ACCOUNTING FINAL
EXAM QUESTIONS AND
ANSWERS UPDATED
2026
# Term Definition
1 Managerial Accounting
Accounting area focused on providing
information to assist business owner
and managers in making business
decisions
2 Ethics
standards of conduct for judging right
from wrong, honest from dishonest,
and fair from unfair
3 Sarbanes Oxley Act of 2002
focuses on three factors that affect the
accounting reporting environment –
opportunity, incentives, and character
4 direct cost
costs that can be traced to the object
5 indirect costs
costs that cannot be traced to the
object or that are not worth the
effort of tracing
6 variable costs
costs that change, in total, in direct
proportion to changes in activity levels
7 fixed costs
costs that stay the same, in total,
regardless of activity level
, 8 mixed costs
have both a fixed and variable
component
9 manufacturing costs
represent all of the costs associated
with producing or manufacturing a
physical
product
10 Manufacturing overhead
includes all of the manufacturing costs
other than direct materials and direct
labor incurred to produce a physical
product
# Term Definition
11 non–manufacturing
the costs associated with running the
business and selling the product as
opposed to manufacturing the product
12 product/inventoriable costs
costs that are assigned to the product
as it is being manufactured; they are
counted as inventory until the product
is actually sold
13 period costs
non manufacturing costs expensed in
the period incurred
14 relevant cost
has the potential to influence a decision
15 will not influence a decision irrelevant cost
16 sunk cost
costs that have already been
incurred; irrelevant for decision making
,17 prime costs
direct materials and direct labor
because at one time they were
considered "primary" costs
18 conversion costs
costs incurred to convert direct
materials into a finished product
19 process cost system
used by companies that make
standardized or homogenous products
or services
20 job order cost system
is used in companies that offer
customized or unique products and
services
21 job cost sheet
provides a detailed record of the costs
incurred to complete a specific job
# Term Definition
22 cost behavior
describes the way total cost behaves, or
changes, when some measure of
activity changes
23 relevant range
the range of activity over which we
expect our assumptions about cost
behavior to hold true
24 step costs
fixed over a range of activity and then
increase in a step–like fashion
25 scattergraph
shows total cost plotted on the vertical
axis and a measure of activity, or cost
driver, plotted on the horizontal axis
, 26 least squares regression method
a statistical technique for finding the
best fitting line based on historical data
27 cost–volume–profit (CVP) analysis
a decision–making tool that focuses on
the relationship among the volume and
mix of
units sold, prices, variable costs, fixed
costs, and profit.
28 unit contribution margin
tells us how much each unit sold
contributes toward fixed costs and
profit
29 Contribution Margin Ratio contribution margin/sales price
30 break even sales total fixed costs/contribution margin ratio (%)
31 target profit analysis
an extension of break–even analysis
that allows managers to determine the
number of units or total sales revenue
needed to
earn a target profit
32 margin of safety
the difference between actual or
budgeted sales and the break–even
point
# Term Definition
33 cost structure
refers to how a company uses variable
costs versus fixed costs to perform its
operation
34 degree of operating leverage
measures the extent to which fixed
costs are used to operate the business
35 managerial accounting
provides useful information for
management to maker decisions
EXAM QUESTIONS AND
ANSWERS UPDATED
2026
# Term Definition
1 Managerial Accounting
Accounting area focused on providing
information to assist business owner
and managers in making business
decisions
2 Ethics
standards of conduct for judging right
from wrong, honest from dishonest,
and fair from unfair
3 Sarbanes Oxley Act of 2002
focuses on three factors that affect the
accounting reporting environment –
opportunity, incentives, and character
4 direct cost
costs that can be traced to the object
5 indirect costs
costs that cannot be traced to the
object or that are not worth the
effort of tracing
6 variable costs
costs that change, in total, in direct
proportion to changes in activity levels
7 fixed costs
costs that stay the same, in total,
regardless of activity level
, 8 mixed costs
have both a fixed and variable
component
9 manufacturing costs
represent all of the costs associated
with producing or manufacturing a
physical
product
10 Manufacturing overhead
includes all of the manufacturing costs
other than direct materials and direct
labor incurred to produce a physical
product
# Term Definition
11 non–manufacturing
the costs associated with running the
business and selling the product as
opposed to manufacturing the product
12 product/inventoriable costs
costs that are assigned to the product
as it is being manufactured; they are
counted as inventory until the product
is actually sold
13 period costs
non manufacturing costs expensed in
the period incurred
14 relevant cost
has the potential to influence a decision
15 will not influence a decision irrelevant cost
16 sunk cost
costs that have already been
incurred; irrelevant for decision making
,17 prime costs
direct materials and direct labor
because at one time they were
considered "primary" costs
18 conversion costs
costs incurred to convert direct
materials into a finished product
19 process cost system
used by companies that make
standardized or homogenous products
or services
20 job order cost system
is used in companies that offer
customized or unique products and
services
21 job cost sheet
provides a detailed record of the costs
incurred to complete a specific job
# Term Definition
22 cost behavior
describes the way total cost behaves, or
changes, when some measure of
activity changes
23 relevant range
the range of activity over which we
expect our assumptions about cost
behavior to hold true
24 step costs
fixed over a range of activity and then
increase in a step–like fashion
25 scattergraph
shows total cost plotted on the vertical
axis and a measure of activity, or cost
driver, plotted on the horizontal axis
, 26 least squares regression method
a statistical technique for finding the
best fitting line based on historical data
27 cost–volume–profit (CVP) analysis
a decision–making tool that focuses on
the relationship among the volume and
mix of
units sold, prices, variable costs, fixed
costs, and profit.
28 unit contribution margin
tells us how much each unit sold
contributes toward fixed costs and
profit
29 Contribution Margin Ratio contribution margin/sales price
30 break even sales total fixed costs/contribution margin ratio (%)
31 target profit analysis
an extension of break–even analysis
that allows managers to determine the
number of units or total sales revenue
needed to
earn a target profit
32 margin of safety
the difference between actual or
budgeted sales and the break–even
point
# Term Definition
33 cost structure
refers to how a company uses variable
costs versus fixed costs to perform its
operation
34 degree of operating leverage
measures the extent to which fixed
costs are used to operate the business
35 managerial accounting
provides useful information for
management to maker decisions
