ACCT 526 Midterm (2026|2027) (Managerial Accounting
Fundamentals and Decision-Making Tools)
Exam Content
Ethics & Governance
Managerial Accounting Information
Cost Analysis & Break-Even
Budgeting & Variance
1. The IMA’s ethical guidelines emphasize:
A. Profit maximization
• B. Integrity, objectivity, confidentiality, and competence
C. ROI only
D. Arbitrary allocations
Rationale: These four principles form the foundation of managerial ethics.
2. When faced with an ethical conflict, the first step is:
A. Ignore the issue
• B. Discuss with immediate supervisor (unless involved)
C. Report to external auditors immediately
D. Resign from the company
Rationale: IMA guidelines recommend internal resolution first.
3. Corporate governance ensures:
A. Profit maximization only
• B. Accountability, fairness, and transparency
C. ROI maximization
D. Residual income only
Rationale: Governance protects stakeholders and builds trust.
4. Managerial accounting differs from financial accounting because it:
A. Is GAAP-based
• B. Focuses on internal decision-making
C. Is mandatory for external reporting
D. Reports only historical data
Rationale: Managerial accounting supports managers internally.
5. Segment reporting may include:
A. Consolidated financials only
• B. Store-level monthly income statements
C. Tax compliance reports
D. Arbitrary allocations
Rationale: Segment reporting provides detailed performance data.
6. Managerial accounting information is primarily:
, A. For shareholders
• B. For internal managers
C. For regulators
D. For creditors
Rationale: It supports planning and control.
7. Break-even point occurs when:
A. Contribution margin = variable costs
• B. Total revenue = total costs
C. ROI = residual income
D. Net income = assets
Rationale: Break-even means no profit or loss.
8. Contribution margin is:
A. Sales – fixed costs
• B. Sales – variable costs
C. Sales – sunk costs
D. Sales – ROI
Rationale: It shows revenue available to cover fixed costs.
9. CVP analysis assumes:
A. Variable costs change per unit
• B. Costs and revenues are linear within relevant range
C. Fixed costs vary with sales
D. ROI is constant
Rationale: CVP relies on linear cost/revenue behavior.
10. Margin of safety is:
A. Contribution margin ÷ sales
• B. Actual sales – break-even sales
C. ROI ÷ assets
D. Residual income ÷ sales
Rationale: It measures sales cushion before losses.
11. A master budget includes:
A. Only operating budgets
• B. Operating and financial budgets
C. Variance analysis only
D. ROI calculations
Rationale: Master budget integrates all components.
12. Flexible budgets are useful because they:
A. Eliminate variances
• B. Adjust for different activity levels
C. Replace master budgets
Fundamentals and Decision-Making Tools)
Exam Content
Ethics & Governance
Managerial Accounting Information
Cost Analysis & Break-Even
Budgeting & Variance
1. The IMA’s ethical guidelines emphasize:
A. Profit maximization
• B. Integrity, objectivity, confidentiality, and competence
C. ROI only
D. Arbitrary allocations
Rationale: These four principles form the foundation of managerial ethics.
2. When faced with an ethical conflict, the first step is:
A. Ignore the issue
• B. Discuss with immediate supervisor (unless involved)
C. Report to external auditors immediately
D. Resign from the company
Rationale: IMA guidelines recommend internal resolution first.
3. Corporate governance ensures:
A. Profit maximization only
• B. Accountability, fairness, and transparency
C. ROI maximization
D. Residual income only
Rationale: Governance protects stakeholders and builds trust.
4. Managerial accounting differs from financial accounting because it:
A. Is GAAP-based
• B. Focuses on internal decision-making
C. Is mandatory for external reporting
D. Reports only historical data
Rationale: Managerial accounting supports managers internally.
5. Segment reporting may include:
A. Consolidated financials only
• B. Store-level monthly income statements
C. Tax compliance reports
D. Arbitrary allocations
Rationale: Segment reporting provides detailed performance data.
6. Managerial accounting information is primarily:
, A. For shareholders
• B. For internal managers
C. For regulators
D. For creditors
Rationale: It supports planning and control.
7. Break-even point occurs when:
A. Contribution margin = variable costs
• B. Total revenue = total costs
C. ROI = residual income
D. Net income = assets
Rationale: Break-even means no profit or loss.
8. Contribution margin is:
A. Sales – fixed costs
• B. Sales – variable costs
C. Sales – sunk costs
D. Sales – ROI
Rationale: It shows revenue available to cover fixed costs.
9. CVP analysis assumes:
A. Variable costs change per unit
• B. Costs and revenues are linear within relevant range
C. Fixed costs vary with sales
D. ROI is constant
Rationale: CVP relies on linear cost/revenue behavior.
10. Margin of safety is:
A. Contribution margin ÷ sales
• B. Actual sales – break-even sales
C. ROI ÷ assets
D. Residual income ÷ sales
Rationale: It measures sales cushion before losses.
11. A master budget includes:
A. Only operating budgets
• B. Operating and financial budgets
C. Variance analysis only
D. ROI calculations
Rationale: Master budget integrates all components.
12. Flexible budgets are useful because they:
A. Eliminate variances
• B. Adjust for different activity levels
C. Replace master budgets
