Accounting Information for Decision Making
Test Preparation
Course Introduction
This course introduces students to the fundamental concepts and techniques of accounting as they apply to effective decision making in organizations. Focusing on both financial and managerial accounting information, the course emphasizes how accounting data is collected, processed, and interpreted to support business planning, control, and strategic decisions. Students will learn how to analyze financial statements, prepare budgets, evaluate performance, and assess the financial implications of various managerial choices. Real-world case studies and practical examples are used to demonstrate how accounting information drives value creation and improves organizational outcomes.
Recommended Textbook Cornerstones of Managerial Accounting 5th Edition by
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16 Chapters
2824 Verified Questions
2824 Flashcards
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Maryanne M. Mowen
Page 2
Chapter 1: Introduction to Managerial Accounting
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) Financial accounting is governed by GAAP.
A)True
B)False
Answer: True
Q2) A __________________________ has passed a comprehensive examination designed to ensure technical competence and has two years of experience.
Answer: Certified Internal Auditor (CIA)
CIA
Q3) Activity-based costing is a less detailed approach to determining the cost of goods and services than traditional cost accounting.
A)True
B)False
Answer: False
Q4) ________________________ involves choosing actions that are right, proper, and just.
Answer: Ethical behavior
Q5) The managerial accounting system produces information for __________ users. Answer: internal
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Refer to Figure 2-2. What was the amount of cost of goods manufactured for the year?
A) $101,000
B) $124,000
C) $100,000
D) $102,000
Answer: D
Q2) Andover Inc. had a gross margin for the month of February totaling $42,000. They sold 5,000 units during the month at a sales price of $20 per unit. What was the amount of cost of goods sold for the month?
A) $100,000
B) $42,000
C) $58,000
D) none of these are correct
Answer: C
Q3) Glue used in the manufacture of cabinets would be an example of a fixed cost. A)True
B)False
Answer: False
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Page 4
Chapter 3: Cost Behavior
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237 Flashcards
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Sample Questions
Q1) direct labor
A)variable
B)fixed
Answer: A
Q2) Knowing how costs change as output changes is essential to
A) planning and controlling.
B) controlling and decision making.
C) planning, controlling and decision making.
D) None of these are correct.
Answer: C
Q3) Fixed cost per unit is $9 when 20,000 units are produced and $6 when 30,000 units are produced. What is the total fixed cost when nothing is produced?
A) $180,000
B) $360,000
C) $150,000
D) $240,000
Answer: A
Q4) Rental expense for a warehouse is an example of a ___________ cost. Answer: fixed
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) Operating leverage is
A) the difference between sales and variable expense.
B) the use of fixed costs to extract higher percentage changes in profits as sales activity changes.
C) the portion of each sales dollar available to cover fixed costs and provide for profit.
D) visually portrays the relationship between profits and units sold.
E) none of these
Q2) The _________________ is the units sold or the revenue earned above the break-even volume.
Q3) If fixed costs increase, the break-even point decreases.
A)True
B)False
Q4) How can a multi-product firm determine its break-even point?
Q5) Contribution margin ratio can be calculated in all of the following ways except
A) fixed costs/Contribution margin per unit.
B) 1 - Variable cost ratio.
C) contribution margin per unit/price.
D) total contribution margin/Total sales.
E) All of these are correct.
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Chapter 5: Job-Order Costing
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196 Flashcards
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Sample Questions
Q1) Refer to Figure 5-2. What is the predetermined overhead rate?
A) $4 per direct labor hour
B) $2.63 per direct labor hour
C) $4.18 per direct labor hour
D) $880,000
E) None of these are correct.
Q2) What are the three steps of overhead application?
Q3) immaterial overhead variance closed to costs of goods sold
A)completion of job
B)end of each accounting period
C)materials are moved from storage into production
D)product is sold
E)end of year
Q4) Refer to Figure 5-5. Calculate the balance in Work-in-Process on October 31.
A) $17,717
B) $22,875
C) $36,653
D) $32,820
E) $15,820
Q5) Applied overhead costs are charged to ________________.
