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16. Important types of control systems and procedures for accounting information systems are
feedback, feed forward and preventive. Which one of the following is in the correct order of feedback,
feed forward and preventive control systems?
a. Cost accounting variances, separation of duties and cash planning.
b. Cost accounting variances, cash budgeting and organizational independence.
c. Cash budgeting, cost accounting variances and separation of duties.
d. Inventory control, capital budgeting and cash budgeting.
17. Which one of the following represents a lack of internal control in a computer-based information
systems?
a. The design and implementation is performed in accordance with managements specific
authorization.
b. Any and all changes in application programs have been authorization and approval of
management.
c. Provisions exist to ensure the accuracy and integrity of computer processing of all files and
reports.
d. Both computer operators and programmers have unlimited access to the programs and
data files.
18. An Executive Information System (EIS) focuses on long-range objectives and gives immediate
information about an organizations critical success factors. It can be used on computers of all sizes.
It is commonly used by all executives at the highest levels within the organization. All of the following
statements apply to EIS except:
a. It is likely to be one of the most widely used and the largest of the information
subsystems in a business organization.
b. It provides top executives with immediate and easy access to information in a highly
interactive format.
c. It provides information in a highly aggregated form.
d. It helps executives monitor business conditions in general and assist in strategic planning to
control and operate the entity.
19. The concept of timeliness of data availability is most relevant to
a. Computerized system
b. Packaged software
c. On-line systems
d. Microsystems
20. To control purchasing and accounts payable, an information system must include certain source
documents. For a manufacturing concern like fruit processors, Inc., these documents should include
a. Purchase requisitions, purchase orders, receiving reports and suppliers invoices.
b. Purchase orders, receiving reports and inventory reports of goods needed.
c. Purchase requisitions, purchase orders, inventory reports of goods needed and suppliers
invoices.
d. Purchase orders, receiving reports and suppliers invoices.
III. MANAGEMENT ACCOUNTING CONCEPTS AND RESPONSIBILITY ACCOUNTING
21. Controllership has attained special recognition in corporate management as business expand in
complexity and reach and as the controller exerts influence for to take organizations goals.
Controllership and treasurership constitute corporate finance. These are among corporate finances
traditional functions.
1. Tax management
2. Finance reporting and interpretation
3. Credit management
4. Sourcing and investing funds
5. Reporting to government regulatory agencies
6. Risk management
7. Economic appraisal
8. Planning for control
Which of the following are the functions of the controller?
a. All eight items
b. Items 1, 2, 5, 7 and 8 only
c. Items 1, 2, 3, 4, 5, 7 and 8 only
d. Items 2, 3, 5, 7 and 8 only
22. To distinguish between management accounting and financial accounting, the following
statements are correct except:
a. Management accounting in view of its various integrated recipients should have a
separate data recording and retrieval system from financial accounting.
b. Financial accounting is bound by Generally Accepted Accounting Principles (GAAP), and
management accounting need not be in conformity with GAAP.
c. Financial accounting can be regarded as the process while management accounting can be
regarded as the product of that process.
d. Management accounting output must be released on time so as not to erode its usefulness;
Financial accounting output can still be useful even when delayed.
23. The activities in a management systems control can be grouped into four
1. Measurement of actual performance
2. Deciding and implementing corrective actions
3. Determining standard of performance
4. Comparing actual performance versus standards and analyzing results.
The above steps must done in this sequence
a. 4, 3, 2, 1
b. 3, 1, 4, 2
c. 1, 3, 4, 2
d. 3, 4, 1, 2
IV. FINANCIAL STATEMENT ANALYSIS
24. If, just prior to a period of rising prices, a company changed its inventory measurement method
from FIFO to LIFO, the effect in the next period would be to
a. Increase both the current ratio and inventory turn-over
b. Decrease both the current ratio and inventory turn-over
c. Increase the current ratio and decrease inventory turn-over
d. Decrease the current ratio and increase inventory turn-over
25. When a balance sheet amount is related to an income statement amount in computing a ratio,
a. The balance sheet amount should be converted to an average for the year.
b. The income statement amount should be converted to an average for the year.
c. Both amounts should be converted to market value.
d. Comparisons with industry ratios are not meaningful.
