Accounting for Managers Practice Questions
Course Introduction
Accounting for Managers is designed to equip future business leaders with a comprehensive understanding of key accounting concepts, principles, and techniques relevant to managerial decision-making. The course covers fundamental topics such as financial statement analysis, budgeting, cost-volume-profit analysis, and performance measurement, enabling managers to interpret financial data effectively. Emphasis is placed on the use of accounting information for planning, control, and strategic decision-making in various organizational contexts. Through practical examples and real-world case studies, students learn how to leverage accounting insights to enhance business performance and support sustainable organizational growth.
Recommended Textbook
Horngrens Financial and Managerial Accounting The Managerial Chapters 5th Edition by Miller
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Chapter 1: Accounting and the Business Environment
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Sample Questions
Q1) Assume MetAmbit Corporation had a net income of $2,300 for the year ending December 2016.Its beginning and ending total assets were $33,500 and $18,000,respectively.Calculate MetAmbit's return on assets (ROA).(Round your percentage answer to two decimal places. )
A)6.87%
B)12.78%
C)8.93%
D)4.47%
Answer: C
Q2) For an accounting equation to balance,a transaction must affect both sides of the equation.
A)True
B)False Answer: False
Q3) Financial statements are business documents used to communicate information needed to make business decisions.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Recording Business Transactions
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Sample Questions
Q1) Source documents provide the evidence and data for accounting transactions.
A)True
B)False
Answer: True
Q2) Which is a true statement regarding the accounting equation?
A)The equation can be stated as assets minus liabilities equals equity.
B)The equation consists of three parts: assets,liabilities,and net income.
C)The equation is an optional tool for accountants to use.
D)The equation does not need to balance during a specific period.
Answer: A
Q3) The accounting process of transferring a transaction from the journal to the ledger is called ________.
A)journalizing
B)posting
C)compounding
D)sourcing
Answer: B
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Chapter 3: The Adjusting Process
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Sample Questions
Q1) In the case of deferred revenue,the cash is received first,and the revenue is earned later.
A)True
B)False
Answer: True
Q2) During the accounting period,office supplies were purchased on account for $3,200.A physical count,on the last day of the accounting period,shows $1,100 of office supplies on hand.Supplies Expense for the accounting period is $3,600.What was the beginning balance of Office Supplies?
A)$4,700
B)$2,100
C)$1,500
D)There is not enough information to answer this question. Answer: C
Q3) The advance cash receipts of future revenues are called ________.
A)accrued revenues
B)deferred expenses
C)deferred revenues
D)accrued expenses
Answer: C
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Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) The Accumulated Depreciation account is a permanent account.
A)True
B)False
Q2) Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?
A)debit Insurance Expense and credit Income Summary
B)debit Insurance Expense and credit Common Stock
C)debit Retained Earnings and credit Insurance Expense
D)debit Income Summary and credit Insurance Expense
Q3) A balance sheet prepared in the report form lists the assets on the left and the liabilities and stockholders' equity on the right.
A)True
B)False
Q4) The Supplies Expense account is a temporary account.
A)True
B)False
Q5) The Accounts Payable account is a temporary account.
A)True B)False
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Chapter 5: Merchandising Operations
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Sample Questions
Q1) When recording the sale of merchandise inventory,using a periodic inventory system,________.
A)a running record of merchandise inventory is maintained during the accounting period
B)the Sales Revenue account is credited only as an adjusting entry because sales information is not needed during the accounting period
C)sales discounts and sales returns and allowances are not recorded
D)there is no need to record an entry to the Merchandise Inventory and the Cost of Goods Sold accounts
Q2) In a periodic inventory system,there is no need to record an entry to Merchandise Inventory and Cost of Goods Sold.
A)True
B)False
Q3) The Merchandise Inventory account is an expense account that is used only for goods purchased that the business owns and intends to resell to customers.
A)True B)False
Q4) Give the journal entry to close the Sales Revenue account.
