LSU ACCT 2000 EXAM 3 (LOWE-ARDOIN) – 200 EXAM
QUESTIONS WITH ANSWERS & DETAILED RATIONALES
1. Which of the following is NOT one of the three broad functions of
managerial accounting?
A. Planning
B. Directing
C. Auditing
D. Controlling
Correct Answer: C. Auditing
Rationale: The three broad functions of managerial accounting are
planning, directing, and controlling. Auditing is a function of financial
accounting and external assurance, not managerial accounting.
2. The managerial function of planning primarily involves:
A. Coordinating day-to-day activities
B. Looking ahead and setting goals
C. Looking back to determine if goals were met
D. Preparing financial statements for external users
Correct Answer: B. Looking ahead and setting goals
Rationale: Planning is the managerial function that involves looking
ahead and setting goals for the organization.
3. Which managerial function involves coordinating the day-to-day
activities of a business?
A. Planning
,B. Controlling
C. Directing
D. Auditing
Correct Answer: C. Directing
Rationale: Directing involves coordinating the day-to-day activities to
ensure the organization runs smoothly.
4. The controlling function of managerial accounting involves:
A. Setting goals for the future
B. Coordinating daily activities
C. Looking back and determining whether goals have been met
D. Hiring new employees
Correct Answer: C. Looking back and determining whether goals have
been met
Rationale: Controlling is the process of looking back and evaluating
whether the organization's goals have been achieved.
5. Which of the following is a characteristic of managerial accounting?
A. It is prepared for external users
B. It must follow GAAP
C. It is prepared as needed, not on a fixed schedule
D. It is highly aggregated
Correct Answer: C. It is prepared as needed, not on a fixed schedule
Rationale: Managerial accounting reports are prepared as needed for
internal users, unlike financial accounting reports which follow a
monthly, quarterly, or annual schedule.
6. Financial accounting reports are primarily prepared for:
A. Internal users such as managers
B. External users such as investors and creditors
,C. Employees only
D. Government regulators only
Correct Answer: B. External users such as investors and creditors
Rationale: Financial accounting is aimed at external users, while
managerial accounting serves internal users.
7. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Advertising expense
Correct Answer: D. Advertising expense
Rationale: Period costs are not associated with the production of a
product and are expensed in the period incurred. Advertising is a period
cost.
8. Product costs consist of which three elements?
A. Direct materials, direct labor, and manufacturing overhead
B. Direct materials, indirect labor, and selling expenses
C. Direct labor, administrative expenses, and manufacturing overhead
D. Raw materials, work in process, and finished goods
Correct Answer: A. Direct materials, direct labor, and manufacturing
overhead
Rationale: Product costs include direct materials, direct labor, and
manufacturing overhead—the costs incurred to manufacture a product.
9. Which of the following would be classified as manufacturing
overhead?
A. Wages of assembly line workers
B. Depreciation on factory equipment
, C. Salary of the CEO
D. Advertising costs
Correct Answer: B. Depreciation on factory equipment
Rationale: Manufacturing overhead includes indirect materials, indirect
labor, and other manufacturing costs such as depreciation on factory
equipment.
10. The equation for Cost of Goods Sold is:
A. Beginning Finished Goods + Cost of Goods Manufactured − Ending
Finished Goods
B. Beginning Raw Materials + Purchases − Ending Raw Materials
C. Beginning WIP + Total Manufacturing Costs − Ending WIP
D. Sales − Cost of Goods Sold
Correct Answer: A. Beginning Finished Goods + Cost of Goods
Manufactured − Ending Finished Goods
Rationale: Cost of Goods Sold = Beginning Finished Goods Inventory +
Cost of Goods Manufactured − Ending Finished Goods Inventory.
11. The equation for Cost of Goods Manufactured is:
A. Beginning WIP + Total Manufacturing Costs − Ending WIP
B. Beginning Finished Goods + Cost of Goods Manufactured − Ending
Finished Goods
C. Direct Materials + Direct Labor + Manufacturing Overhead
D. Sales − Variable Costs
Correct Answer: A. Beginning WIP + Total Manufacturing Costs −
Ending WIP
Rationale: Cost of Goods Manufactured = Beginning Work in Process +
Total Manufacturing Costs − Ending Work in Process.