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Chapter 6: Process Costing
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177 Flashcards
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Sample Questions
Q1) units pass through one process before they can be worked on in the next processes
A)parallel processing
B)sequential processing
C)process costing
D)weighted-average costing method
Q2) If changes occur in the prices of the manufacturing inputs from one period to the next, then the weighted average method produces a more accurate unit cost than does the FIFO method.
A)True
B)False
Q3) Refer to Figure 6-6. What are the equivalent units of production for conversion costs?
A) 120,000
B) 132,000
C) 122,000
D) 135,000
Q4) __________________________ are the complete units that could have been produced given the total amount of manufacturing effort expended for the period under consideration.
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) One of the three major dimensions of measuring activity performance is quality.
A)True
B)False
Q2) The length of time it takes to produce a unit of output from the time raw materials are received until the good is delivered to finished goods inventory.
A)cycle time
B)direct tracing
C)activity sharing
D)driver tracing
E)value-added activities
F)activity selection
Q3) Quality improvement can increase profitability by decreasing costs.
A)True
B)False
Q4) Which is not a component of process value analysis?
A) driver analysis
B) velocity
C) activity analysis
D) performance measurement
E) None of these.
Page 9
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) The profit contribution each segment makes toward covering a company's common fixed costs is called ______________.
Q2) Ordering costs
A)the costs of not having a product available when demanded by a customer
B)the costs of carrying inventory
C)approach that maintains goods should be pulled through the system by present demand
D)the number of units in the order quantity that minimizes the total cost
E)the costs of placing and receiving an order
Q3) Which of the following is not a traditional reason for carrying inventory?
A) to satisfy customer demand
B) to avoid shutting down manufacturing facilities
C) to buffer against unreliable production processes
D) to hedge against future price increases
E) all of these are traditional reasons for carrying inventory
Q4) Variable costing treats fixed factory overhead as a ______________.
Q5) _______________ assigns all manufacturing costs to the product.
Q7) The ___________________ income statement groups expenses according to Page 10
Q6) Generally accepted accounting principles require ______________ for external reporting.
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Page 11
Chapter 9: Profit Planning
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Sample Questions
Q1) Monetary incentives include salary increases, bonuses, and promotions.
A)True
B)False
Q2) There are as many direct materials purchases budgets as there are products.
A)True
B)False
Q3) Refer to Figure 9-3. What is the total overhead budgeted for the month of September?
A) $680,000
B) $580,300
C) $142,100
D) $460,000
E) $362,100
Q4) Which of the following appears on the budgeted balance sheet?
A) Estimated sales
B) Estimated cost of goods sold
C) Estimated ending accounts receivable
D) Estimated fixed selling expense
E) Estimated fixed factory overhead
Q5) What are the advantages of budgeting?
Page 12
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) ___________________ is calculated by multiplying the unit labor standard by the actual output.
Q2) Engineering studies are often too rigorous and may not be achievable by operating personnel.
A)True
B)False
Q3) Ideal standards can be achieved only if everything operates perfectly, meaning that they do not allow for any machine breakdowns, slack, etc.
A)True
B)False
Q4) The sum of the price and usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.
A)True
B)False
Q5) Currently attainable standards offer the most behavioral benefits because higher performance levels are attained through challenging, yet achievable, standards.
A)True
B)False
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Chapter 11: Flexible Budgets and Overhead Analysis
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172 Flashcards
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Sample Questions
Q1) Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?
A) BFOH = SFOR * AH
B) BFOH = SFOR * SH for actual production
C) BFOH = SFOR * SH for planned production
D) BFOH = SFOR/SH for actual production
E) None of these.
Q2) The total fixed overhead variance is calculated by the following formula:
A) Total actual overhead - Total applied overhead.
B) AFOH -Standard overhead rate *SH.
C) AFOH - SFOR * SH.
D) AFOH - SFOR F* AH.
E) Total actual overhead - SFOR * SH.
Q3) A _________________ enables a firm to compute expected costs for a range of activity levels.
