Managerial Accounting Exam Questions and Answers, Exams of Advanced Education

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Managerial Accounting Exam Questions

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Which of the following management responsibilities often involves BUDGETS? a. controlling b. directing c. planning d. none of the above - Correct Answer-c. planning Managerial accounting differs from financial accounting in that managerial accounting... a. emphasizes data relevance over data objectivity. b. is used primarily by external decision makers. c. is required by Generally Accepted Accounting Principles (GAAP). d. tends to report on the company as a whole rather than segments of the company. - Correct Answer-a. emphasizes data relevance over data objectivity. Which of the following corporate positions is responsible for raising capital and investing funds? a. treasurer b. chief operating officer (COO) c. internal audit d. controller - Correct Answer-a. treasurer Of the following skills, which are needed by today's management accountants? a. knowledge of both financial and managerial accounting b. oral and written communication skills c. knowledge of how a business functions d. all of the above - Correct Answer-d. all of the above Managers' three primary responsibilities are planning, directing, and controlling. a. true b. false - Correct Answer-a. true Management accounting is geared toward external stakeholders, such as investors and creditors. a. true b. false - Correct Answer-b. false Management accountants often work in cross-functional teams throughout the organization. a. true b. false - Correct Answer-a. true

The internal audit function reports to the audit committee of the board of directors. a. true b. false - Correct Answer-a. true Management accountants are now more often looked upon as internal business advisors, rather than "bean counters" recording historical transactions. a. true b. false - Correct Answer-a. true Management accountants should be technically proficient, but they don't need strong oral and written communication skills. a. true b. false - Correct Answer-b. false Management accountants should be proficient in Excel. a. true b. false - Correct Answer-a. true The AICPA (American Institute of Certified Public Accountants) issues the CMA (Certified Management Accountant) certification. a. true b. false - Correct Answer-b. false Identifying alternative courses of action and choosing among them a. decision making b. planning c. controlling d. directing - Correct Answer-a. decision making Running the company on a day-to-day basis a. decision making b. planning c. controlling d. directing - Correct Answer-d. directing Determining whether the company's units are operating according to plan a. decision making b. planning c. controlling d. directing - Correct Answer-c. controlling Setting goals and objectives for the company and determining strategies to achieve them a. decision making b. planning

c. controlling d. directing - Correct Answer-b. planning Describes historical transactions with external parties a. financial accounting b. managerial accounting - Correct Answer-a. financial accounting Is not required by any authoritative body, such as the SEC a. financial accounting b. managerial accounting - Correct Answer-b. managerial accounting Reports on the company's subunits, such as products, geographical areas, and departments a. financial accounting b. managerial accounting - Correct Answer-b. managerial accounting Is intended to be used by creditors and investors a. financial accounting b. managerial accounting - Correct Answer-a. financial accounting Is formatted in accordance with GAAP a. financial accounting b. managerial accounting - Correct Answer-a. financial accounting Do not disclose company information unless authorized to do so. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-b. confidentiality Continue to develop skills and knowledge. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-a. competence Don't bias the information and reports presented to management. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-d. credibility If you do not have the skills to complete a task correctly, do not pretend you do. a. competence b. confidentiality c. integrity

d. credibility - Correct Answer-a. competence Avoid actual and apparent conflicts of interest. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-c. integrity Which of the following organizations is the professional association for management accountants? a. IFRS b. FASB c. AICPA d. IMA - Correct Answer-d. IMA Which of the following professional standards requires management accountants to mitigate conflicts of interest? a. confidentiality b. credibility c. integrity d. competence - Correct Answer-c. integrity Which of the following professional standards requires management accountants to communicate information fairly and objectively? a. confidentiality b. credibility c. competence d. integrity - Correct Answer-b. credibility The Sarbanes-Oxley Act of 2002 (SOX) imposes stricter requirements over financial reporting and internal controls and stricter consequences for those who engage in financial statement misconduct and other white-collar crimes. a. true b. false - Correct Answer-a. true U.S. companies that have operations overseas must use the International Financial Reporting Standards (IFRS) to issue their statements. a. true b. false - Correct Answer-b. false Extensible Business Reporting Language (XBRL) is a standardized coding system that allows financial information to be "tagged" so that it can be read by computer programs. a. true b. false - Correct Answer-a. true