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Chapter 6: Merchandise Inventory
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Sample Questions
Q1) Martell,Inc.purchased inventory on account for $6,500.Provide the journal entry to record the purchase of inventory on account.(Assume a perpetual inventory system. )
Q2) Ronald,Inc.had the following balances and transactions during 2017: \[\begin{array}
{ | l | l | }
\hline \text { Beginning Merchandise Inventory } & 15 \text { units at } \$ 90 \\
\hline \text { March } 10 & \text { Sold } 13 \text { units } \\
\hline \text {June } 10 & \text { Purchased } 30 \text { units at } \$ 87 \\
\hline \text { October 30 } & \text { Sold } 25 \text { units } \\ \hline
\end{array}\] What is the amount of the company's Merchandise Inventory,as disclosed in the December 31,2017 balance sheet,using the periodic weighted-average inventory costing method? (Round the unit costs to two decimal places and total costs to the nearest dollar. )
A)$104
B)$87
C)$373
D)$616
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Page 8
Chapter 7: Internal Control and Cash
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Q1) A company has a petty cash fund amount of $300.When replenished,it has petty cash receipts of $33 for gas expense,$31 for postage expense,$11 for supplies expense,and $12 for miscellaneous expenses.Assume the cash balance is not over or short.In the journal entry,Cash would be credited for ________.
A)$87
B)$76
C)$64
D)$75
Q2) Which of the following is an attribute of the internal control procedure-competent,reliable,and ethical personnel?
A)providing cross training to allow sales personnel to record revenue transactions
B)the need to train and supervise employees
C)monitoring of internal controls by external auditors
D)purchase of burglar alarms
Q3) On a bank reconciliation,deposits in transit are added on the bank side of the reconciliation.
A)True
B)False
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Chapter 8: Receivables
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Q1) On October 1,2017,Parkin,Inc.made a loan to one of its customers.The customer signed a 9-month note for $150,000 at 14%.Calculate the maturity value of the note.(Round your answer to the nearest dollar. )
A)$165,750
B)$171,000
C)$129,000
D)$134,250
Q2) Which of the following statements is true?
A)Accounts receivable are more liquid than cash.
B)Notes receivable are always classified as current assets.
C)Notes receivable usually have longer collection terms than accounts receivable.
D)Accounts receivable are liabilities.
Q3) Interest on a $6,000 note at 8% for 4 months is $160.
A)True
B)False
Q4) When using the allowance method,Allowance for Bad Debts is debited when an account receivable is written off.
A)True
B)False
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Chapter 9: Plant Assets, natural Resources, and Intangibles
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Sample Questions
Q1) On January 1,2016,WAX-D purchased equipment for $60,000 cash,expecting it to remain in service for six years.The equipment is depreciated using the straight-line method with $2,000 estimated residual value.On April 30,2018,the equipment was sold for $48,000 cash.Record depreciation expense for 2018 and the sale of the equipment on April 30,2018.(Do not round your intermediate calculations. )
Q2) Radar,Inc.purchased a van on January 1,2016,for $830,000.Estimated life of the van was five years,and its estimated residual value was $104,000.Radar uses the straight-line method of depreciation.At the beginning of 2018,the corporation revised the total estimated life of the asset from five years to six years.The estimated residual value remained the same as estimated earlier.Calculate the depreciation expense for 2018.
A)$145,200
B)$134,900
C)$108,900
D)$72,600
Q3) A fully depreciated asset that is still in service is not reported as an asset on the balance sheet.
A)True
B)False
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11
Chapter 10: Investments
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Sample Questions
Q1) When a company receives interest revenue on a long-term investment in bonds,________.
A)long-term assets decrease
B)long-term assets increase
C)equity increases
D)current assets decrease
Q2) A security is a ________.
A)regulation dealing with the transactions of investments
B)system aimed at protecting the interests of the market participants
C)share or interest representing financial value
D)process related to the valuation of a financial instrument
Q3) Hometown Resources,Inc.has a 9% rate of return on total assets and the industry average is 12%.How was the 9% rate of return on total assets computed? Comment on this information.
Q4) Securities are ________.
A)commonly traded on an exchange
B)assets traded between companies working in the same industry
C)intangible assets traded in the stock exchange
D)always considered to be long-term investments
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Chapter 11: Current Liabilities and Payroll
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Q1) On October 1,2017,Carlos,Inc.borrowed $225,000 by signing a nine-month,8% note payable.Interest was accrued on December 31,2017.Prepare the journal entry July,1,2017,the date the note was paid.
Q2) Katie Pereira and Ferro Schwartz are employees of Free Star,Inc.In February 2017,Katie's gross pay was $6,000,and Ferro's gross pay was $7,400.All earnings are subject to FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.Which of the following would be included in the entry to record the salaries expense for February?
