1) A company uses the direct method to prepare the statement of cash flows. It presents
the following data on its financial statements:
*Relates solely to the acquisition of inventory
Which of the following is correct about salaries payable in the operating activities
category of the cash flow statement?
A) The increase of $4,000 will be subtracted from salary expense to determine
payments to employees.
B) The increase of $4,000 will be subtracted from net income.
C) The increase of $4,000 will be added to salary expense to determine payments to
employees.
D) The increase of $4,000 will be added to net income.
2) The Dogwood Technology Company managerial accountant computes the May total
variance report. The budgeted fixed overhead was $48,580 and the standard fixed
overhead cost allocated to production was $45,600. The actual fixed overhead totaled
$47,930. Compute the fixed overhead budget variance and the fixed overhead volume
variance.
A) $3,430 F; $880 U
B) $650 U; $2,980 F
C) $880 F; $3,430 U
D) $2,980 U; $650 F
3) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to common stock?
A) Stockholder’s equity as 7.81% of total capital
B) Increase of $5,460 in common stock
C) 88.50% increase from prior to current year of cost of goods sold
D) Sales return of $11.26
4) The following information relates to Woolf Unlimited for the past two years.
What is the rate of return on total assets for the current year?
A) 0.10
B) 0.13
C) 0.14
D) 0.78
5) The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the debt ratio for the current year?
A) 0.21
B) 0.06
C) 1.27
D) 0.35
6) Tom’s Taxidermy expects to sell 800 units of its specialty preservation product. The
managerial accountant reported that manager must sell 400 units of specialty product to
breakeven. Compute the margin of safety in units.
A) 100 units
B) 200 units
C) 300 units
D) 400 units
7) Sales territories, such as geographic areas within the country may be classified as
a(n)
A) cost center.
B) investment center.
C) revenue center.
D) profit center.
8) The balance in the ________ is used to check the accuracy on the ending balance of
the statement of cash flows.
A) asset and liability accounts
B) liability accounts
C) cash and cash equivalent accounts
D) asset accounts
9) In 2013, the employee at Lighthouse Services prepared an annual report for the bank
that revealed total revenue in 2012 was $6,000,000. The manager needs the information
to apply for a loan to purchase new equipment to maintain the operations at the
organization. The report was prepared in accordance with GAAP and the report
contained information about the 2012 financial performance at the company.
Which of the following describes the role of the employee at Lighthouse Services?
A) Managerial Accountant
B) CFO
C) CEO
D) Board of Director
E) Financial Accountant
10) To evaluate the performance of a(an) ________, a top manager is responsible for
revenues, costs, and the efficient use of the assets invested in the division.
A) cost center
B) investment center
C) profit center
D) revenue center
11) Tom is the new accounting supervisor at Maryland Distributors. Tom requires all
accountants to join the IMA and Tom expects all accountants to commit to ethical
professional practice. Tom is asked to review the previous quarter audit reports that
were completed by the CPA firm. Tom reviews the reports and he discovers that an
accountant in the sales division did not participate in continuing education as required.
According to the IMA Statement of Ethical Professional Practice, which of the
following did the accountant violate when the accountant did not participate in
continuing education requirements?
A) Competence
B) Confidentiality
C) Integrity
D) Credibility
E) Leadership
12) A company uses the direct method to prepare the statement of cash flows. It
presents the following data on its financial statements:
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts payable?
A) The increase of $15,000 will be subtracted from net income.
B) The increase of $15,000 will be added to net income.
C) The increase of $15,000 will be added to purchases to determine payments to
suppliers.
D) The increase of $15,000 will be subtracted from purchases to determine payments to
suppliers.
13) Maintenance costs at Wilmington Manufacturing over the past six months are listed
in the following table.
Using the high-low method, what would the monthly fixed maintenance cost be?
A) $1,200
B) $2,320
C) $13,680
D) $27,440
14) The SEC requires an independent certified public accountant (CPA) to audit reports
generated by managerial accounting systems.