The triple bottom line assesses company performance on three factors: people (social impact), planet (environmental impact), and profit (economic impact). a. true b. false - Correct Answer-a. true Manufacturing makes up the largest sector of the U.S. economy. a. true b. false - Correct Answer-b. false The globalization of business has little bearing on management accounting. a. true b. false - Correct Answer-b. false Computer systems that integrate all of a company's worldwide functions into one database are known as Integrated Worldwide Systems (IWSs). a. true b. false - Correct Answer-b. false Lean thinking focuses on eliminating waste from operations in an effort to reduce costs. a. true b. false - Correct Answer-a. true The ISO 9001:2008 certification focuses on environmental management. a. true b. false - Correct Answer-b. false Which of the following requires the company's CEO and CFO to assume responsibility for the company's financial statements and disclosures? a. Sarbanes-Oxley Act of 2002 (SOX) b. Lean Operations c. Extensible Business Reporting Language (XBRL) d. International Financial Accounting Standards (IFRS) - Correct Answer-a. Sarbanes- Oxley Act of 2002 (SOX) Which of the following is false? a. Lean operations is a philosophy and business strategy of operating without waste. b. Globalization has increased the necessity for more detailed and accurate cost information. c. TQM is a standardized coding system used to tag financial and business data so that it can be read by computer programs. d. ERP systems integrate information from all company functions into a centralized data warehouse. - Correct Answer-c. TQM is a standardized coding system used to tag financial and business data so that it can be read by computer programs. The triple bottom line focuses on a. people

b. planet c. profit d. all of the above - Correct Answer-d. all of the above Which of the following types of companies would carry raw materials, work in process, and finished goods inventory? a. service b. manufacturing c. merchandising d. all of the above - Correct Answer-b. manufacturing Which of the following is not an activity in the value chain? a. customer service b. marketing c. administration d. design - Correct Answer-c. administration Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Wages of checkout clerks? a. indirect cost b. direct cost - Correct Answer-a. indirect Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Wages for workers in the Produce Department? a. indirect b. direct - Correct Answer-b. direct Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Depreciation on refrigerated produce display cases? a. indirect b. direct - Correct Answer-b. direct Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Cost of weekly advertisements in local newspaper?

a. indirect b. direct - Correct Answer-a. indirect Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Cost of bananas, lettuce, and other produce? a. indirect b. direct - Correct Answer-b. direct Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Baggies and twist ties available for shoppers in the Produce Department? a. indirect b. direct - Correct Answer-b. direct Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Monthly lease payment for grocery store retail location? a. indirect b. direct - Correct Answer-a. indirect Assume a grocery store manager wants to know the cost of running the Produce Department. Thus, the Produce Department is the cost object. Which of the following would be considered direct costs of the Produce Department? Cost of scales hanging in the Produce Department? a. direct b. indirect - Correct Answer-a. direct A cost that can be traced to a cost object is known as a(n) a. direct cost b. indirect cost c. inventoriable product cost d. period cost - Correct Answer-a. direct cost Cost of leasing the retail locations a. inventoriable product cost b. period cost - Correct Answer-b. period cost

Cost of manager's and sales associates' salaries a. inventoriable product cost b. period cost - Correct Answer-b. period cost Cost of merchandise purchased for resale a. inventoriable product cost b. period cost - Correct Answer-a. inventoriable product cost Cost of designing and operating the company's website a. inventoriable product cost b. period cost - Correct Answer-b. period cost Cost of shipping merchandise to the store a. inventoriable product cost b. period cost - Correct Answer-a. inventoriable product cost Cost of providing free shipping to customers who buy product online a. inventoriable product cost b. period cost - Correct Answer-b. period cost Cost of utilities used in running the retail locations a. inventoriable product cost b. period cost - Correct Answer-b. period cost Cost of import duties paid on merchandise purchased from overseas suppliers a. inventoriable product cost b. period cost - Correct Answer-a. inventoriable product cost Depreciation on store shelving and shopping carts a. inventoriable product cost b. period cost - Correct Answer-b. period cost Costs associated with warranties and recalls a. production b. research and development c. marketing d. customer service e. design f. distribution - Correct Answer-d. customer service Cost of shipping finished goods to overseas customers a. production b. research and development c. marketing d. customer service e. design

f. distribution - Correct Answer-f. distribution Costs a pharmaceutical company incurs to develop new drugs a. production b. research and development c. marketing d. customer service e. design f. distribution - Correct Answer-b. research and development Cost of a 30-second commercial during the SuperBowl™ a. production b. research and development c. marketing d. customer service e. design f. distribution - Correct Answer-c. marketing Cost of making a new product prototype a. production b. research and development c. marketing d. customer service e. design f. distribution - Correct Answer-e. design Cost of assembly labor used in the plant a. production b. research and development c. marketing d. customer service e. design f. distribution - Correct Answer-a. production Depreciation on plant equipment - Correct Answer-Inventoriable Product cost, Manufacturing overhead Depreciation on salespeoples' automobiles - Correct Answer-period costs insurance on plant building - Correct Answer-inventoriable product cost, manufacturing overhead marketing manager's salary - Correct Answer-period cost cost of major components of the finished product - Correct Answer-inventoriable product cost, direct materials

