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Multiple Choice 1.) A distinguishing feature of managerial accounting is a. external users. general-purpose reports. very detailed reports. quarterly...

Multiple Choice
1.) A distinguishing feature of managerial accounting is
a. external users.
b. general-purpose reports.
c. very detailed reports.
d. quarterly and annual reports.
2.) Which one of the following is a cost that would not likely be associated with computer-integrated manufacturing?
a.   Manufacturing overhead associated with allocation of equipment depreciation
b. Direct labor costs of a welder on the production floor
c. Manufacturing overhead associated with allocation of the plant lease to the latest production run
d. Direct materials cost with several fuse plates for a new automobile
3.) The unified transfer tax system
a. imposes a single tax upon transfers of property during an individual's lifetime only.
b. imposes a single tax upon transfers of property during an individual's life and at death.
c. imposes a single tax upon transfers of property only at an individual's death.
d. involves one tax rate table for lifetime transfers and a different tax rate table for transfers at death.
4.)  When property is transferred, the gift tax is based on
a. replacement cost of the transferred property.
b. fair market value on the date of transfer.
c. the transferor's original cost of the transferred property.
d. the transferor's depreciated cost of the transferred property.
5.) Vertical equity means that
a. taxpayers with the same amount of income pay the same amount of tax.
b. taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.
c. all taxpayers should pay the same tax.
d. none of the above.
6.) All of the following are classified as flow-through entities for tax purposes except
a. partnerships
b. c corporations
c. s corporations
d. limited liability companies
7.) All of the following statements are true except
a. The net income earned by a sole proprietorship is reported on the owner's  individual income tax return.
b. The net income of an S corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the S corporation to individual shareholders is also taxed.  
c. The net income of C corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the C corporation to individual shareholders is also taxed.  
d. LLCs are generally taxed as partnerships.
8.) When Jason contacts a tax advisor to inform him that he has sold some stock at a loss, the tax advisor is faced with
a. an open-fact situation.
b. a closed-fact situation.
c. a recognized-fact situation.
d. a restricted-fact situation.
9.) Investigation of a tax problem that involves a closed-fact situation means that
a. future events may be planned and controlled.
b. the statute of limitations on the client's tax return is still open.
c. the client's transactions have already occurred and the tax questions must now be resolved.
d. research is primarily concerned with applying the law to the facts as they exist.
10.) 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.  
11.) The term "tax law" includes
a. legislation.
b. administrative interpretations.
c. judicial decisions.
d. all of the above
12.) Which of the following is not a tort?
a.    breach of contract
b.    negligence
c.    gross negligence
d.    fraud
e.    ordinary negligence
13.) Gross negligence can best be defined as:
a.    failure to exercise due care.
b.    misrepresentation.
c.    failure to exercise even slight care.
d.    criminal fraud.
e.    collusion.
14.) Section 18 liability is relatively narrow in scope because it relates only to a false or misleading statement in documents "filed" with the:
a.    FASB
b.    IRS
c.    SEC
d.    AICPA
e.    IMA
15.) Which of the following ratios is used to measure profitability?  
a.   Net profit margin
b.   Inventory turnover
c.   Times interest earned
d.   Current ratio
16.) Which of the following ratios is used to measure liquidity?
a.   Debt-to-assets ratio
b.   Times interest earned
     c.    Fixed asset turnover
     d.    Inventory turnover
17.) Which of the following ratios relies on net income?
a. Gross profit percentage
b. Current ratio
c. Earnings per share
d. Capital acquisitions
18.) 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
19.) Which of the following ratios can indicate income manipulation?
a. Current ratio
b. Return on equity
c. Quality of income
d. Times interest earned
20.) 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
21.) 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.
22.) 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
23.) 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
24.) Managerial accounting applies to each of the following types of businesses except
a. service firms.
b. merchandising firms.
c. manufacturing firms.
d. Managerial accounting applies to all types of firms.
25.) Managerial accounting information is generally prepared for
a. stockholders.
b. creditors.
c. managers.
d. regulatory agencies.
26.) Managerial accounting information
a. pertains to the entity as a whole and is highly aggregated.
b. pertains to subunits of the entity and may be very detailed.
c. is prepared only once a year.
d. is constrained by the requirements of generally accepted accounting principles.
27.) The major reporting standard for presenting managerial accounting information is
a. relevance.
b. generally accepted accounting principles.
c. the cost principle.
d. the current tax law.
28.) Managerial accounting is also called
a. management accounting.
b. controlling.
c. analytical accounting.
d. inside reporting.
29.) Which of the following is not an internal user?
a. Creditor
b. Department manager
c. Controller
d. Treasurer
30.) Managerial accounting does not encompass
a. calculating product cost.
b. calculating earnings per share.
c. determining cost behavior.
d. profit planning.
31.) Managerial accounting is applicable to
a. service entities.
b. manufacturing entities.
c. not-for-profit entities.
d. all of these.
32.) 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.
33.) Internal reports must be communicated
a. daily.
b. monthly.
c. annually.
d. as needed.
34.) Financial statements for external users can be described as
a. user-specific.
b. general-purpose.
c. special-purpose.
d. managerial reports.
35.) Managerial accounting reports can be described as
a. general-purpose.
b. macro-reports.
c. special-purpose.
d. classified financial statements.
36.) The reporting standard for external financial reports is
a. industry-specific.
b. company-specific.
c. generally accepted accounting principles.
d. department-specific.
37.)  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.
38.) 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.
39.) Internal reports are generally
a. aggregated.
b. detailed.
c. regulated.
d. unreliable.
40.) A distinguishing feature of managerial accounting is
a. external users.
b. general-purpose reports.
c. very detailed reports.
d. quarterly and annual reports.
41.) What activities and responsibilities are not associated with management's functions?
a. Planning
b. Accountability
c. Controlling
d. Directing
  42.)   Determining whether amounts are in conformity with GAAP addresses the proper measurement of assets, liabilities, revenues, and expenses which includes all of the following except:  
a. the reasonableness of management's accounting estimates.
b. proper application of valuation principles such as cost, net reliable value, market value, and present value.
c. consistency in the application of accounting principles.
d. the reasonableness of management's accounting policies.
e. proper application of the matching principle.
  43.)  The concept of materiality is defined by the Financial Accounting Standards Board in terms of the judgment of the:
a. auditor.
b. preparer.
c. FASB members.
d. users.
e. AICPA members.
  44.)   Which one of the following is among the three components of audit risk?  
a. incurrence risk
b. occurrence risk
c. rejection risk
d. acceptance risk
e. control risk
  45.)   Inherent risk is defined in terms of:  
a. a total absence of controls.
b. an ideal set of controls.
c. the existing controls.
d. the standard controls for the client's industry.
e. a full set of controls.
46.)  Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports.  
47.)  Decision-making is an integral part of the planning, directing, and controlling functions.  
48.)  An accountant may be held liable to a client under either contract law or tort law.  
49.)  An auditor would be guilty of gross negligence for delivery of a report past the agreed-upon date.  
50.)  Failure to use even slight care in the circumstances constitutes ordinary negligence.

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