BU330: Accounting for Managers

life/Work Experience Examination - Pari I

II Accounting for Managers

Select the single best answer for each question or statement, then transfer your

answers to the appropriate scan sheet provided.

1. Management accounting:

a. deals primarily with people and organizations outside of the

business entity.

b. requires only periodic reporting on a regular basis.

c. uses any type of useful measurement unit, including physical as

well as monetary measures.

d. deals only with the double-entry recording system.

2. Which of the following types of information is not essential for a manager to run

a business effectively?

a. Product or service costing information

b. Data for planning and controlling of operations

c. Special reports and analyses to support decisions

d. Quote of the CUlTent price of the company's stock

3. Accumulating, interpreting, and reporting financial information is important for:

a. service-related firms only.

b. manufacturing firms only.

c. virtually all types of organizations.

d. not-for-profit organizations only.

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4. The unit of measurement used in management accounting is:

a. primarily the historical dollar.

b. usually current replacement cost.

c. any measurement unit that is useful in a particular situation.

d. the measurement unit used by competing companies.

5. Which of the following would not be included in the cost of a manufactured

product?

a. Cost to ship products to a customer

b. Cost of factory machinery used in production

c. Cost to design the product

d. Plant supervisor's salary

6. Which of the following is not included in the purchase cost of merchandise

inventory?

a. Purchase discounts

b. Overhead costs

c. Freight-in costs

d. Purchase returns and allowances

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7. Depreciation expense could be:

a. a period cost.

b. a product cost.

c. a fixed cost.

d. All of the above

8. The three costs in every product are:

a. direct materials, work in process, and overhead.

b. direct materials, work in process, and finished goods.

c. direct materials, direct labor, and overhead.

d. direct materials, direct labor, and period costs.

9. The type of product costing system used by a company is dictated by the:

a. project manager.

b. production process.

c. company president.

d. plant supervisor.

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10. Product costs appear on the income statement in the form of:

a. cost of goods sold.

b. materials inventory.

c. sales commissions.

d. None of the above

11. If there is a debit balance in the Factory Payroll account at the end of the

accounting period, it represents:

a. an amount because applied payroll was greater than actual payroll.

b. an amount because actual payroll was greater than applied payroll.

c. labor costs which have not yet been distributed.

d. an amount which should be charged to Cost of Goods Sold.

12. A process costing system assigns costs to pr~ducts:

a. individually.

b. according to which products can absorb the most costs and still be

profitable.

c. randomly.

d. equally.

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13. Which of the following accurately describes a difference between job order and

process costing systems?

a. In job order costing systems, overhead costs are treated as product

costs, whereas in process costing systems, overhead costs are

treated as period costs.

b. Job order costing systems do not need to assign costs to

production, whereas process costing systems do.

c. Injob order costing systems, costs are traced to products, whereas

in process costing systems, a FIFO method may be used.

d. Since costs are assigned to products in ajob order costing system,

selling costs are treated as product costs in the job order costing

system, whereas they are treated as period costs in process costing

systems.

14. Which of the following statements is true?

a. The Work in Process Inventory account is the focal point of

process costing.

b. To compute unit costs using the FIFO costing method, total costs

of direct materials, direct labor, and overhead that have been

accumulated in the Work in Process Inventory account or accounts

are divided by the units worked on during the period.

c. Equivalent units usually are computed for direct materials and

manufacturing overhead combined.

d. Labor costs are accounted for differently from manufacturing

overhead costs in a process costing system.

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15. Full product cost includes:

a. all direct labor and direct material costs and all production and

nonproduction costs.

b. only nonproduction costs.

c. only the costs of direct material.

d. only the costs of direct labor.

16. Customer relations are usually part of:

a. the supply chain.

b. the value chain.

c. both the value chain and the supply chain.

d. neither the value chain nor the supply chain.

17. Which of the following activities would be part of the supply chain of a

manufacturer?

a. Shipping

b. Customer service

c. Parts manufacturing

d. Research and development

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18. Nonvalue-adding activities are:

a. unnecessary activities.

b. included in the value chain of activities.

c. all wasteful and targeted for elimination.

d. not all wasteful and may not be targeted for elimination.

19. Which of the following would not require the use of cost behavior analysis?

a. Transferring production costs from one depaliment to another

b. Projecting anticipated costs of a new project

c. Buying an existing business

d. Changing an existing product or service

20. Which of the following statements most accurately explains the behavior of costs?

a. There is no norm; rather, costs can be fixed, variable, or a

combination of both.

b. The majority of costs are variable per unit of production.

c. The majority of costs are fixed per unit of production.

d. Costs can be fixed or variable but usually not a combination of

both.

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21. Which of the following statements is true regarding fixed and variable costs?

a. Both costs are constant when considered on a total basis.

b. Variable costs are constant in total, and fixed costs are constant per

unit.

c. Both costs are constant when considered on a per unit basis.

d. Fixed costs are constant in total, and variable costs are constant per

unit.

22. Budgets:

a. should contain both revenues and expenses.

b. contain as much information as possible.

c. are presented in dollars only; nondollar data should be excluded.

d. are synonymous with managing an organization.

