Financial Accounting for Managers
Practice Questions
Course Introduction
Financial Accounting for Managers provides an in-depth understanding of the foundational principles and practices of financial accounting tailored to managerial decision-making. The course covers key topics including the preparation and interpretation of financial statements, understanding accounting cycles, and the application of accounting information in planning, control, and performance evaluation. Emphasis is placed on analyzing income statements, balance sheets, and cash flow statements to equip managers with the skills necessary to make informed financial decisions, comply with regulatory requirements, and communicate effectively with stakeholders. Through case studies and real-world examples, participants learn how financial accounting contributes to strategic business management and organizational success.
Recommended Textbook
Managerial Accounting 11th Canadian Edition by Ray Garrison
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14 Chapters
2025 Verified Questions
2025 Flashcards
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) Many organizations use extrinsic incentives to highlight important goals and to motivate employees to achieve them.
A)True
B)False
Answer: True
Q2) Both financial and managerial accounting rely on the same underlying financial data but there are major differences.Managerial Accounting: A) emphasizes financial consequences of past activities.
B) emphasizes precision.
C) emphasizes relevance.
D) must follow GAAP.
Answer: C
Q3) Companies that adopt a customer intimacy strategy are in essence saying to their target customers,"The reason you should choose us is because we understand and respond to your individual needs better than our competitors."
A)True
B)False
Answer: True
Page 3
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Chapter 2: Cost Terms,concepts,and Classifications
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105 Flashcards
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Sample Questions
Q1) The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000.The beginning inventory of finished goods was $60,000,and the ending inventory of finished goods was $85,000.What was the cost of goods manufactured for the first quarter?
A) $375,000.
B) $350,000.
C) $400,000.
D) $385,000.
Answer: C
Q2) What was the cost of goods sold for the year (in thousands of dollars)?
A) $530.
B) $520.
C) $500.
D) $460.
Answer: C
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Page 4
Chapter 3: Cost Behaviour: Analysis and Use
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112 Flashcards
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Sample Questions
Q1) Using the high-low method,the estimated fixed cost per month for electricity is closest to which of the following?
A) $870.00.
B) $1,150.00.
C) $1,290.00.
D) $1,306.50.
Answer: B
Q2) The planning horizons for committed fixed costs and discretionary fixed costs are generally the same.
A)True
B)False
Answer: False
Q3) The concept of the relevant range does not apply to fixed costs.
A)True
B)False
Answer: False
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Chapter 4: Cost-Volume-Profit Relationships
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Sample Questions
Q1) The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.
A)True
B)False
Q2) The basic cost-volume-profit model assumes no change in inventories when the model is applied to a manufacturing company.
Required:
Explain the reasoning behind this assumption.
Q3) A company with sales of $80,000 and variable expenses of $40,000 should spend $12,000 on increased advertising,if the increased advertising will increase sales by $22,000.
CM ratio = 50% so incremental CM = 22,000 *.5 which is less than $12,000.
A)True
B)False
Q4) The total volume in sales dollars that would be required to attain a given target operating profit is determined by dividing the sum of the fixed expenses and the target operating profit by the contribution margin ratio.
A)True
B)False
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Chapter 5: Systems Design: Job-Order Costing
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Sample Questions
Q1) Job cost sheets supporting a normal job-order costing system contain entries for actual direct material,actual direct labour,and actual manufacturing overhead cost incurred in completing a job.
A)True
B)False
Q2) A job cost sheet is a form prepared for each separate job that records the materials,labour,and overhead costs charged to the job.
A)True
B)False
Q3) Which entry records the application of overhead?
A) 1.
B) 5.
C) 6.
D) 3.
Q4) What would be the ending Work in Process account balance?
A) $2,000.
B) $13,000.
C) $50,000.
D) $55,000.
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Chapter 6: Systems Design: Process Costing
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131 Flashcards
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Sample Questions
Q1) Which of the following statements referring to a production report is not correct?
A) The quantity schedule deals with physical units, not whole units.
B) The total "Costs to be accounted for" must equal the total cost of the units completed and transferred out, plus the cost of the ending work-in-process inventory.
C) The equivalent units in the ending work-in-process inventory will be different if the weighted-average method is used than it will be if the FIFO method is used.
D) The total of the "Units to be accounted for" will equal the total of the "Units accounted for."
Q2) Assuming that Tru-Colour Paint Company uses the weighted-average method,what are the equivalent units of production for conversion costs?
A) 44,400 units.
B) 42,600 units.
C) 46,000 units.
D) 48,000 units.
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Chapter 7: Activity-Based Costing: A Tool to Aid Decision Making
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Sample Questions
Q1) In general,duration drivers are more accurate measures of the consumption of resources than transaction drivers.
A)True
B)False
Q2) Which of the following types of costs present the greatest difficulty in efforts to trace them to products and services?
A) Unit-level costs
B) Batch-level costs
C) Product/service-level costs
D) Organization-sustaining costs
Q3) The predetermined overhead rate (i.e.,activity rate)for Activity 2 under the activity-based costing system is closest to:
A) $22.60
B) $54.84
C) $58.76
D) $36.73
Q4) Transaction drivers usually take more effort to record than duration drivers.
