Intermediate Accounting
Final Exam Questions
Course Introduction
Intermediate Accounting builds on foundational accounting principles to provide students with a deeper understanding of financial reporting and analysis. The course focuses on the preparation and interpretation of financial statements, emphasizing assets, liabilities, and equity measurement. Key topics include revenue recognition, inventory valuation, long-term assets, liabilities, investments, and income taxes, as well as the application of current accounting standards and guidelines. Through theoretical concepts, real-world examples, and hands-on problem solving, students develop the skills necessary to analyze complex financial information and make informed business decisions. This course is essential for those pursuing advanced studies in accounting or preparing for professional accounting certifications.
Recommended Textbook
Managerial accounting 10th Canadian Edition by Ray Garrison
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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Q1) All three major professional accounting groups in Canada require their members to undertake professional development and/or continuing education.This practice is intended to directly satisfy which of these rules of ethical conduct in line with other code of ethics?
A) Integrity.
B) Objectivity.
C) Competence.
D) Confidentiality.
Answer: C
Q2) Day-to-day decision making is most common to which of the following activities managers are expected to carry on in organizations?
A) Strategy formulation.
B) Directing and motivating.
C) Planning.
D) Budgeting.
Answer: B
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Chapter 2: Cost Terms, Concepts, and Classifications
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Q1) When raw materials are used in production,their costs are transferred to the work in process inventory account as direct materials.
A)True
B)False
Answer: True
Q2) What was the ending finished goods inventory?
A) $17,000.
B) $12,000.
C) $7,000.
D) $2,000.= 12,000 + 105,000 - (210,000 - 100,000)= $7,000
Answer: C
Q3) What was the net income (in thousands of dollars)for the year?
A) $410.
B) $110.
C) $40.
D) $180.= 910 - (130 + 520 - 150)- 160 - 140 = $110
Answer: B
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Page 4
Chapter 3: Cost Behaviour: Analysis and Use
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Q1) What is the best estimate of the company's total fixed operating expense per year?
A) $72,000.
B) $188,000.
C) $200,000.
D) $212,000.
Answer: C
Q2) What is the expected gross margin next month?
A) $11,200.
B) $14,400.
C) $16,400.
D) $17,600.
Answer: D
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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Q1) Last year,Perry Company reported profits of $4,200.Its total variable expenses were $66,000,or $6 per unit.The unit contribution margin was $3.00.What is the break-even point in units for Perry Company?
A) 11,000 units.
B) 9,600 units.
C) 22,000 units.
D) 12,400 units.B/E = $28,800/3 = 9,600 units.
Q2) If sales decrease by 500 units in the next month,by how much would fixed expenses have to be reduced to maintain the current operating income?
A) $7,500.
B) $6,000.
C) $2,000.
D) $3,000.
Q3) What is the degree of operating leverage for July?
A) The same as that for June.
B) Higher than that for June.
C) Lower than that for June.
D) Not determinable.June CM = 8,000 * 10.30 = 82,400 DOL = 82,400/(82,400 - 80,000)= 34.33.
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Page 6
Chapter 5: Systems Design: Job-Order Costing
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Q1) The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period.The job cost sheets of two uncompleted jobs show charges of $400 and $200 for direct materials and charges of $300 and $500 for direct labour.From this information,what predetermined overhead rate,as a percentage of direct labour costs,does the company appear to be using?
A) 80%.
B) 125%.
C) 240%.
D) 300%.
Q2) When a job is completed and transferred to the finished goods warehouse the journal entry to record this is debit Cost of Goods Sold and credit Work in Process Inventory.
A)True
B)False
Q3) The labour time ticket contains a detailed summary of the direct and the indirect labour hours of an employee.
A)True
B)False
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Chapter 6: Systems Design: Process Costing
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Q1) (Appendix 6A)Using the FIFO method,what are the equivalent units of production for materials for May?
A) 82,400 units.
B) 104,000 units.
C) 107,200 units.
D) 108,000 units.
Q2) (Appendix 6A)If a company uses two different unit cost figures to cost transfers from one department to another under a process costing system,then which of the following statements is reasonable to assume?
A) There was no beginning work-in-process inventory.
B) Processing centres are arranged in a sequential pattern.
C) The FIFO cost method is being used.
D) The weighted-average cost method is being useD.
Q3) (Appendix 6A)What are the equivalent units of production for material for the month?
A) 50,000 units.
B) 60,000 units.
C) 54,500 units.
D) 75,000 units.
Q4) $112,000 ÷ 28,000 EUs = $4 per EU
Page 8
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Chapter 7: Activity-Based Costing: a Tool to Aid Decision Making
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Q1) Unit-level production activities are performed each time a unit is made. A)True
B)False
Q2) The predetermined overhead rate (i.e. ,activity rate)for Activity 2 under the activity-based costing system is closest to which of the following?
A) $10.25.
B) $16.77.
C) $24.91.