26. On December 31, 19x0 the Balance Sheet of Belle Co. disclosed total assets of P8, 000,000,
current liabilities of P1, 500,000 and long-term debt of P2, 400, 000. Common stock outstanding
amounted to 500,000 shares, while 100,000 shares of P10 par value preferred stock were
outstanding. The retained earnings account indicated a deficit balance of P2, 000, 000. Belles book
value per share of common stock as of December 31, 19x0 is
a. P16.00
b. P6.20
c. P12.20
d. P8.20
27. How are dividends per share for common stock used in the calculation of the following?
Dividend per-share
Earnings
Payout ratio
per share
a. Denominator
denominator
b. Denominator
Not used
c. Numerator
Not used
d. Numerator
Numerator
28. During 19x5, Reuel Company purchased P1, 920, 000 of inventory. The cost of goods sold for
19x5 was P1, 800, 000 and the ending inventory at December 31, 19x5 was P360, 000. What was
the inventory turn-over for 19x5?
a. 5.0
b. 5.3
c. 6.0
d. 6.4
V. COST-VOLUME-PROFIT ANALYSIS
The following data apply to items 29-33
Lara Company produces a single product. It sold 25, 000 units last year with the following
results:
Sales
Variable Costs
P625, 000
P375, 000
Fixed Costs
150, 000
525, 000
100, 000
45, 000
P 55, 000
In an attempt to improve its product, Lara is considering replacing a component part in its
product that has a cost of P2.50 with a new and better part costing P4.50 per unit in the coming year.
A new machine would also be needed to increase plant capacity. The machine would cost P18, 000
with a useful life of 6 years and no salvage value. The company uses straight line depreciation on all
plant assets.
29. What was Lara Companys break-even point in number of units last year?
a. 6, 000
b. 15, 000
c. 21, 000
d. 18, 000
30. How many units of product would Lara Company have had to sell in the last year to earn P77, 000
in net income after taxes?
a. 29, 000
b. 23, 000
c. 22, 700
d. 29, 300
31. If Lara Company holds the sales price constant and makes the suggested changes, how many
units of product must be sold in the coming year to break-even?
a. 15, 300
b. 18, 750
c. 19, 125
d. 21, 000
32. If Lara Company holds the sales price constant and makes the suggested changes, how many
units of the product will the company have to sell to make the same net income after taxes as last
year?
a. 31, 625
b. 31, 250
c. 33, 500
d. 25, 300
33. If Lara Company wishes to maintain the same contribution margin ratio, what selling price per unit
of product must it charge next year to cover the increased material costs?
a. P27.00
b. P25.00
c. P32.50
d. P28.33
b. P8, 000
c. P12, 000
d. P16, 000
P80
Direct Labor
Variable Factory Overhead
15
20
Bags Corporation offered to supply the assembled ice bag for P40 with a minimum order of 5, 000
units. If picnic accepts the offer it will be able to reduce variable labor and overhead costs by 50%.
The direct materials for the freezable ice bag will cost Picnic P20 if it will produce it. Considering Bags
Corporation offer, Picnic should
a. Buy the freezable ice bag due to P150, 000 advantaged.
b. Produce the freezable ice bag due to P225, 000 advantaged.
Y < 10
c. P222, 100
d. P208, 200
56. The net present value capital budgeting technique can be used when cash flows from period to
period are:
Uniform
Uneven
a. No
Yes
b. No
No
c. Yes
No
d. Yes
Yes
57. It is assumed that cash flows are reinvested at the rate actually earned by the investment in which
of the following capital budgeting techniques?
Time-adjusted rate of return
a. Yes
Yes
b. Yes
No
c. No
No
d. No
Yes
58. If income tax considerations are ignored, how is straight line depreciation expense used in the
following capital budgeting techniques?
Time-adjusted rate of return
a. Excluded
Excluded
b. Excluded
Included
c. Included
Excluded
d. Included
Included
Time value
of money
No
b. No
c. Yes
d. Yes
Yes
Yes
No
1.70
4.20
2.47
5.90
44. D
45. A
46. D
47. A
48. D
49. D
50. D
51. B
52. A
53. D
54. C
55. C
56. D
57. B
58. A
59. A
60. B
61. B
62. C
63. A
64. D
65. D
66. B
27. C
28. C
29. B
30. A
31. C
32. A
33. D
34. D
35. D
36. C
37. D
38. A
39. C
40. A
41. B
42. C
43. A