Q4) Static budgets are the best benchmarks for preparing a performance report.
A)True
B)False
Q5) The ________________ budget is based on the actual level of activity.
Q6) _________________ are capacity costs acquired in advance of usage.
Page 14
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) The dollar difference between operating income and minimum required return on a company's operating assets.
A)Turnover
B)Margin
C)ROI
D)Residual income
Q2) The Auto Division of Big Department Store had a net operating income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12%. Sales for the period totaled $3,000,000. The residual income for the period is
A) $480,000.
B) $360,000.
C) $120,000.
D) $80,000.
Q3) A transfer price is the price charged for a component by the selling division to the buying division of the same company.
A)True
B)False
Q4) Typically, investment centers are evaluated on the basis of
Q5) _____________ is the ratio of operating income to sales.
Page 15
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) A segment margin is always greater than or equal to zero.
A)True
B)False
Q2) The decision on whether to produce a product internally or purchase it from a supplier is an example of a _______________.
Q3) Sunk costs
A)the difference in total cost between the alternatives in a decision
B)determine whether or not a segment should be kept or dropped
C)limited resources and limited demand for each product
D)a specific set of procedures that produces a decision
E)the point that products that have common processes and costs of production become distinguishable
F)method of determining the cost of a product based on the price that customers are willing to pay
G)decisions involving a choice between internal and external production
H)products that have common processes and costs of production up to a point
I)past costs that cannot be affected by future decisions
J)a percentage applied to the base cost to cover other costs plus profit
K)determine whether a specially priced order should be accepted or rejected
L)determine whether it is more profitable to process a joint product further
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) What is a capital investment decision? Give an example.
Q2) The reason that a discount factor in Year 3 is less than a discount factor in Year 2 is that
A) cash flows are uneven.
B) compounding does not occur.
C) cash flows are even.
D) present value is positive.
E) a dollar received in 3 years is worth less than a dollar received in 2 years.
Q3) A firm is evaluating a project that has a net present value of $0 when a discount rate of 8% is used. A discount rate of 6% will result in a
A) negative net present value.
B) positive net present value.
C) net present value of $0.
D) The question cannot be answered based upon the information provided.
Q4) A formula for the accounting rate of return is
A) average income/initial investment.
B) initial investment/annual cash flow.
C) annual cash flow/initial investment.
D) initial investment/average income.
E) (average income + initial investment)/initial investment.
Page 17
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Chapter 15: Statement of Cash Flows
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Sample Questions
Q1) Total operating expenses on Tucker Company's income statement for last year totaled $215,000. During the year the accounts payable stayed the same, the accrued liabilities stayed the same, and prepaid expenses stayed the same. Depreciation expense for the year was $11,000. Based on this information, operating expenses adjusted to cash basis under the direct method on the statement of cash flows would be
A) $215,000.
B) $204,000.
C) $226,000.
D) none of these.
Q2) How is it possible for a company to suffer a net loss for a given year, yet produce a positive net cash flow from operating activities?
Q3) In preparing the statement of cash flows, determining the net increase or decrease to cash requires the use of
A) the adjusted trial balance.
B) the current period's retained earnings statement.
C) a comparative balance sheet.
D) a comparative income statement.
Q4) Income statements are prepared on a (n) ______________.
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Page 18
Chapter 16: Financial Statement Analysis
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Sample Questions
Q1) A successful grocery store would probably have
A) a low inventory turnover.
B) a high inventory turnover.
C) zero profit margin.
D) low volume.
Q2) Phillips Company had $300,000 in sales on account last year. The beginning accounts receivable balance was $25,000 and the ending accounts receivable balance was $18,000. The company's accounts receivable turnover ratio was closest to
A) 16.67.
B) 12.00.
C) 3.85.
D) 13.95.
Q3) Which profitability ratio requires the use of earnings per share and the current market price?
A) return on common stockholders' equity
B) dividend payout ratio
C) dividend yield
D) price-earnings ratio
Q4) For meaningful analysis, ratios should be compared with a ____________.
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