Question 1

Which of the following statements is INCORRECT?

Accepted Answer

A) Management accounting information is required to comply with accounting standards. 
B) Management accounting information does not require an external audit. 
C) The primary users of management accounting are the company's managers. 
D) Management accounting information is used to help managers plan and control their operations. 
A) Management accounting information is required to comply with accounting standards. 
B) Management accounting information does not require an external audit. 
C) The primary users of management accounting are the company's managers. 
D) Management accounting information is used to help managers plan and control their operations.

Question 2

When a company is preparing a budgeted cash flow statement and they wish to calculate the payments for operating expenses, they should refer to which of the following?

Accepted Answer

A) Sales budget 
B) Budgeted cash payments for operating expenses 
C) Budgeted cash payments for purchases 
D) Budgeted balance sheet 
A) Sales budget 
B) Budgeted cash payments for operating expenses 
C) Budgeted cash payments for purchases 
D) Budgeted balance sheet

Question 3

Which of the following are period costs?

Accepted Answer

A) Costs related to the manufacture of products 
B) Costs incurred and expensed during the accounting period 
C) Current liabilities on the balance sheet 
D) Current assets on the balance sheet 
A) Costs related to the manufacture of products 
B) Costs incurred and expensed during the accounting period 
C) Current liabilities on the balance sheet 
D) Current assets on the balance sheet

Question 4

Which of the following is an example of the benchmarking function of a budget?

Accepted Answer

A) Budgeting requires close cooperation between accountants and operational personnel. 
B) The budget outlines a specific course of action for the coming period. 
C) Budgeted amounts are compared to actual results. 
D) A budget demands integrated input from different business units and functions. 
A) Budgeting requires close cooperation between accountants and operational personnel. 
B) The budget outlines a specific course of action for the coming period. 
C) Budgeted amounts are compared to actual results. 
D) A budget demands integrated input from different business units and functions.

Question 5

Budgeted operating expenses for the current year include the expiration of insurance that was paid for in a previous period.

Accepted Answer

A) True 
 B)False

Question 6

Argyle Company forecasts sales of $50 000 in January, $60 000 in February, $70 000 in March, and $75 000 in April. The inventory balance at 1 January is $12 000. Cost of sales is budgeted at 40% of sales revenue. Argyle wishes to have inventory levels at the end of each month equal to 60% of cost of sales for the following month, plus a "safety cushion" of $1 000. How much should be budgeted for inventory purchases in February?

Accepted Answer

A) $22 100 
B) $23 400 
C) $26 400 
D) $21 000 
A) $22 100 
B) $23 400 
C) $26 400 
D) $21 000

Question 7

The cost of sales for Frye Manufacturing in 2013 was $233 000. The 1 January 2013 finished goods inventory balance was $31 600 and the 31 December 2013 finished goods inventory balance was $24 200. What was cost of goods manufactured during 2013?

Accepted Answer

A) $240 400 
B) $288 800 
C) $225 600 
D) $233 000 
A) $240 400 
B) $288 800 
C) $225 600 
D) $233 000

Question 8

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for Inventory, which document should be used?

Accepted Answer

A) Inventory, purchases and cost of sales budget 
B) Electricity and gas budget 
C) Budgeted cash collections 
D) Cash budget 
A) Inventory, purchases and cost of sales budget 
B) Electricity and gas budget 
C) Budgeted cash collections 
D) Cash budget

Question 9

Which of the following is an example of the coordination and communication function of a budget?

Accepted Answer

A) Budget figures are used to evaluate the performance of managers. 
B) The budget outlines a specific course of action for the coming period. 
C) A budget requires integrated input from different business units and functions. 
D) Employees are motivated to achieve the goals set by the budget. 
A) Budget figures are used to evaluate the performance of managers. 
B) The budget outlines a specific course of action for the coming period. 
C) A budget requires integrated input from different business units and functions. 
D) Employees are motivated to achieve the goals set by the budget.

Question 10

Which of the following would probably be considered an indirect material cost in a bakery?