Assembly-line workers' wages - Correct Answer-inventoriable product cost, direct materials Period costs are often referred to as: a. Operating expenses. b. both Selling, general, and administrative expenses and Operating expenses. c. Selling, general, and administrative expenses. d. neither Selling, general, and administrative expenses nor Operating expenses. - Correct Answer-b. both Selling, general, and administrative expenses and Operating expenses. Prime costs consist of a. direct labor and manufacturing overhead. b. direct materials and manufacturing overhead. c. direct materials and direct labor. d. direct materials, direct labor, and manufacturing overhead. - Correct Answer-c. direct materials and direct labor Which of the following is not part of manufacturing overhead? a. Period costs, such as depreciation on office computers b. indirect labor, such as forklift operators' wages c. Other indirect manufacturing costs, such as plant utilities d. Indirect materials, such as machine lubricants - Correct Answer-a. Period costs, such as depreciation on office computers Which of the following types of companies will always have the Cost of Goods Sold account on their income statements a. Service, merchandising, and manufacturing companies b. Service and manufacturing companies c. Merchandising and manufacturing companies d. Service and merchandising companies - Correct Answer-c. Merchandising and manufacturing companies Which of the following is a calculated amount, rather than a general ledger account? a. Finished goods inventory b. Cost of goods manufactured c. Cost of goods sold d. Sales revenue - Correct Answer-b. Cost of goods manufactured Which of the following is false? a. Uncontrollable costs are costs over which the company has little or no control in the short run. b. Sunk costs are generally relevant to decisions. c. The difference in cost between two alternatives is known as a differential cost.

d. Sunk costs are costs that have already been incurred. - Correct Answer-b. Sunk costs are generally relevant to decisions. Which of the following is false? a. Fixed costs stay constant in total over a wide range of activity levels. b. Manufacturing overhead is a mixture of fixed and variable costs. c. Direct materials are considered to be variable costs. d. The average cost per unit is valid for predicting total costs at many different output levels. - Correct Answer-d. The average cost per unit is valid for predicting total costs at many different output levels For which of the following would job costing not be appropriate? a. Electrician b. Manufacturer of custom-ordered production equipment c. Manufacturer of mass-produced carbonated beverages d. Law firm - Correct Answer-c. Manufacturer of mass-produced carbonated beverages Document specifying when jobs will be manufactured a. process costing b. stock inventory c. raw materials records d. production schedule e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-d. production schedule Product costing system used by mass manufacturers a. process costing b. stock inventory c. raw materials records d. production schedule e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-a. process costing Bill from supplier a. process costing b. stock inventory c. raw materials records d. production schedule e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-f. invoice

Document specifying parts needed to produce a job a. process costing b. stock inventory c. raw materials records d. production schedule e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-g. bill of materials Product costing system used by manufacturers of unique products a. process costing b. stock inventory c. raw materials records d. production schedule e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-h. job costing Document containing the details and balance of each part in stock a. process costing b. stock inventory c. raw materials records d. production schedule e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-c. raw materials records Document for recording incoming shipments a. process costing b. stock inventory c. raw materials records d. production schedule e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-e. receiving report Products normally kept on hand in order to fill orders quickly a. process costing b. stock inventory c. raw materials records d. production schedule

e. receiving report f. invoice g. bill of materials h. job costing - Correct Answer-b. stock inventory Which of the following documents specifies the materials needed to produce a job? a. bill of materials b. production schedule c. receiving report d. raw materials records - Correct Answer-a. bill of materials Which of the following documents is used to accumulate all of the manufacturing costs assigned to a job? a. job cost record b. materials requisition c. labor time record d. purchase order - Correct Answer-a. job cost record The amount of manufacturing overhead recorded on a job cost record for a particular job is found by a. allocating manufacturing overhead to the job. b. tracing manufacturing overhead to the job. c. either tracing or allocating manufacturing overhead costs (management's choice). d. None of the answers listed is correct. - Correct Answer-a. allocating manufacturing overhead to the job. Which of the following is false? a. A cost-plus price is determined by adding a markup to the cost. b. Non-manufacturing costs can be assigned to jobs only for internal decision making, never for external financial reporting. c. Job cost information is not useful for assessing the profitability of different products. d. Direct costing focuses on only the direct costs found on the job cost record. - Correct Answer-c. Job cost information is not useful for assessing the profitability of different products. Which of the following is true? a. If manufacturing overhead is underallocated, then jobs will be overcosted. b. if manufacturing overhead is overallocated, then jobs will be undercosted. c. Both of the statements are true. d. None of the statements is true. - Correct Answer-d. None of the statements is true. Assuming the amount of manufacturing overhead overallocation or underallocation is not material, which account is adjusted at the end of the period? a. Cost of Goods Sold b. Work in Process Inventory c. Raw Materials Inventory

