Introduction to Accounting Exam Preparation Guide
Course Introduction
Introduction to Accounting is a foundational course designed to familiarize students with the basic principles and concepts of accounting. The course covers essential topics such as the accounting cycle, recording and summarizing financial transactions, preparing financial statements, and understanding how financial information is used in decision-making processes. Students will gain practical skills in analyzing financial data, maintaining accurate records, and interpreting balance sheets, income statements, and cash flow statements. By the end of the course, students will have a strong understanding of the role of accounting in business and the economy, preparing them for further studies or entry-level positions in the field.
Recommended Textbook
Introduction to Management Accounting 15th Edition by Charles T. Horngren
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17 Chapters
2396 Verified Questions
2396 Flashcards
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Chapter 1: Managerial Accounting, the Business Organization
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) ________ information involves routine reports that compare actual results to predicted results.
A)Budgets
B)Attention directing
C)Scorekeeping
D)Problem solving
Answer: B
Q2) What do Certified Management Accountants and Certified Public Accountants have in common?
A)Both groups are licensed to practice by state licensing agencies.
B)Both groups follow codes of conduct.
C)Both groups prepare information for stockholders and creditors.
D)Both groups rely heavily on other fields such as economics and behavioral science for analytical tools.
Answer: B
Q3) Variances are deviations from planned results.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Introduction to Cost Behavior and Cost-Volume Relationships
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) The break-even point is the level of sales at which revenue equals fixed costs.
A)True
B)False
Answer: False
Q2) An accountant may have difficulty classifying costs as fixed or variable because
A)costs may behave in a nonlinear way
B)costs may be affected by more than one cost driver
C)it depends on the decision situation
D)all of the above
Answer: D
Q3) Which of the following is NOT an underlying assumption of cost-volume-profit analysis?
A)We can classify expenses into fixed and variable categories.
B)Sales mix will be constant.
C)Revenues and expenses are linear over the relevant range.
D)There will be changes in efficiency or productivity.
Answer: D
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Chapter 3: Measurement of Cost Behavior
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) In an economic downturn,a company could temporarily reduce or eliminate a(n)________.
A)lease payment
B)salaries of key personnel
C)employee training program
D)insurance on corporate offices
Answer: C
Q2) ________ is a method in which the cost analyst draws a straight line through a plot of all the available data,and develops the cost function from this line.
A)Engineering analysis
B)Account analysis
C)The visual-fit method
D)Activity analysis
Answer: C
Q3) In a regression analysis,the constant from the linear cost function is a measure of reliability.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Cost Management Systems and Activity-Based
Costing
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Costs that can be allocated to a cost object are called direct costs.
A)True
B)False
Q2) Which of the following statements about cost accounting systems is FALSE?
A)The cost accounting system provides the cost data that managers use for decision making.
B)The cost accounting system is the most fundamental component of a cost management system.
C)A cost accounting system that provides accurate information is a key success factor for all types of organizations.
D)The cost accounting system does not provide data for financial reports.
Q3) Benchmarking is the continuous process of comparing products to the average industry standards.
A)True
B)False
Q4) Unallocated costs ________.
A)are not recorded in the cost accounting system
B)are not allocated to cost objects
C)are direct costs for service firms
D)are indirect costs for merchandising firms
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Chapter 5: Relevant Information for Decision Making With a Focus
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128 Verified Questions
128 Flashcards
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Sample Questions
Q1) Under absorption costing,all ________ costs are product or inventoriable costs.
A)direct and indirect manufacturing
B)direct manufacturing
C)indirect manufacturing
D)selling and administrative
Q2) The only decision for a manager to make with perfect competition is how much to produce.
A)True
B)False
Q3) Precise but irrelevant information may still be useful for decision making.
A)True
B)False
Q4) Cougar Company is trying to decide which product to manufacture.Expected direct materials costs are $4 for each product.In choosing between the two products,the direct materials costs are ________.
A)relevant because it is an expected future cost
B)relevant because it is a product cost
C)irrelevant because it is an estimated cost
D)irrelevant because it does not differ between the two alternatives
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Chapter 6: Relevant Information for Decision Making With a Focus
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Past costs that are unavoidable and unchangeable are known as sunk costs.
A)True
B)False
Q2) Future costs are relevant in decision making when they ________.