A)True
B)False
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Chapter 8: Variable Costing: A Tool for Management
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Sample Questions
Q1) During the last year,Hansen Company had operating income under absorption costing that was $5,500 lower than its operating income under variable costing.The company sold 9,000 units during the year,and its variable costs were $10 per unit,of which $6 was variable selling expense.If fixed production cost is $5 per unit under absorption costing every year,how many units did the company produce during the year?
A) 7,625 units.
B) 7,900 units.
C) 8,450 units.
D) 10,100 units.
Q2) What was the company's operating income under variable costing?
A) $407,500.
B) $417,500.
C) $421,250.
D) $431,250.
Q3) What was the operating income under variable costing?
A) $2,000.
B) $9,000.
C) $12,000.
D) $21,000.
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Chapter 9: Budgeting
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Sample Questions
Q1) What are the total collections from customers for the year,in thousands of dollars?
A) $260.
B) $277.
C) $290.
D) $284.
Q2) When using the participative budget approach,it is generally best for top management to accept all budget estimates without question in order to minimize adverse behavioural responses from employees.
A)True
B)False
Q3) Zero-based budgeting requires managers to justify all costs of programs as if these programs were being proposed for the first time.
A)True
B)False
Q4) One of the distinct advantages of a budget is that it can help to uncover potential bottlenecks before they occur.
A)True
B)False
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Chapter 10: Standard Costs and Overhead Analysis
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Sample Questions
Q1) If two products are close substitutes,the sales volume variance for each product can be split into a sales quantity variance and a sales mix variance.
A)True
B)False
Q2) For March,what was the fixed overhead volume variance?
A) $80,000 favourable.
B) $80,000 unfavourable.
C) $96,000 favourable.
D) $96,000 unfavourable.
Q3) The Porter Company has a standard cost system.In July,the company purchased and used 22,500 kilograms of direct material at an actual cost of $53,000,the materials quantity variance was $1,875 unfavourable,and the standard quantity of materials allowed for July production was 21,750 kilograms.What was the materials price variance for July?
A) $2,725 favourable.
B) $2,725 unfavourable.
C) $3,250 favourable.
D) $3,250 unfavourable.
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Chapter 11: Reporting for Control
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Sample Questions
Q1) Effective decentralization is essential for which of the following management accounting practices in organizations?
A) Break-even analysis.
B) Product costing.
C) Segment reporting.
D) Activity-based costing.
Q2) Many firms tend to adopt a focus or a niche strategy instead of either a cost leadership or a differentiation strategy.
A)True
B)False
Q3) Which of the following is the numerator in the calculation of the turnover component of ROI?
A) Invested capital.
B) Total assets.
C) Operating income.
D) Sales.
Q4) The salary paid to a store manager is a traceable fixed expense of the store.
A)True
B)False
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Chapter 12: Relevant Costs for Decision Making
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Sample Questions
Q1) Assume that discontinuing the Tam product would result in a $120,000 increase in the contribution margin of other product lines.How many Tams would have to be sold next year for the company to be as well off as if it just dropped the line and enjoyed the increase in contribution margin from other products?
A) 5,000 units.
B) 6,000 units.
C) 6,500 units.
D) 7,000 units.
Q2) Suppose there is not enough idle capacity to produce all of the units for the overseas customer,and accepting the special order would require cutting back on production of 700 units for regular customers.The minimum acceptable price per unit for the special order is closest to which of the following?
A) $63.78.
B) $69.10.
C) $78.90.
D) $86.10.
Q3) Opportunity costs are recorded in the accounts of an organization.
A)True
B)False
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Page 14
Chapter 13: Capital Budgeting Decisions
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Sample Questions
Q1) The following data pertain to an investment:
\(\begin{array}{|l|r|}
\hline \text { Cost of the Investment } & \$ 18,995 \\
\hline \text { Life of the Project } & 5 \text { years } \\
\hline \text { Annual Cost Savings } & \$ 5,000 \\
\hline \text { Estimated Salvage Value } & \$ 1,000 \\
\hline
\end{array}\)
\[\begin{array} { | l | l |}
\hline \text { Discourt Rate } & 10 \%\\\hline
\end{array}\]
What is the net present value of the proposed investment? (Ignore income taxes in this problem.)(Do not round your intermediate calculations and round the final answer to the nearest whole dollar.)
A) ($3,430).
B) $0.
C) $620.
D) $3,355.
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Page 15
Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Oratz Company's average sale period (turnover in days)for Year 2 was closest to which of the following?
A) 29.1 days.
B) 40.3 days.
C) 41.6 days.
D) 57.6 days.
Q2) Dratif Company's working capital is $33,000,and its current liabilities are $80,000.The company's current ratio is closest to which of the following?
A) 0.41 to 1.
B) 0.59 to 1.
C) 1.41 to 1.
D) 3.42 to 1.
Q3) Orantes Company's average sale period (turnover in days)for Year 2 was closest to which of the following?Do not round intermediate calculations.
A) 18.9 days.
B) 24.7 days.
C) 27.1 days.
D) 35.5 days.
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