d. Sales Revenue - Correct Answer-a. Cost of Goods Sold Whenever direct material, direct labor, and manufacturing overhead are recorded on a job cost record, an associated journal entry is made to debit which of the following accounts? a. Sales Revenue b. Cost of Goods Sold c. Work in Process Inventory d. Finished Goods Inventory - Correct Answer-c. Work in Process Inventory When a job is completed, the total cost of manufacturing the job should be moved to which of the following general ledger accounts? a, Work in Process Inventory b. Finished Goods Inventory c. Cost of Goods Sold d. Sales Revenue - Correct Answer-b. Finished Goods Inventory Which of the following is true when using job costing at a service firm? a. Both direct and indirect costs are assigned to client jobs. b. Professional labor cost would be considered an indirect cost of serving the client. c. Office rent would be considered a direct cost of serving the client. d. The professional billing rate consists solely of the professionals' labor cost. - Correct Answer-a. Both direct and indirect costs are assigned to client jobs. SEC examiner a. financial accounting info b. managerial accounting info c. both - Correct Answer-a. financial accounting info Bookkeeping Department a. financial accounting info b. managerial accounting info c. both - Correct Answer-a. financial accounting info Division controller a. financial accounting info b. managerial accounting info c. both - Correct Answer-c. both External auditor (public accounting firm) a. financial accounting info b. managerial accounting info c. both - Correct Answer-a. financial accounting info Loan officer at the company's bank a. financial accounting info

b. managerial accounting info c. both - Correct Answer-a. financial accounting info State tax agency auditor a. financial accounting info b. managerial accounting info c. both - Correct Answer-a. financial accounting info Board of directors a. financial accounting info b. managerial accounting info c. both - Correct Answer-c. both Manager of the Service Department a. financial accounting info b. managerial accounting info c. both - Correct Answer-b. managerial accounting info Wall Street analyst a. financial accounting info b. managerial accounting info c. both - Correct Answer-b. financial accounting info Internal auditor a. financial accounting info b. managerial accounting info c. both - Correct Answer-c. both Potential investors a. financial accounting info b. managerial accounting info c. both - Correct Answer-a. financial accounting info Current stockholders a. financial accounting info b. managerial accounting info c. both - Correct Answer-a. financial accounting info Reporter from the Wall Street Journal a. financial accounting info b. managerial accounting info c. both - Correct Answer-a. financial accounting info Regional division managers a. financial accounting info b. managerial accounting info

c. both - Correct Answer-b. managerial accounting info Maintain an appropriate level of professional expertise by continually developing knowledge and skills. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-a. competence Recognize and communicate professional limitations that would preclude responsibility judgement or successful performance of an activity. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-a. competence Disclose all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations a. competence b. confidentiality c. integrity d. credibility - Correct Answer-d. credibility Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-d. credibility Perform professional duties in accordance with relevant laws, regulations, and technical standards. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-a. competence Abstain from engaging in or supporting any activity that might discredit the profession. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-c. integrity Refrain from engaging in any conduct that would prejudice carrying out duties ethically. a. competence b. confidentiality

c. integrity d. credibility - Correct Answer-c. integrity Provide decision support information and recommendations that are accurate, clear, concise, and timely. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-a. competence Keep information confidential except when disclosure is authorized or legally required. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-b. confidentiality Communicate information fairly and objectively. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-d. credibility Refrain from using confidential information for unethical or illegal advantage. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-b. confidentiality Inform all relevant parties regarding the appropriate use of confidential information. Monitor subordinates' activities to ensure compliance. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-b. confidentiality Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts. a. competence b. confidentiality c. integrity d. credibility - Correct Answer-c. integrity aircraft builder a. job costing b. process costing - Correct Answer-a. job costing

hospital a. job costing b. process costing - Correct Answer-a. job costing cement plant a. job costing b. process costing - Correct Answer-b. process costing dentist a. job costing b. process costing - Correct Answer-a. job costing advertising agency a. job costing b. process costing - Correct Answer-a. job costing custom-home builder a. job costing b. process costing - Correct Answer-a. job costing oil refinery a. job costing b. process costing - Correct Answer-b. process costing house painter a. job costing b. process costing - Correct Answer-a. job costing manufacturer of computer chips a. job costing b. process costing - Correct Answer-b. process costing yacht builder a. job costing b. process costing - Correct Answer-a. job costing cereal manufacturer a. job costing b. process costing - Correct Answer-process costing landscaper a. job costing b. process costing - Correct Answer-a. job costing pet food processor a. job costing

b. process costing - Correct Answer-b. process costing wallpaper installation service a. job costing b. process costing - Correct Answer-a. job costing