QUESTIONS WITH ANSWERS & DETAILED RATIONALES
1. Which of the following is NOT one of the three broad functions of
managerial accounting?
A. Planning
B. Directing
C. Auditing
D. Controlling
Correct Answer: C. Auditing
Rationale: The three broad functions of managerial accounting are
planning, directing, and controlling. Auditing is a function of financial
accounting and external assurance, not managerial accounting.
2. The managerial function of planning primarily involves:
A. Coordinating day-to-day activities
B. Looking ahead and setting goals
C. Looking back to determine if goals were met
D. Preparing financial statements for external users
Correct Answer: B. Looking ahead and setting goals
Rationale: Planning is the managerial function that involves looking
ahead and setting goals for the organization.
3. Which managerial function involves coordinating the day-to-day
activities of a business?
A. Planning
,B. Controlling
C. Directing
D. Auditing
Correct Answer: C. Directing
Rationale: Directing involves coordinating the day-to-day activities to
ensure the organization runs smoothly.
4. The controlling function of managerial accounting involves:
A. Setting goals for the future
B. Coordinating daily activities
C. Looking back and determining whether goals have been met
D. Hiring new employees
Correct Answer: C. Looking back and determining whether goals have
been met
Rationale: Controlling is the process of looking back and evaluating
whether the organization's goals have been achieved.
5. Which of the following is a characteristic of managerial accounting?
A. It is prepared for external users
B. It must follow GAAP
C. It is prepared as needed, not on a fixed schedule
D. It is highly aggregated
Correct Answer: C. It is prepared as needed, not on a fixed schedule
Rationale: Managerial accounting reports are prepared as needed for
internal users, unlike financial accounting reports which follow a
monthly, quarterly, or annual schedule.
6. Financial accounting reports are primarily prepared for:
A. Internal users such as managers
B. External users such as investors and creditors
,C. Employees only
D. Government regulators only
Correct Answer: B. External users such as investors and creditors
Rationale: Financial accounting is aimed at external users, while
managerial accounting serves internal users.
7. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Advertising expense
Correct Answer: D. Advertising expense
Rationale: Period costs are not associated with the production of a
product and are expensed in the period incurred. Advertising is a period
cost.
8. Product costs consist of which three elements?
A. Direct materials, direct labor, and manufacturing overhead
B. Direct materials, indirect labor, and selling expenses
C. Direct labor, administrative expenses, and manufacturing overhead
D. Raw materials, work in process, and finished goods
Correct Answer: A. Direct materials, direct labor, and manufacturing
overhead
Rationale: Product costs include direct materials, direct labor, and
manufacturing overhead—the costs incurred to manufacture a product.
9. Which of the following would be classified as manufacturing
overhead?
A. Wages of assembly line workers
B. Depreciation on factory equipment
, C. Salary of the CEO
D. Advertising costs
Correct Answer: B. Depreciation on factory equipment
Rationale: Manufacturing overhead includes indirect materials, indirect
labor, and other manufacturing costs such as depreciation on factory
equipment.
10. The equation for Cost of Goods Sold is:
A. Beginning Finished Goods + Cost of Goods Manufactured − Ending
Finished Goods
B. Beginning Raw Materials + Purchases − Ending Raw Materials
C. Beginning WIP + Total Manufacturing Costs − Ending WIP
D. Sales − Cost of Goods Sold
Correct Answer: A. Beginning Finished Goods + Cost of Goods
Manufactured − Ending Finished Goods
Rationale: Cost of Goods Sold = Beginning Finished Goods Inventory +
Cost of Goods Manufactured − Ending Finished Goods Inventory.
11. The equation for Cost of Goods Manufactured is:
A. Beginning WIP + Total Manufacturing Costs − Ending WIP
B. Beginning Finished Goods + Cost of Goods Manufactured − Ending
Finished Goods
C. Direct Materials + Direct Labor + Manufacturing Overhead
D. Sales − Variable Costs
Correct Answer: A. Beginning WIP + Total Manufacturing Costs −
Ending WIP
Rationale: Cost of Goods Manufactured = Beginning Work in Process +
Total Manufacturing Costs − Ending Work in Process.