Accepted Answer

A) Eggs 
B) Milk 
C) Spices 
D) Flour 
A) Eggs 
B) Milk 
C) Spices 
D) Flour

Question 11

The starting point in the budgeting process is the preparation of the:

Accepted Answer

A) sales budget. 
B) cash budget. 
C) budgeted income statement. 
D) budgeted cash flow statement. 
A) sales budget. 
B) cash budget. 
C) budgeted income statement. 
D) budgeted cash flow statement.

Question 12

Managerial accounting's focus is to provide information for internal planning and control.

Accepted Answer

A) True 
 B)False

Question 13

A budget focuses primarily on financial information, but does not reflect specific business strategies.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following describes the term cost object?

Accepted Answer

A) An object which costs money to purchase 
B) Any cost which is treated as a period expense 
C) Any type of cost which is incurred to produce a finished product 
D) Anything which requires a detailed record of its component costs to be kept 
A) An object which costs money to purchase 
B) Any cost which is treated as a period expense 
C) Any type of cost which is incurred to produce a finished product 
D) Anything which requires a detailed record of its component costs to be kept

Question 15

Repair and maintenance costs of vehicles used to deliver products to the customers are inventoriable product costs.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is TRUE about the capital expenditures budget?

Accepted Answer

A) It must be completed before the budgeted income statement is prepared. 
B) It must be completed before the cash budget can be prepared. 
C) It includes the sales budget. 
D) It is a part of the financial budget. 
A) It must be completed before the budgeted income statement is prepared. 
B) It must be completed before the cash budget can be prepared. 
C) It includes the sales budget. 
D) It is a part of the financial budget.

Question 17

When a company is preparing a budgeted cash flow statement and they wish to calculate the payments to suppliers for purchases of inventory, they should refer to which of the following?

Accepted Answer

A) Budgeted balance sheet 
B) Budgeted cash payments for purchases 
C) Budgeted cash collections 
D) Sales budget 
A) Budgeted balance sheet 
B) Budgeted cash payments for purchases 
C) Budgeted cash collections 
D) Sales budget

Question 18

Transportation costs to ship products to customers are inventoriable product costs.

Accepted Answer

A) True 
 B)False

Question 19

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?

Accepted Answer

A) Creating detailed budgets 
B) Evaluating results of operations 
C) Comparing actual performance to previously budgeted amounts 
D) Implementing operational plans 
A) Creating detailed budgets 
B) Evaluating results of operations 
C) Comparing actual performance to previously budgeted amounts 
D) Implementing operational plans

Question 20

Which of the following is an example of a period cost?

Accepted Answer

A) Advertising expense 
B) Property rates for the factory 
C) Indirect materials 
D) Depreciation on factory equipment 
A) Advertising expense 
B) Property rates for the factory 
C) Indirect materials 
D) Depreciation on factory equipment

Exam 19: Introduction to Managerial Accounting and the Master Budget

Which of the following statements is INCORRECT?

When a company is preparing a budgeted cash flow statement and they wish to calculate the payments for operating expenses, they should refer to which of the following?

Which of the following are period costs?

Which of the following is an example of the benchmarking function of a budget?

Budgeted operating expenses for the current year include the expiration of insurance that was paid for in a previous period.

The cost of sales for Frye Manufacturing in 2013 was $233 000. The 1 January 2013 finished goods inventory balance was $31 600 and the 31 December 2013 finished goods inventory balance was $24 200. What was cost of goods manufactured during 2013?

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for Inventory, which document should be used?

Which of the following is an example of the coordination and communication function of a budget?

Which of the following would probably be considered an indirect material cost in a bakery?

The starting point in the budgeting process is the preparation of the:

Managerial accounting's focus is to provide information for internal planning and control.

A budget focuses primarily on financial information, but does not reflect specific business strategies.

Which of the following describes the term cost object?

Repair and maintenance costs of vehicles used to deliver products to the customers are inventoriable product costs.

Which of the following statements is TRUE about the capital expenditures budget?

When a company is preparing a budgeted cash flow statement and they wish to calculate the payments to suppliers for purchases of inventory, they should refer to which of the following?

Transportation costs to ship products to customers are inventoriable product costs.

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?

Which of the following is an example of a period cost?

The Role of Accounting in Business

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Share Capital and the Balance Sheet

Companies: Effects on Retained Earnings, Share Splits and Buy-Backs, and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Job Costing

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Appendix

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