A)a debit to Salaries Payable to employees for $830.80
B)a debit to FICA-Medicare Taxes Payable for $830.80
C)a credit to FICA-OASDI Taxes Payable for $830.80
D)a credit to Salaries Expense for $830.80
Q3) Which of the following is a control procedure to prevent a dishonest employee from cashing a paycheck that was written to a fictitious person?
A)having employees clock in and out of work
B)keeping computerized records of payroll data
C)serial numbering of paychecks
D)requiring photo IDs for employees picking up their paychecks
Q4) What is a contingent liability? Provide two examples of contingencies.
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13
Chapter 12: Long-Term Liabilities
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Q1) Which of the following statements is true if a bond's stated interest rate is the same as the market rate?
A)The bond will be issued at a premium.
B)The bond will be issued at par.
C)The bond will be issued at a discount.
D)The bond will be issued for an amount lower than the maturity value.
Q2) The issue price of a bond-whether it is issued at par,premium,or discount-has an effect on the principal repayment at maturity.
A)True
B)False
Q3) Which of the following describes a serial bond?
A)a bond that matures in installments at regular intervals
B)a bond that gives the bondholder a claim for specific assets
C)a bond that matures at one specified time
D)a bond that is not backed by specific assets
Q4) Long-term liabilities can be structured with equal principal payments or with an equal total payment amount.
A)True
B)False
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Chapter 13: Stockholders Equity
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Sample
Questions
Q1) On July 31,2017,Archer,Inc.reported the following information in the equity section of their balance sheet:
\(\begin{array}{|l|r|}
\hline \text { Stockholders' Equity: } & \\
\hline \text { Common Stock, } \$ 1.00 \text { par, } 500,000 \text { shares authorized, } 20,000 \text { shares issued } & \\
\text { and outstanding } & \$ 20,000 \\
\hline \text { Paid-In Capital in Excess of Par-Common } & 1,180,000 \\
\hline \text { Retained Earnings } & 3,200,000 \\
\hline \text { Total Stockholder's Equity } & \$ 4,400,000\\
\hline
\end{array}\) Assume that Archer splits its common stock 3-for-1.Prepare an equity section of the balance sheet that shows the effects of the stock split.(Please round all numbers to the nearest cent. )
Q2) A corporation issues 16,000 shares of its $3 stated value common shares.The issue price is $9 per share.The credit to the Common Stock account is $144,000.
A)True
B)False
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Chapter 14: The Statement of Cash Flows
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Q1) To Go Company is preparing its statement of cash flows using the indirect method.During the year,they purchased equipment for $15,000 cash.Which of the following statements is true?
A)$15,000 would be shown as a negative cash flow in the operating activities section.
B)$15,000 would be shown as a negative cash flow in the investing activities section.
C)$15,000 would be shown as a positive cash flow in the investing activities section.
D)$15,000 would be shown as a positive cash flow in the financing activities section.
Q2) While preparing a statement of cash flows using the indirect method,an increase in current assets is added to net income to arrive at net cash flow from operating activities. A)True B)False
Q3) Financing activities on the statement of cash flows affect the long-term liability and equity accounts. A)True B)False
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) Investors and creditors cannot evaluate a company by examining only one year's data.
A)True B)False
Q2) Merchandise inventory and prepaid expenses are excluded from the acid-test ratio. A)True B)False
Q3) An external auditor is responsible for assessing the effectiveness of a company's internal controls.
A)True B)False
Q4) A high times-interest-earned ratio indicates difficulty in paying interest expense. A)True B)False
Q5) The dividend payout ratio measures the annual dividend per share as a proportion of the market price per share.
A)True B)False
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Chapter 16: Introduction to Managerial Accounting
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Sample Questions
Q1) Manufacturing companies produce their own products,but merchandising companies do not.
A)True
B)False
Q2) Which of the following is a period cost for a manufacturing company?
A)office rent
B)wages of factory janitor
C)insurance cost of production equipment
D)raw materials
Q3) The following format represents the flow of costs for all three manufacturing inventory accounts:
Beginning balance + Additions - Ending balance = Amount used,manufactured,or sold
A)True
B)False
Q4) The IMA standards of ethical practice require managerial accountants to maintain their professional competence.
A)True
B)False
Q5) Define indirect cost.
