IVY SOFTWARE MBA PREPWORKS MANAGERIAL
ACCOUNTING PRACTICE EXAM QUESTIONS AND
CORRECT ANSWERS
Why is the accounting cycle important? - CORRECT ANSWER It results in
the creation of the financial accounting statement
What is an example of recurring income? - CORRECT ANSWER Bank
Account Interest
What should be considered when deciding on a time period for a
budget? - CORRECT ANSWER Amount of financial activity
What should be included in a short-term budget? - CORRECT ANSWER
Monthly water bill expenses
Which item is a living expense? - CORRECT ANSWER Healthcare Premium
What is an example of a macro factor in planning a budget? - CORRECT
ANSWER Interest rates
Jim made a budget and tracked his expenses in the month of June.
Expected Actual
,Rent $1,200 $1,200
Gas and Travel $150 $220
Groceries $400 $310
Eating at restaurants $100 $180
Contributions to savings $40 $40
What can Jim do in July to make his expected budget align more closely
with his actual budget? - CORRECT ANSWER Eat at restaurants less, and
get more groceries to cook at home.
Marcus collected this data in his budget for the month of March:
Cash from handyman work $70
Paycheck income $1,500
Rent and bills -$800
Purchase of lawnmower -$150
Total income $1570
Total Expenses -$950
Which description matches Marcus' March budget? - CORRECT ANSWER
He ran a surplus of $620.
Why is financial accounting information valuable to consumers? -
CORRECT ANSWER External users can evaluate the financial health of a
business.
,How would a bank use financial accounting information? - CORRECT
ANSWER To approve lines of credit
What information does a balance sheet show? - CORRECT ANSWER
Financial position of a business at a specific date
Which group should make use of financial accounting information when
determining whether to open an additional store location? - CORRECT
ANSWER Owners and managers
Which organization is focused on developing generally accepted
accounting principles (GAAP) within the United States? - CORRECT
ANSWER Financial Accounting Standards Board (FASB)
How would an employee labor union use financial accounting
information? - CORRECT ANSWER To determine ability to pay an increase
in wages
Which statement is a financial accounting statement? - CORRECT ANSWER
Income statement
Which financial statement shows all of the expenses of doing business
over a specific period of time? - CORRECT ANSWER Income statement
What is a benefit of adopting a single set of international accounting
standards? - CORRECT ANSWER More uniform financial reporting among
international companies
, What is a drawback of the United States using International Financial
Reporting Standards (IFRS)? - CORRECT ANSWER It would cost US
companies time and money in the short term to adopt
Which step should an accountant perform next after analyzing source
documents to determine their effects on the basic accounting equation? -
CORRECT ANSWER Journalize the transactions
What should be done if the trial balance debit and credit columns are not
equal? - CORRECT ANSWER Analyze the trial balance and financial
records to find the error
How is a worksheet used? - CORRECT ANSWER To help prepare adjusting
entries and financial statements
Which accounts do closing entries move to retained earnings? - CORRECT
ANSWER Expense and revenue
Why does a stockholder's equity need to be completed prior to preparing
a balance sheet? - CORRECT ANSWER The amount of ending balance from
the statement of stockholder's equity must be presented on the balance
sheet.
An accountant for a firm is preparing a post-closing trial balance and has
the following figures that represent all debit and credit accounts:
ACCOUNTING PRACTICE EXAM QUESTIONS AND
CORRECT ANSWERS
Why is the accounting cycle important? - CORRECT ANSWER It results in
the creation of the financial accounting statement
What is an example of recurring income? - CORRECT ANSWER Bank
Account Interest
What should be considered when deciding on a time period for a
budget? - CORRECT ANSWER Amount of financial activity
What should be included in a short-term budget? - CORRECT ANSWER
Monthly water bill expenses
Which item is a living expense? - CORRECT ANSWER Healthcare Premium
What is an example of a macro factor in planning a budget? - CORRECT
ANSWER Interest rates
Jim made a budget and tracked his expenses in the month of June.
Expected Actual
,Rent $1,200 $1,200
Gas and Travel $150 $220
Groceries $400 $310
Eating at restaurants $100 $180
Contributions to savings $40 $40
What can Jim do in July to make his expected budget align more closely
with his actual budget? - CORRECT ANSWER Eat at restaurants less, and
get more groceries to cook at home.
Marcus collected this data in his budget for the month of March:
Cash from handyman work $70
Paycheck income $1,500
Rent and bills -$800
Purchase of lawnmower -$150
Total income $1570
Total Expenses -$950
Which description matches Marcus' March budget? - CORRECT ANSWER
He ran a surplus of $620.
Why is financial accounting information valuable to consumers? -
CORRECT ANSWER External users can evaluate the financial health of a
business.
,How would a bank use financial accounting information? - CORRECT
ANSWER To approve lines of credit
What information does a balance sheet show? - CORRECT ANSWER
Financial position of a business at a specific date
Which group should make use of financial accounting information when
determining whether to open an additional store location? - CORRECT
ANSWER Owners and managers
Which organization is focused on developing generally accepted
accounting principles (GAAP) within the United States? - CORRECT
ANSWER Financial Accounting Standards Board (FASB)
How would an employee labor union use financial accounting
information? - CORRECT ANSWER To determine ability to pay an increase
in wages
Which statement is a financial accounting statement? - CORRECT ANSWER
Income statement
Which financial statement shows all of the expenses of doing business
over a specific period of time? - CORRECT ANSWER Income statement
What is a benefit of adopting a single set of international accounting
standards? - CORRECT ANSWER More uniform financial reporting among
international companies
, What is a drawback of the United States using International Financial
Reporting Standards (IFRS)? - CORRECT ANSWER It would cost US
companies time and money in the short term to adopt
Which step should an accountant perform next after analyzing source
documents to determine their effects on the basic accounting equation? -
CORRECT ANSWER Journalize the transactions
What should be done if the trial balance debit and credit columns are not
equal? - CORRECT ANSWER Analyze the trial balance and financial
records to find the error
How is a worksheet used? - CORRECT ANSWER To help prepare adjusting
entries and financial statements
Which accounts do closing entries move to retained earnings? - CORRECT
ANSWER Expense and revenue
Why does a stockholder's equity need to be completed prior to preparing
a balance sheet? - CORRECT ANSWER The amount of ending balance from
the statement of stockholder's equity must be presented on the balance
sheet.
An accountant for a firm is preparing a post-closing trial balance and has
the following figures that represent all debit and credit accounts:
