Financial and Managerial Accounting Practice Exam
Course Introduction
Financial and Managerial Accounting introduces students to the fundamental principles and practices of accounting, with a focus on both external reporting for stakeholders (financial accounting) and internal decision-making processes (managerial accounting). The course covers the preparation and interpretation of financial statements, income measurement, asset valuation, and the accounting cycle. It also explores budgeting, cost analysis, performance evaluation, and the use of accounting information in planning and controlling business operations. Through case studies and practical exercises, students develop analytical skills to apply accounting concepts in real-world organizational contexts.
Recommended Textbook Managerial Accounting 5th Edition by
Karen W. Braun
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The IMA issues which of the following certifications?
A)CMA
B)CIA
C)CFP
D)CPA
Answer: A
Q2) The primary purpose of managerial accounting information is to help external users make investing and lending decisions.
A)True
B)False
Answer: False
Q3) What ethical standard is being violated when you tell a friend that the company you work for is going to report lower than expected earnings next week?
A)Credibility
B)Integrity
C)Confidentiality
D)Competence
Answer: C
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3
Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) Average variable costs
A)remain the same as production decreases.
B)remain the same as production increases.
C)remain the same no matter if production increases or decreases.
D)go down as production decreases.
Answer: C
Q2) Before these materials are used to manufacture cabinets, a woodworker classifies lumber, paint, and glue as
A)finished goods inventory.
B)work in process inventory.
C)raw materials inventory.
D)merchandise inventory.
Answer: C
Q3) Which of the following are merchandising companies?
A)Manufacturers
B)Retailers
C)Wholesalers
D)Both retailers and wholesalers
Answer: D
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Page 4
Chapter 3: Job Costing
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Sample Questions
Q1) The journal entry needed to record the completion of a job includes a
A)credit to Work-in-Process Inventory account.
B)credit to Finished Goods Inventory account.
C)debit to Work-in-Process Inventory account.
D)debit to Cost of Goods Sold account.
Answer: A
Q2) Job costing is often used by professional service providers, such as law firms.
A)True
B)False
Answer: True
Q3) Manufacturers follow four steps to implement a manufacturing overhead allocation system. In the first step, the company estimates its total manufacturing overhead costs for the coming year.
A)True
B)False
Answer: True
Q4) A paper mill company like International Paper would most likely use job costing.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) If a company uses departmental overhead allocation rates, then the amount of manufacturing overhead allocated to the job is equal to the plantwide overhead rate multiplied by the actual use of the cost allocation base.
A)True
B)False
Q2) Lean thinking involves carrying large amounts of inventory "just in case" something goes wrong.
A)True
B)False
Q3) Which of the following cost of quality categories represents the cost incurred to "test toasters before a sale"?
A)Appraisal costs
B)Prevention costs
C)Internal failure costs
D)External failure costs
Q4) External failure costs occur when poor-quality goods or services are not detected until after delivery to customers.
A)True
B)False
Page 6
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Chapter 5: Process Costing
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Sample Questions
Q1) If a company has a series of processes, the company uses just one work-in-process account.
A)True
B)False
Q2) Which of the following is the third step of the 5-step process costing procedure?
A)Compute output in terms of equivalent units
B)Summarize total costs to account for
C)Summarize the flow of physical units
D)Compute the cost per equivalent unit
Q3) In a job cost system, all costs flow to a particular job.
A)True
B)False
Q4) When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?
A)Transported costs
B)Transmitted costs
C)Transferred costs
D)Conveyed costs
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Direct Call offers a calling plan that charges $10.00 per month plus $0.03 per minute of call time. Under this plan, what is your monthly cost if you talk for a total of 400 minutes?
A)$12.00
B)$22.00
C)$2.00
D)$10.00
Q2) Stanley's Bicycles store buys bicycles on average for $610 and sells them on average for $780. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1500 a month rent for his store, and also pays $3000 a month to his staff in addition to the commissions. Stanley sold 140 bicycles in June. If Stanley prepares a traditional income statement for the month of June, what would be his operating income?
A)$109,200
B)$44,680
C)$2920
D)$23,800
Q3) Unit variable costs do not change as total production increases.
A)True
B)False
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) What will be the effect on the contribution margin ratio if the selling price per unit decreases and variable cost per unit remains the same?
A)It will decrease.
B)It will increase.
C)It will remain the same.
D)It is impossible to determine with the given information.
Q2) The line that begins at the origin on a CVP graph represents
A)total fixed expenses.
B)total sales revenues.
C)total expenses.
D)both the total expenses and the total sales revenues.
Q3) ________ should be subtracted from the sales price per unit to compute the unit contribution margin.
A)All variable costs
B)Only variable inventoriable product costs
C)Only variable period costs
D)All fixed costs
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9
Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) Which of the following best describes a "sunk cost"?
A)Costs that were incurred in the past and cannot be changed
B)Benefits foregone by choosing a particular alternative course of action
C)A factor that restricts the production or sale of a product
D)Expected future data that differ among alternatives
Q2) One key to analyzing short-term business decisions is to use a contribution margin approach that separates variable costs from fixed costs.
A)True
B)False
Q3) Not factoring in qualitative factors, if the incremental revenue from fulfilling a special order is ____________ the incremental costs of the order, the company should accept the special order.
A)less than B)equal to
C)greater than D)added to
Q4) Cost-plus pricing is essentially the opposite of target-costing.
A)True B)False
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Chapter 9: The Master Budget
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Sample Questions
Q1) The master budget is the set of budgeted financial statements and supporting schedules in the entire organization.
A)True
B)False
Q2) Managers may intentionally build slack into the budget
A)because they are uncertain about the future.
B)to make their performance appear better.
C)to acquire the resources they need in the event the organization implements a budget cut.
D)because all of the above are true.
Q3) In which of the following company types does a manager use a sales budget?
A)Manufacturing
B)Merchandising
C)Service
D)All of the above
Q4) The budget committee
A)rarely has the final say on the budget.
B)usually is made up of the accounting staff.
C)usually is made up of managers from all areas of the value chain.
D)usually is made up of the Board of Directors.
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Chapter 10: Performance Evalulation
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Sample Questions
Q1) The number of defects found during the manufacturing process may be an example of measuring which perspective of the balanced scorecard?
A)Internal business
B)Customer
C)Financial
D)Learning and growth
Q2) Management by exception directs management's attention to a large variance between an actual and budget amount in a performance report.
A)True
B)False
Q3) With regard to flexible budgets, which of the following statements is true?
A)They are prepared for one level of sales volume.
B)Managers use them to help plan for uncertainties.
C)They are prepared by the accounting department on an annual basis.
D)They are designed to estimate revenues only.
Q4) Goal congruence is more likely to occur at a centralized organization rather than a decentralized organization.
A)True
B)False
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) Nexus Industries uses a standard costing system to apply manufacturing costs to its production process. In May, Nexus anticipated producing 2050 units with fixed manufacturing overhead costs allocated at $8.4 per direct labor hour with a standard of 2.5 direct labor hours per unit. In May, actual production was 3300 units and actual fixed manufacturing overhead costs were $29,000. What was Nexus' fixed manufacturing overhead budget variance in May?
A)$14,050 favorable
B)$14,050 unfavorable
C)$26,250 favorable
D)$26,250 unfavorable
Q2) Benny Company budgeted 610 pounds of direct materials costing $18.00 per pound to make 8000 units of product. The company actually used 650 pounds of direct materials costing $30.00 per pound to make the 8000 units. What is the direct materials quantity variance?
A)$1200 favorable
B)$720 favorable
C)$1200 unfavorable
D)$720 unfavorable
Q3) Identify four advantages of standard costs and variances.
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Page 13
Chapter 12: Capital Investment Decisions and the Time Value of Money
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Sample Questions
Q1) The payback and accounting rate of return models are conceptually better than the discounted cash flow models because they are based on cash flows, and they consider both profitability and the time value of money.
A)True
B)False
Q2) Companies often use more than one capital budgeting method to determine which capital investment to make.
A)True
B)False
Q3) The discounted cash flow methods for capital budgeting are generally considered inferior to the payback period and the ARR because they consider the time value of money.
A)True
B)False
Q4) Capital budgeting is done when common stock is issued.
A)True B)False
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Which of the following statements is true about information in a statement of cash flows?
A)The statement of cash flows is one of the required financial statements for publicly-held companies.
B)The statement of cash flows is prepared at the option of management.
C)The statement of cash flows is combined with the income statement.
D)The statement of cash flows is not completed when an income statement is prepared.
Q2) Which of the following would be presented differently on the statement of cash flows under the direct method versus the indirect method?
A)Cash from operating activities
B)Cash from investing activities
C)Cash from financing activities
D)Cash from retained earnings activities
Q3) The only difference in a statement of cash flows prepared under the direct method as opposed to the indirect method is the presentation of investing activities.
A)True
B)False
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15
Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) The common size statement percentages are different from those that appear in horizontal analysis.
A)True
B)False
Q2) The managerial accountant at Managerial Funding Resources reported in 2014 its earnings per share were $6.20 and the market price per share of its common stock is $75. In 2013, the managerial accountant reported $3.10 earnings per share and the market price was $40 per share.
Compute the price/earnings ratio at Managerial Funding Resources and discuss why the managerial accountant is interested in the price/earnings ratio.
Q3) The formula for computing book value per share of common stock is
A)market price per share of common stock/earning per share.
B)annual dividend per share of common stock/market price per share of common stock.
C)(net income - preferred dividends)/number of shares of common stock outstanding.
D)(total stockholders' equity - preferred equity)/number of shares of common stock outstanding.
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Chapter 15: Sustainability
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Sample Questions
Q1) The cost of water used to cool steel beams at a steel mill would be categorized as what type of cost by an environmental management accounting system (EMA)?
A)Materials cost of non-product outputs
B)Materials cost of product outputs
C)Waste and emission control cost
D)Intangible cost
Q2) Environmental management accounting (EMA)utilizes three types of information for internal decision making.
A)True
B)False
Q3) Another name used to refer to sustainability reporting is
A)Corporate Social Responsibility report.
B)Environmental, Social, and Governance report.
C)Neither of these choices
D)Both A and B are correct
Q4) Comprehensive reports disclose all indicators related to each identified material aspect in the CSR report.
A)True
B)False
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