A)exceed future revenues
B)are not based on estimates
C)differ between alternative courses of action
D)are the same between alternative courses of action
Q3) Sunk cost is another term for historical cost or past cost.
A)True
B)False
Q4) The disposal value of old equipment is relevant in equipment replacement decisions.
A)True
B)False
Q5) Generally,companies use aggregate measures of performance when conducting performance evaluations of managers.
A)True
B)False
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Chapter 7: Introduction to Budgets and Preparing the Master Budget
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) The Happy Company is preparing a budgeted income statement.The dollar amount for Sales comes from ________.
A)the sales forecast
B)the sales manager
C)the sales budget
D)the sales from competitors
Q2) The Sad Company is preparing a budgeted income statement.The dollar amount of Operating Expenses comes from ________.
A)the purchases budget
B)the cash disbursements for purchases budget
C)the operating expense budget
D)the sales budget
Q3) For next year,Dunphy Company has budgeted sales of 30,000 units,target ending inventory of 1,000 units and a beginning inventory of 800 units.How many units should be purchased?
A)29,800
B)30,000
C)30,200
D)31,800
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Chapter 8: Flexible Budgets and Variance Analysis
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) For the current year,John Company's static budget sales were $225,000.Actual sales for the current year were $220,000.Actual sales last year were $219,000.Expected sales last year were $225,000.What is the static budget variance for sales in the current year?
A)$5,000 Favorable
B)$5,000 Unfavorable
C)$6,000 Favorable
D)$6,000 Unfavorable
Q2) Currently attainable standards do not make allowances for spoilage and waste.
A)True
B)False
Q3) Standard cost systems value products according to actual costs.
A)True
B)False
Q4) The flexible budget variance for variable overhead costs is composed of a(n)________ variance and a(n)________ variance.
A)efficiency; effective
B)spending; rate
C)quantity; efficiency
D)spending; efficiency
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Chapter 9: Management Control Systems and Responsibility Accounting
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) Market share and customer survey scores are performance measures used to monitor the achievement of the ________ goal.
A)business process improvement
B)organizational learning
C)customer satisfaction
D)financial stability
Q2) Cycle time is a performance measure used to monitor the achievement of the ________ goal.
A)customer satisfaction
B)employee turnover
C)financial stability
D)business process improvement
Q3) Most nonprofit organizations face substantial difficulty implementing management control systems.What is the main reason?
A)The outputs of nonprofit organizations are easy to measure.
B)The outputs of nonprofit organizations are difficult to measure.
C)The outputs of nonprofit organizations cannot be measured.
D)The inputs of nonprofit organizations cannot be measured.
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Chapter 10: Management Control in Decentralized Organizations
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) Cost of capital is the company's cost of inventory multiplied by the amount of investment.
A)True
B)False
Q2) Why do some companies prefer the use of economic profit over return on investment in decision-making?
A)The calculations for economic profit are easier.
B)The data needed to calculate return on investment are not always available.
C)Return on investment can motivate managers to make investment decisions that are not in the best interests of the company as a whole.
D)The concept behind economic profit is more logical.
Q3) When a division has idle production capacity,the transfer price that leads to optimal decision making is variable cost.
A)True
B)False
Q4) Return on investment equals return on sales divided by capital turnover. A)True
B)False
Q5) Identify the disadvantages of decentralization.
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Chapter 11: Capital Budgeting
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) ________ shows the financial consequences that would occur if actual cash flows differ from expected cash flows.
A)Discount analysis
B)Interest rate analysis
C)Sensitivity analysis
D)Budgeting
Q2) Globe Company will purchase a truck for $100,000.The truck's depreciable life is 5 years.The truck has no terminal salvage value.Assume a tax rate of 30% and a required after-tax rate of return of 12%.The company uses the straight-line method of depreciation for tax purposes.What is the annual after-tax cash flow from depreciation expense?
A)$6,000 cash outflow
B)$6,000 cash inflow
C)$12,000 cash outflow
D)$12,000 cash inflow
Q3) The total project approach to investments can be used to compare any number of projects.
A)True
B)False
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Page 13
Chapter 12: Cost Allocation
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) When allocating fixed costs from service departments to production departments,managers should use ________ instead of ________.