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Chapter 17: Job Order Costing
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Sample Questions
Q1) Littleton Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances.Littleton has four public relations specialists and office staff.At the beginning of 2016,Littleton estimated the total cost of salaries and benefits for the public relations specialists at $684,000 and a total of 7,200 billable hours for the year.The office and administrative costs were estimated at $432,000.The allocation base for office and administrative costs is billable hours.A new client is contracting with Littleton to promote a ballet tour in the United States Littleton estimates that the job will require 38 billable hours of specialist time.If Littleton wishes to have a 20% mark up on cost on the job,what price should Littleton quote to the client?
A)$3,610
B)$2,280
C)$8,128
D)$2,238
Q2) Define a job order costing system and list two types of businesses that would us a job order costing system.
Q3) Job order costing is well suited for the service industry.
A)True
B)False
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Chapter 18: Process Costing
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Q1) For each of the following statements,indicate whether the statement applies to Job Order Costing Systems (JO)or Process Costing Systems (PC).
\[\begin{array} { | l | l | }
\hline& \text { JO or PC }\\
\hline \begin{array} { l }
\text { The company manufactures homogeneous products through a } \\ \text { series of uniform steps or processes. }
\end{array} \\
\hline \text { Cost transfers are made when each job is completed. } & \\
\hline \begin{array} { l }
\text { There are separate Work-in-Process Inventory accounts for each } \\
\text { department. }
\end{array} & \\
\hline \text { A job sheet is prepared for each job. } & \\
\hline \text { Cost transfers are made at the end of the accounting period. } & \\ \hline
\end{array}\]
Q2) What does the concept of equivalent units of production allow businesses to measure?
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Chapter
19: Cost Management Systems: Activity-Based,
and Quality Management Systems
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Q1) A radial tire manufacturer produces products in two departments-Divisions A and B.The company uses separate predetermined overhead allocation rates for each department to allocate its overhead.Divisions A and B have estimated manufacturing overhead costs of $160,000 and $340,000,respectively.Division A uses machine hours as the allocation base,and Division B uses direct labor hours as the allocation base.The total estimated machine hours were 31,000,and direct labor hours were 22,000 for the year.Calculate the departmental predetermined overhead allocation rates.(Round your answer to the nearest cent. )
A)Division A-$5.16,Division B-$15.45
B)Division A-$15.45,Division B-$5.16
C)Division A-$7.27,Division B-$10.97
D)Division A-$10.97,Division B-$7.27
Q2) Activity-based management is not suitable for service companies as it deals with the proper allocation of manufacturing overhead costs. A)True B)False
Q3) Why is using multiple predetermined overhead allocation rates more accurate than using a single plantwide allocation rate?
Q4) Managers can use activity-based management to make what two kinds of decisions?
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Chapter 20: Cost-Volume-Profit Analysis
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Q1) What is the margin of safety? List three ways in which margin of safety can be expressed.
Q2) Antique Works is owned and operated by a craftsman who makes replicas of historic firearms for museums,sportsmen,and collectors.The data are as follows: \[\begin{array} { | l | r | }
\hline \text { Sales price per unit } & \$ 800 \\
\hline \text { Variable cost per unit } & 470 \\
\hline \text { Fixed costs per month } & 8,580 \\
\hline
\end{array}\] If Antique expects to sell 40 units per month,what is his margin of safety expressed in units per month?
A)14 units
B)40 units
C)66 units
D)12 units
Q3) If variable costs increase,and all other factors remain the same,the margin of safety will become smaller.
A)True
B)False
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Chapter 21: Variable Costing
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Q1) Rickman,Inc.reports the following information: \[\begin{array} { | l | r |r| }
\hline \text { Units produced } & 590& \text { units } \\
\hline \text { Units sold } & 490& \text { units } \\
\hline \text { Sales price } & \$ 120& \text { per unit } \\
\hline \text { Direct materials } & \$ 26 &\text { per unit } \\
\hline \text { Direct labor } & \$ 9& \text { per unit } \\
\hline \text { Variable manufacturing overhead } & \$ 14& \text { per unit } \\
\hline \text { Fixed manufacturing overhead } & \$ 16,500& \text { per year } \\
\hline \text { Variable selling and administrative costs } & \$ 6 &\text { per unit } \\
\hline \text { Fixed selling and administrative costs } & \$ 12,200 &\text { per year } \\
\hline
\end{array}\] There are no beginning inventories.What is the ending balance in Finished Goods Inventory using variable costing?
