $70,500 of 8%, 5-year bonds at 97. Hanover uses the straight-line method of bond discount amortization. The interest payments are due on December 31 each year. How much interest expense will Hanover report on its income statement on December 31, Year 1?
A) $423
B) $2,115
C) $5,640
D) $6,063
Q3) Loans that require payment of interest at regular intervals and payment of principal at maturity are installment notes.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Proprietorships, Partnerships, and Corporations
Available Study Resources on Quizplus for this Chatper
94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/67411
Sample Questions
Q1) A reason often given for a corporate stock split is to:
A) reduce the market price of the stock.
B) protect the interest of creditors.
C) increase the par value of the stock.
D) absorb the treasury stock.
Q2) The class or type of stock that every corporation must have is preferred stock.
A)True
B)False
Q3) Where is treasury stock reported on a corporation's balance sheet?
A) As an addition to total paid-in capital
B) As a deduction from total stockholders' equity, following retained earnings
C) As a deduction from total paid-in capital
D) As a deduction from retained earnings
Q4) Which of the following statements about types of business entities is true?
A) For accounting purposes a sole proprietorship is not a separate entity from its owner.
B) Ownership in a partnership is represented by having shares of capital stock.
C) One advantage of a corporation is ability to raise capital.
D) Sole proprietorships are subject to double taxation.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/67410
Sample Questions
Q1) You are considering an investment in IBM stock and wish to assess the firm's long-term debt-paying ability and its use of debt financing. All of the following ratios can be used to assess solvency except:
A) Number of times interest is earned.
B) Debt to assets ratio.
C) Debt to equity ratio.
D) Net margin.
Q2) Common methods of financial statement analysis include all of the following except:
A) Incremental analysis.
B) Horizontal analysis.
C) Vertical analysis.
D) Ratio analysis.
Q3) The most frequently quoted measure of earnings performance is the stockholders' equity ratio.
A)True
B)False
Q4) The current ratio is one of the most common measures of solvency.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: An Introduction to Management Accounting
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/67409
Sample Questions
Q1) A company that uses a just in time inventory system:
A) has finished goods inventory on hand at all times in order to speed up shipments of customer orders.
B) may find that having less inventory actually leads to increased customer satisfaction.
C) assesses its value chain to create new value-added activities.
D) adopts a systematic, problem-solving attitude.
Q2) Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?
A) Economic data
B) Financial data
C) Nonfinancial data
D) Both financial data and nonfinancial data
Q3) Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner include:
A) depreciation on production equipment.
B) direct material.
C) indirect labor.
D) Both depreciation on production equipment and indirect labor.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Cost Behavior, Operating Leverage, and Profitability Analysis
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/67421
Sample Questions
Q1) Contribution margin represents the amount available to cover fixed expenses and then provide company profits.
A)True
B)False
Q2) At the break-even point:
A) Sales would be equal to total costs.
B) Contribution margin would be equal to total fixed costs.
C) Sales would be equal to fixed costs.
D) Both sales would be equal to total costs and contribution margin would be equal to total fixed costs are correct.
Q3) Cost behavior
Q4) The activity base selected determines whether a cost behaves as a variable cost or fixed cost.
A)True
B)False
Q5) A cost that contains both fixed and variable elements is referred to as a:
A) mixed cost.
B) hybrid cost.
C) relevant cost.
D) nonvariable cost.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Cost Accumulation, Tracing, and Allocation
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/67408
Sample Questions
Q1) Great Outdoors Company makes two types of camping tents. Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor. During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information:
A) $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
B) $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
C) $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent.
D) None of the answers are correct.
Q2) It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Relevant Information for Special Decisions
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/67420
Sample Questions
Q1) All of the following are examples of product-level costs except:
A) product inspection costs.
B) product advertising costs.
C) engineering design costs.
D) patent costs.
Q2) Which of the following costs is an example of a product-level cost?
A) Machine setup costs
B) Patent filing costs
C) Materials and labor costs
D) Shipping and handling costs
Q3) Facility-level costs are not involved in decisions to eliminate a segment of a business.
A)True
B)False
Q4) Sunk costs:
A) are not considered when evaluating new proposals.
B) differ among the alternatives.
C) impact the future.
D) are relevant.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Planning for Profit and Cost Control
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/67419
Sample Questions
Q1) Sales for January are budgeted at 50,000 units, and the company expects sales to increase 4% each month. How many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units?
A) 52,000 units
B) 54,000 units
C) 62,000 units
D) None of the choices is correct.
Q2) Four purposes or advantages for budgeting involve planning, coordination, performance measurement, and punitive action.
A)True
B)False
Q3) The cash budget includes three sections: (1) operating activities, (2) investing activities, and (3) financing activities.
A)True
B)False
Q4) The first budget prepared in a master budget is the cash receipts budget.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Performance Evaluation
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/67422
Sample Questions
Q1) Brookings Company evaluates its managers on the basis of return on investment. Division Three has a return on investment (ROI) of 15% while the company as a whole has an ROI of only 10%. Which of the following performance measures will motivate the manager of Division Three to accept a project earning a 12% return?
A) ROI
B) Residual income
C) Both ROI and residual income will motivate the manager to accept the project.
D) Neither ROI nor residual income will motivate the manager to accept the project.
Q2) Jacob is a department manager who recently instituted a new recognition program for his employees. He budgeted the cost of the new program at $10 per employee, but actual costs were $15 per employee. The cost associated with the recognition program would be considered which of the following kinds of cost?
A) Controllable cost
B) Opportunity cost
C) Fixed cost
D) Product cost
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Planning for Capital Investments
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/67407
Sample Questions
Q1) Which capital budgeting technique defines returns in terms of income instead of cash flows?
A) The unadjusted rate of return method
B) The internal rate of return technique
C) The net present value technique
D) The payback period
Q2) The unadjusted rate of return is found by dividing the average incremental increase in annual operating income by the cost of the investment.
A)True
B)False
Q3) Which of the following would be considered a cash inflow in determining the value of a capital investment?
A) Incremental revenues from increased productivity
B) Cost savings from a reduction in labor hours
C) An increase in working capital commitments
D) Both incremental revenues from increased productivity and cost savings from a reduction in labor hours are correct.
To view all questions and flashcards with answers, click on the resource link above.
18