D) $26.36.
Q3) (Appendix 7A)The predetermined overhead rate (i.e. ,activity rate)for Activity 2 under the activity-based costing system is closest to which of the following?
A) $9.15.
B) $10.23.
C) $51.99.
D) $86.93.
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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Q1) Absorption costing treats fixed manufacturing overhead as a period cost,rather than as a product cost.
A)True
B)False
Q2) For the period noted,which of the following statements best describes the relationship between the operating income under absorption costing and under variable costing?
A) Absorption costing operating income would be higher than the operating income under variable costing.
B) Absorption costing operating income would be lower than the operating income under variable costing.
C) Absorption costing operating income would be the same as the operating income under variable costing.
D) The relationship between absorption costing operating income and variable costing operating income cannot be determined without additional information.
Q3) Variable costing is sometimes referred to as direct costing or marginal costing. A)True B)False
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Chapter 9: Budgeting
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Q1) A static budget is geared toward a single level of activity.
A)True
B)False
Q2) What is the variance for laundry costs in the flexible budget performance report for the month?
A) $5,080 F
B) $5,080 U
C) $5,800 U
D) $5,800 F
Q3) If all cash expenses are paid for in the month incurred what is the budgeted cash disbursements for manufacturing overhead if 5,500 units are produced?
A) $16,500.
B) $75,500.
C) $91,500.
D) $99,000.
Q4) Budgets are used for planning rather than for control of operations.
A)True
B)False
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11
Chapter 10: Standard Costs and Overhead Analysis
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Q1) For August,what was the fixed overhead volume variance?
A) $4,300 unfavourable.
B) $4,980 favourable.
C) $4,980 unfavourable.
D) $7,920 unfavourable.
Q2) What was the variable overhead spending variance for March?
A) $4,900 unfavourable.
B) $11,060 unfavourable.
C) $14,700 unfavourable.
D) $17,300 unfavourable.
Q3) For March,what was the variable overhead spending variance?
A) $6,000 favourable.
B) $10,000 unfavourable.
C) $12,000 unfavourable.
D) $22,000 favourable.
Q4) The fixed portion of the predetermined overhead rate is used for product costing purposes and has no significance in terms of cost control.
A)True
B)False
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Chapter 11: Reporting for Control
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Q1) (Appendix 11A)Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into its sales to outside customers.From the point of view of Division A,any sales to Division B should be priced no lower than which of the following?
A) $17.
B) $18.
C) $29.
D) $30.
Q2) (Appendix 11A)Which of the following statements about quality costs is correct?
A) They relate only to the manufacturing process.
B) They should be focused on appraisal activities.
C) They are minimized by having a team of well-trained quality control inspectors.
D) They cut across departmental lines and often are not accumulated and reported to management.
Q3) 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
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Chapter 12: Relevant Costs for Decision Making
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Q1) At what selling price per unit should Immanuel be indifferent between accepting or rejecting the special offer?
A) $4.90.
B) $6.40.
C) $7.40.
D) $7.70.
Q2) Assume that Tolar decides to upgrade the calculators.At what selling price per unit would the company be as well off as if it just sold the calculators in their present condition?
A) $8.
B) $30.
C) $53.
D) $67.
Q3) (Appendix 12A)If a company sells a product for less than its budgeted unit product cost under absorption costing,then the company will lose money.
A)True
B)False
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Chapter 13: Capital Budgeting Decisions
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Q1) Which of the following statements about the evaluation of an investment having uneven cash flows using the payback method is correct?
A) It CANNOT be done.
B) It can be done only by matching cash inflows and investment outflows on a year-by-year basis.
C) It will produce essentially the same results as those obtained through the use of discounted cash flow techniques.
D) It requires the use of a sophisticated calculator or computer software.
Q2) (Appendix 13A and 13B)If Manti deducts the maximum CCA for tax purposes,what will be the approximate present value (as of January 2,Year 1)of the CCA tax shield for Year 2?(Do not round your intermediate calculations. )
A) $6,194.
B) $7,700.
C) $9,291.
D) $19,425.
Q3) (Appendix 13B)Not all cash inflows are taxable.
A)True
B)False
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Chapter 14: Financial Statement Analysis Online
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Q1) March Company's acid-test (quick)ratio at the end of Year 2 was closest to which of the following?
A) 0.39 to 1.
B) 0.53 to 1.
C) 0.95 to 1.
D) 1.90 to 1.
Q2) Orange Company's accounts receivable turnover for Year 2 was closest to which of the following?
A) 11.0 times.
B) 12.4 times.
C) 15.7 times.
D) 17.7 times.
Q3) Harton Company,a retailer,had cost of goods sold of $250,000 last year.The beginning inventory balance was $20,000,and the ending inventory balance was $22,000.The company's inventory turnover was closest to which of the following?
A) 5.95 times.
B) 11.36 times.
C) 11.90 times.
D) 12.50 times.
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