1) Review the following individual accounting system components that contain the
skills and capabilities of individuals in Chart A and review the accounting system
components that contain the skills and capabilities of individuals in Chart B.
Which of the following describes the individual required to perform the accounting
system skills and capabilities in Chart A and which individual is the responsible
individual required to perform the skills and capabilities in Chart B?
A) Chart A: Independent Auditor; Chart B: Internal Audit Function
B) Chart A: Managerial Accountant; Chart B: Financial Accountant
C) Chart A: Audit Committee; Chart B: Cross Functional Teams
D) Chart A: Cross Functional Teams; Chart B: Treasurer
E) Chart A: Controller; Chart B: Treasurer
2) The security department that is evaluated on its ability to control costs when the
company compares actual costs to budget costs at a department store chain may be
classified as a(n)
A) cost center.
B) investment center.
C) profit center.
D) revenue center.
3) 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 company’s price-earnings ratio for the current year?
A) 2.00
B) 3.50
C) 12.50
D) 0.08
4) The manager at East Coast Manufacturing organizes costs to prepare the Costs of
Quality report. The manger compiled the following data:
What of the following cost is the total cost of quality the manager should use to report
the costs in the internal failure cost category?
A) $195,000
B) $180,000
C) $650,000
D) $260,000
E) $290,000
5) Which of the following is the operating income an investment center generates
before subtracting common fixed costs that are allocated to the center?
A) Sales volume variance
B) Segment margin
C) Return on investment (ROI)
D) Return on assets (ROA)
6) Catamount Studios has budgeted the following amounts for its next fiscal year:
If Catamount Studios can reduce fixed expenses by $46,500, by how much can variable
expenses per unit increase and still allow the company to maintain the original
breakeven sales in units?
A) $1.50
B) $20.00
C) $21.50
D) $18.50
7) Bridgette is a managerial accountant at the Middle Peninsula Manufacturing
Company. Recently, Bridgette received a Certified Management Accountant (CMA)
certification. To receive the certification, Bridgette was required to attend classes and
she had to pass a rigorous examination and maintain continuing professional education
now and as designated in the future. To prepare for the exam, Bridgette focused on
managerial accounting topics, economic topics, and business finance topics. The exam
permits Bridgette to earn a competitive salary and to obtain a promotion to a
higher-level position within the company. Which of the following is the name of the
regulatory body that issues the Certified Management Accountant (CMA) certification?
A) Sarbanes-Oxley Act of 2002
B) U. S. Securities and Exchange Commission
C) Institute of Management Accountants (IMA)
D) The Federal Reserve Board
E) International Financial Reporting Standards (IFRS)
8) Sally wants to purchase a new sofa because she purchased a new home at the beach.
Sally visited two stores and she narrowed down her choices to a red sofa and a blue
sofa. Sally owns pets so she considers the cost of insurance to insure each sofa. Sally
compiled the following data and she realizes that the sales tax to purchase the sofa is
10% in her state.
Which sofa should Sally purchase? What costs are relevant in her decision? Why?
9) Crown Industries has the following information about its standards and production
activity for December:
Assume the allocation base for fixed overhead costs is the number of units to be
produced.
How much are the standard overhead costs allocated to actual production?
A) $48,750
B) $92,500
C) $71,250
D) $25,650
10) The following information relates to Bennett Corporation.
Required:
a.What is the acid-test ratio for the current year?
b.What is the inventory turnover for the current year?
c.What is days’ sales in receivables for the current year?
d.What is the book value per share of common stock for the current year?
e.What is the price-earnings ratio for the current year?
f.What is the rate of return on total assets for the current year?
g.What is the times-interest-earned ratio for the current year?
h.What is the current ratio for the current year?
11) 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 company’s dividend yield for the current year?
A) 6.00%
B) 42.11%
C) 26.00%
D) 32.00%
12) The following information relates to Woolf Unlimited for the past two years.
What is the times-interest-earned ratio for the current year?
A) 3.71 times
B) 13.00 times
C) 2.30 times
D) 1.75 times
13) The following information relates to Truman Unlimited for the past two years.
The acid-test ratio for the current year is
A) 0.85.
B) 0.57.
C) 1.12.
D) 2.00.
14) Which of the following roles require publicly-traded companies to have an internal
audit function?
A) The New York Stock Exchange (NYSE)
B) The Internal Revenue Service (IRS)
C) The stockholders
D) The Board of Directors
15) Which of the following terms is useful because it compares “actual” revenues and
expenses against “budgeted” revenues and expenses?
A) Responsibility center
B) Capital budget
C) Performance report
D) Sensitivity analysis
16) A company uses the indirect 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 $10,000 will be subtracted from net income.
B) The increase of $10,000 will be added to net income.
C) The increase of $10,000 will be subtracted from cost of goods sold.
D) The increase of $10,000 will be added to cost of goods sold.