Question 1) A distinguishing feature of managerial accounting is
a.external users.
b. general-purpose reports.
c. very detailed reports.
d. quarterly and annual reports.
Question 2) In an open-fact situation the tax advisor
a. must consider tax policy issues.
b. is usually restricted in tax planning.
c. must always attempt to minimize taxes.
d. must consider the client's nontax and tax objectives.
Question 3) Render Co. chose to round its income statement to the nearest thousandth dollar. Which of the following concepts did Render apply?
a. Materiality
b. Reliability
c. Consistency
d. Matching
Question 4) Which of the following ratios can indicate income manipulation?
a. Current ratio
b. Return on equity
c. Quality of income
d. Times interest earned
Question 5) Samsonic Electronics reported a P/E ratio of 98. The industry average P/E ratio is 21. What does Samsonic’s P/E ratio indicate?
a. That investors highly value its stock
b. That the stock is relatively inexpensive to buy
c. That Samsonic is very profitable
d. That Samsonic stock probably exceeds $100 per share
Question 6) Shop-Mart reports a current ratio of 0.1. What does this indicate?
a. Shop-Mart is insufficiently solvent.
b. Shop-Mart is insufficiently liquid.
c. Shop-Mart has earnings per share of 0.10.
d. Shop-Mart’s profits are low.
Question 7) Sunny Bank is considering a long-term loan to Cloudy Corp. Which of the following ratios will be most important to Sunny’s analysis?
a. Quality of income
b. Cash coverage
c. Capital acquisitions
d. Fixed asset turnover
Question 8) Bellow, Inc. reported a decrease in return on equity. Which of the following situations would most directly cause this decrease?
a. Increasing net income
b. Increasing average stockholders’ equity
c. Increasing current liabilities
d. Increasing debt-to-asset ratio
Question 9) Managerial accounting does not encompass
a. calculating product cost.
b. calculating earnings per share.
c. determining cost behavior.
d. profit planning.
Question 10) Managerial accounting is applicable to
a. service entities.
b. manufacturing entities.
c. not-for-profit entities.
d. all of these.
Question 11) Management accountants would not
a. assist in budget planning.
b. prepare reports primarily for external users.
c. determine cost behavior.
d. be concerned with the impact of cost and volume on profits.
Question 12) Internal reports must be communicated
a. daily.
b. monthly.
c. annually.
d. as needed.
Question 13) Financial statements for external users can be described as
a. user-specific.
b. general-purpose.
c. special-purpose.
d. managerial reports.
Question 14) Managerial accounting reports can be described as
a. general-purpose.
b. macro-reports.
c. special-purpose.
d. classified financial statements.
Question 15) The reporting standard for external financial reports is
a. industry-specific.
b. company-specific.
c. generally accepted accounting principles.
d. department-specific.
Question 16) Which of the following statements about internal reports is not true?
a. The content of internal reports may extend beyond the double-entry accounting system.
b. Internal reports may show all amounts at market values.
c. Internal reports may discuss prospective events.
d. Most internal reports are summarized rather than detailed.
Question 17) In an analogous sense, external user is to internal user as generally accepted accounting principles are to
a. timely.
b. special-purpose.
c. relevance to decision.
d. SEC.
Question 18) Internal reports are generally
a. aggregated.
b. detailed.
c. regulated.
d. unreliable.