23. Budgets identify, gather, summarize, and communicate:

a. financial data only.

b. financial and nonfinancial data.

c. nonfiriancial data only.

d. None of the above

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24. After management has set short-term goals, the budgeting process typically starts

with:

a. a clearly defined timetable of events.

b. input only from the accounting personnel.

c. the naming of an efficient coordinator or director.

d. a set of procedures or instructions.

25. Which of the following represents a basic stakeholder of an organization?

a. The account receivable clerk of the organization

b. A vice president of the organization

c. A line supervisor of the organization

d. All of the above

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life/Work Experience Examination - Part II

II Accounting for Managers

Select the single best answer for each question or statement, then transfer your

answers to the appropriate scan sheet provided.

1. By balancing all stakeholders' needs, managers are more likely to achieve their

objectives in:

a. the long term.

b. the short telID.

c. the short term as well as the long term.

d. all areas of the organization.

2. Which of the following is an example of a performance measurement?

a. Product quality

b. Number of customer complaints

c. Customer satisfaction

d. All of these choices

3. In a standard costing system, standard costs eventually flow into the:

a. Cost of Goods Sold account.

b. Standard Cost account.

c. Selling and Administrative Expenses account.

d. Sales account.

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4. Service organizations do not develop standards for:

a. any service costs.

b. overhead.

c. direct materials.

d. labor.

5. A standard costing system:

a. is not typically used by management for cost planning and cost

control purposes.

b. is a system in which all costs affecting the three inventory accounts

and the Cost of Goods Sold account are stated in terms of actual

costs incurred.

c. depends on actual costs rather than planned costs.

d. is employed with an existing job order costing or process costing

system and is not a full cost accounting system in itself.

6. Cost information for short-run decision making focuses on:

a. why it happened.

b. what is happening.

c. what happened.

d. what will happen.

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7. Qualitative factors used by decision makers include all of the following except:

a. social issues.

b. competition.

c. annual or projected revenues.

d. timeliness.

8. All management decisions should be supported by:

a. analysis of alternative courses of action.

b. stockholder approval.

c. . analysis of one course of action.

d. detailed analysis of relevant data, usually consisting of past costs

and revenues.

9. An example of a pricing objective is to:

a. have prices that top the market.

b. maintain or gain market share.

c. maximize losses.

d. minimize quality and cost.

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life/Work Experience Examination - Pari II

10. To stay in business, a company must have a selling price that is:

a. acceptable to the customer.

b. able to recover the variable costs of production.

c. the highest in the marketplace.

d. equal to or lower than the company's costs per unit.

11. When making the decision on a product's price, the manager must consider:

a. all products at the same time.

b. the minimum price that will produce a profit.

c. only cost-based infOlmation.

d. the product's total variable costs.

12. All of the following are capital investment decisions, except whether or not to:

a. replace old equipment.

b. issue stock to raise capital.

c. acquire another company.

d. add a new product line.

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13. Which of the following items can be described as a noncash expense?

a. Wages

b. Advertising

c. Income taxes

d. Depreciation

14. The primary focus ofa management information system is on the management of:

a. people.

b. costs.

c. activities.

d. time.

15. Information captured by a management information system allows managers to do

all of the following except:

a. determine accurate product or service costs.

b. improve processes.

c. provide timely feedback.

d. satisfy all customer inquiries.

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16. How does an ERP system differ from an MIS?

a. The ERP system informally links the different areas of

management for specific purposes.

b. There is no difference.

c. The ERP system combines all areas of management into one

centralized data warehouse.

d. The ERP system can be used only in a service business.

17. The overall objective of controlling the costs of quality is to eliminate:

a. appraisal costs.

b. costs of nonconformance.

c. costs of conformance.

d. the costs of quality.

18. Service department costs are allocated so that:

a. budgeting purposes are fulfilled.

b. they can be properly managed.

c. a business can then assess the profitability of a product or service.

d. they will have a zero balance at the end of the accounting period.

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19. Which of these would not be considered an activity center in a warehouse

operation?

a. Receiving

b. Distribution

c. Facility Maintenance

d. Product Design

20. Which of the following is not a directly traceable cost to a store in a restaurant

chain?

a. Food prepared in the store

b. Company newsletter and website

c. Manager's salary

d. Wait staff

21. Joint costs are:

a. incurred prior to the separation of joint products.

b. incurred after separation of joint products.

c. incurred prior and after separation of joint products.

d. None of the above

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life/Work Experience Examination - Pari II

22. Executive officers' compensation is typically comprised of all of the following

except:

a. incentive bonuses.

b. declared dividends.

c. stock option awards.

d. annual base salaries.

23. Market strength refers most closely to the ability to:

a. survive for many years.

b. pay bills when they fall due.

c. earn a satisfactory net income.

d. increase the wealth of stockholders.

24. The ability to pay bills when due and to meet unexpected needs for cash most

closely describes:

a. cash flow adequacy.

b. long-term solvency.

c. liquidity.

d. profitability.

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life/Work Experience Examination - Pari II

25. Financial performance measurement is useful for all of the following except

assessment of:

a. accounting methods.

b. return by investors.

c. risk by creditors.

d. risk by investors.

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