A)$4,900
B)$3,500
C)$5,500
D)$7,697
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Chapter 22: Master Budgets
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Q1) 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
Q2) In the budgeted statement of cash flows,all cash receipts and payments are categorized into operating,financing,and ________ activities.
A)investing
B)merchandising
C)budgeting
D)controlling
Q3) The budgeted income statement is a cash-based income statement.
A)True
B)False
Q4) If the cost of indirect materials needed for production is insignificant,it should not be included in the budgeting process.
A)True
B)False
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Q1) Mermaid Outfitters projected sales of 78,000 units for the year at a unit sales price of $15.00.Actual sales for the year were 70,000 units at $15.00 per unit.Variable costs were budgeted at $4.50 per unit,and the actual variable cost was $4.80 per unit.Budgeted fixed costs totaled $376,000,while actual fixed costs amounted to $400,000.What is the sales volume variance for operating income?
A)$39,000 unfavorable
B)$84,000 unfavorable
C)$84,000 favorable
D)$45,000 unfavorable
Q2) The direct materials cost and efficiency variances make up the total direct materials variance.
A)True
B)False
Q3) 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.
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Chapter 24: Responsibility Accounting and Performance Evaluation
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Q1) The limitations of financial performance measures reinforce the importance of the balanced scorecard.
A)True
B)False
Q2) Regarding controllable costs,which of the following statements is incorrect?
A)The production manager cannot make the decision to replace older equipment.
B)All costs are ultimately controllable at the upper levels of management.
C)The production manager is not responsible for avoiding waste of direct materials.
D)The production manager must be able to control all costs of his or her department.
Q3) The manager of a revenue center is responsible for generating profits.
A)True
B)False
Q4) An investment center manager is responsible for generating profits and managing invested capital.
A)True
B)False
Q5) List two objectives in setting transfer prices.
Page 26
Q6) Explain the difference between a controllable and a noncontrollable cost.
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Chapter 25: Short-Term Business Decisions
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Q1) High Seas Sail Makers manufactures sails for sailboats.The company has the capacity to produce 36,000 sails per year and is currently producing and selling 25,000 sails per year.The following information relates to current production: \[\begin{array} { |
l | r | }
\hline \text { Sales price per unit } & \$ 175 \\
\hline \text { Variable costs per unit: } & \\
\hline \text { Manufacturing } & \$ 50 \\
\hline \text { Selling and administrative } & \$ 10 \\
\hline \text { Total fixed costs: } & \\
\hline \text { Manufacturing } & \$ 700,000 \\
\hline \text { Selling and administrative } & \$ 250,000 \\ \hline
\end{array}\] If a special pricing order is accepted for 5,700 sails at a sales price of $170 per unit,fixed costs remain unchanged,and there are no variable selling and administrative costs for this order,what is the change in operating income?
A)Operating income decreases by $627,000.
B)Operating income decreases by $684,000.
C)Operating income increases by $627,000.
D)Operating income increases by $684,000.
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Chapter 26: Capital Investment Decisions
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Q1) An investment should be accepted if ________.
A)it has positive total cash inflows
B)it has a payback period in less than 10 years
C)the investment's rate of return is lower than the company's current year required rate of return
D)the net present value is positive
Q2) Compound interest assumes that all interest earned will remain invested and earn additional interest at the same interest rate.
A)True
B)False
Q3) Managers generally use payback as the sole method for deciding whether to invest in an asset.
A)True B)False
Q4) Cash inflows include future cash revenue generated from an investment and any future residual value of the asset but exclude any future savings in ongoing cash operating costs resulting from the investment.
A)True B)False
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Chapter 27: Accounting Information Systems
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Source URL: https://quizplus.com/quiz/70781
Sample Questions
Q1) All transactions are recorded in either one of the special journals or in the general journal,but not both.
A)True
B)False
Q2) Rockville Corporation makes a $1,200 purchase of merchandise inventory on account.This transaction will be recorded in the ________.
A)cash payments journal
B)sales journal
C)cash receipts journal
D)purchases journal
Q3) On May 31,a retail firm pays rent of $2,700 for the month of May.When this transaction is recorded in the cash payments journal,________.
A)assets and equity will increase by $2,700
B)assets and liabilities will decrease by $2,700
C)assets and equity will decrease by $2,700
D)liabilities and equity will increase by $2,700
Q4) List and briefly discuss the three basic components of an accounting information system.
Q5) Describe the transactions recorded in the cash payments journal.
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