Managerial Final Exam Review

What is the purpose of managerial accounting?

• To manage personal finances

• To explain the purpose of budgeting

• To analyze a performance report

• To explain the purpose of managerial accounting

Which of the following is a characteristic of financial accounting?

• Reports to internal stakeholders

• Flexible and tailored to internal needs

• Adheres to standardized rules like GAAP or IFRS

• Future-focused and operational

What is the purpose of a cash budget?

• To outline specific actions and processes

• To track expected cash inflows and outflows

• To compare actual results to budgeted expectations

• To provide a financial framework for organizational goals

Which of the following is a characteristic of fixed costs?

• Remain constant regardless of production volume

• Change with production volume

• Directly tied to output levels

• Vary with raw materials

How is gross profit calculated?

• Sales revenue – Cost of Goods Sold (COGS)

• Sales revenue – Variable Costs

• Contribution Margin / Total Units Sold

• Gross Profit / Sales Revenue × 100

What does vertical analysis in an income statement express?

• Each income statement item as a percentage of total assets

• Each income statement item as a percentage of sales revenue

• Each income statement item as a percentage of net income

• Each income statement item as a percentage of liabilities

to calculate ratios from the ___________, you’ll use:

•Net Sales

•Cost of Merchandise Sold

•Income from Operations

•Net Income After Federal Income Tax

• Income Statement

• Balance Sheet

• SCOE

• COGS

Which of the following is FALSE about managerial accounting versus financial accounting?

• Managerial reports are prepared annually, whereas financial reports are prepared when required.

• Managerial accounting is primarily utilized by internal users, whereas financial accounting is primarily utilized by external users.

• The primary information characteristic for managerial accounting is relevance, whereas the primary information characteristics for financial accounting are reliability and objectivity.

• No authoritative body requires managerial accounting reports, whereas the SEC requires financial accounting reports for publicly traded companies.

Which one is NOT one of the five factors of Cost Volume Profit?

• Selling prices

• Unit variable costs

• Total variable costs

• Total fixed costs

What is the margin of safety?

• The difference between units sold and the break-even amount

• The margin between units and sales

• The margin between each break-even point

• The margin between profit and loss