A)capacity used; capacity available
B)capacity available; budgeted capacity
C)capacity used; budgeted capacity
D)capacity available; capacity used
Q2) The greatest virtue of the step-down method for allocating service department costs is ________.
A)its simplicity
B)its ability to allocate production department costs to service departments
C)its ability to allocate user department costs to production departments
D)the recognition of reciprocal relationships between service departments
Q3) The preferred guidelines for allocating service department costs to user departments include ________.
A)allocating variable-cost and fixed-cost pools separately
B)establishing details about cost allocation after providing services
C)using actual costs for allocation
D)none of the above
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14
Chapter 13: Accounting for Overhead Costs
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) Most companies consider production volume variances to be beyond a manager's immediate control.
A)True
B)False
Q2) There should be a strong cause-and-effect relationship between factory overhead costs incurred and the cost-allocation base chosen for its application.
A)True B)False
Q3) The most important contributor to the variance between actual and applied overhead costs is ________.
A)poor forecasting
B)inefficient use of overhead items
C)price changes in overhead items
D)operating at a different level of volume than the level used as a denominator in calculating the budgeted overhead rate
Q4) The variable-costing income statement separates costs into fixed costs and variable costs.
A)True B)False
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Chapter 14: Job-Order Costing and Process-Costing Systems
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) Wheels Company uses a backflush-costing system to account for bicycles.Bicycles are scheduled for production only after orders are received and products are shipped to customers immediately upon completion.No finished goods inventory is maintained and product costs are applied directly to cost of goods sold.The standard cost for materials is $150 per bicycle.The standard cost for conversion costs is $75 per bicycle. During the current month,Wheels Company purchased $6,000 of direct materials and incurred $3,000 in conversion costs to produce 40 bicycles.The journal entry to eliminate the conversion cost variance includes a debit to ________.
A)Finished Goods Inventory for $600
B)Conversion Costs for $600
C)Cost of Goods Sold for $600
D)No entry is needed
Q2) Which industry does NOT use job-order costing?
A)construction
B)aircraft
C)printing
D)lumber
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Page 16
Chapter 15: Basic Accounting: Concepts, techniques, and Conventions
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) VanHalen Company pays weekly wages every Friday.The current month ends on a Wednesday.The adjusting entry at the end of the month will ________.
A)increase expenses and decrease cash
B)increase assets and increase expenses
C)increase liabilities and increase expenses
D)decrease liabilities and decrease cash
Q2) Cash collected from customers before goods are delivered will increase ________.
A)assets and increase revenues
B)revenues and decrease liabilities
C)liabilities and increase assets
D)liabilities and decrease revenues
Q3) The statement of financial position is also called the ________.
A)income statement
B)statement of cash flows
C)statement of retained earnings
D)balance sheet
Q4) As unearned revenue is earned,stockholders' equity decreases.
A)True
B)False
17
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Chapter 16: Understanding Corporate Annual Reports:
Basic Financial Statements
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) The cash received from the sale of land is included in the ________ section of the statement of cash flows.
A)operating
B)financing
C)investing
D)noncash
Q2) The cash received from the sale of equipment is included in the ________ section of the statement of cash flows.
A)operating
B)financing
C)investing
D)noncash
Q3) The cash paid for employees' wages is included in the ________ section of the statement of cash flows.Assume the direct method is used.
A)operating
B)financing
C)investing
D)noncash
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Chapter 17: Understanding and Analyzing Consolidated Financial Statements
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Sample Questions
Q1) Company A acquired 100 percent of the outstanding common stock of Company
B.At the date of acquisition,no goodwill was involved and the book value of the assets and liabilities of Company B equal their fair values.Immediately after the acquisition,an elimination entry is prepared in order to prepare consolidated financial statements.What accounts are affected by the elimination entry?
A)Investment in Company B only
B)Stockholders' Equity of Company B only
C)Fixed Assets of Company B only
D)Investment in Company B and Stockholders' Equity of Company B
Q2) In an efficient capital market,the role of accounting information is to ________.
A)help investors find underpriced securities
B)help investors find overpriced securities
C)help investors find low risk securities
D)help investors identify the different degrees of risk among different securities
Q3) The current ratio equals current assets divided by current liabilities.
A)True
B)False
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Page 19