WGU D196 PRINCIPLES OF FINANCIAL AND MANAGERIAL ACCOUNTING COMPLETE TEST BANK: 300+ OA AND PREASSESSMENT PRACTICE QUESTIONS WITH VERIFIED SOLUTIONS | 2025/2026 ACTUAL EXAM | WESTERN GOVERNORS UNIVERSITY

1. Which budget should include all production costs other than those for direct materials and direct labor?

A.Sales budget

B.Direct materials budget

C.Manufacturing overhead budget

D. Production budget

c

2. Which account is a common asset account?

A.Accounts payables

B.Equity

C.Accounts receivable

D. Utilities Expense

c

3 .On which financial statement would you see the valuation of a company's asset accounts?

a.Statement of Cash Flows

b.Balance Sheet

c.Income Statement

d.Statement of Retained Earnings

B

4. What is the final step in the accounting cycle?

a.Summarize the effects of transactions

b.Analyze transactions

c.Prepare reports

d.Record the effects of transactions

c

5. Which of the following is not an example of a transaction?

a.Receive cash in payment of an invoice

b.Purchase an asset from a supplier

c.Sale on credit to a customer

d. Preparing financial statements

d

6. On which financial statement would you see cash flows from financing activities?

a.Statement of Cash Flows

b.Balance Sheet

c.Income Statement

d.Statement of Retained Earnings

d

7. Whose job is it to make sure that investors are provided with full and fair information about publicly traded companies?

FASB

AICPA

IASB

SEC

d

8. How does a classified balance sheet provide useful information to a decision maker?

a.It distinguishes between current and long-term assets

b.It provides data that are not publicly disclosed

c.It distinguishes liabilities from expenses

D. It provides data for a period of time instead of as a point in time

a

9. In some companies, the performance measures for profit center managers are heavily influenced by cost allocations downward from organizational units (such as company headquarters). Why is this a mistake?

a.Controllable costs should not be included in the performance evaluation measure of a profit center manager

b.Revenues should not be included in the performance evaluation measure of a profit center manager

c.Uncontrollable costs should not be included in the performance evaluation measure of a profit center manager

d. Direct costs should not be included in the performance evaluation measure of a profit center manager

c

10. Which is an example of a product cost?

a.Non-manufacturing personnel costs

b.Rent Expense

c.Office Supplies

d. Raw materials to make a product

d

11. Which label is given to the cost of wages for factory supervisors?

a. Direct labor

b.Direct materials

c. Manufacturing overhead

d. Administrative expenses

c

12. A company reports the following data: Price per unit = $20 Variable costs per unit = $12 Fixed costs = $12,000 Given these data, what is the variable cost ratio?

a. 40%

b. 25%

c. 16%

d. 60%

d

13. If overhead is underapplied, which statement is true?

a.Actual costs exceed applied costs

b.Applied costs exceed actual costs

c.Costs will not be affected

d. Budgeted and applied costs will be equal

a

14. Which of the following is not an example of a cost driver?

a.Miles driven

b.Selling costs

c.Machine hours

d. Number of customers

b

15. Which item is a period cost?

Manufacturing supplies

Overhead directly tied to the production facility

Raw materials

Marketing expense

d

16. Which overhead allocation method should be used for a trash bag manufacturer?

a. Product-line costing

b. Process costing

c. ABC costing

d . Job order costing

b

17. For relevant range, which costs are approximately linear within a certain range of production?

a. Fixed costs

b. Variable costs

c. Stepped costs

d. Mixed costs

b

18. Which of the following focuses on how a company's activity levels impact profits?

Job order costing

Cost-Volume-Profit Analysis

Overhead cost allocation

Process costing

b

19. Which overhead allocation method should be used for a automobile repair shop?

a. Product-line costing

b. Process costing

c. ABC costing

d. Job order costing

d

20. What is an example of indirect labor?

a. Factory supervisors wages

b. Security guard wages

c. Maintenance staff wages

d. All of the above are examples of indirect labor

d

21. Which of the following is an example of an indirect material?

a.Timber used to construct a house

b. The grease used on machines that manufacture products

c. The fabric used to assemble clothing

d. The circuit board included in a radio

b

22. Which of the following is not an operating expense?

a.Advertising and marketing

b.Office supplies

c.Utilities

d. Income taxes

d

23. A company reports the following data:

Total sales revenue = $275,000

Number of units sold = 25,000 units

Variable costs = $100,000

If the company is operating at its break-even point, what is the company's total contribution margin?

a.$250,000

b.$175,000

c.$150,000

d. $125,000

b

24. How are period costs reported on an income statement?

a. As revenue

b. As an expense

c. As cost of goods sold

d. As an asset

b

25. Which item is an example of a controllable cost?

a. Advertising costs

b. Rent expense

c. Depreciation

d. Customer tastes and economic conditions

a

26. A company purchases equipment with a note payable. How does this transaction affect the paying company's accounting equation? a.Asset increases; Liability increases

b.Asset increases; Asset decreases

c. Asset increases; Expense increases

d .Asset increases; Equity decreases

a

27. What is the impact of paying employee wages on the accounting equation?

a.Increase owner's equity

b.Increase expense

c. Decrease expense

d .Increase asset

b

28. Which account is summarized on the balance sheet?

a.Expense account

b. Owner's equity

c. Revenue account

d. Cost of good sold

b

29. A retail company purchased inventory costing $100,000. By the end of the year, inventory costing $75,000 had been sold. How is the cost of inventory reported in the financial statements?

a.$75,000 COGS on balance sheet

b.$75,000 inventory on balance sheet

c.$75,000 COGS on income statement

d. $75,000 inventory on income statement

c

30. Which of the following is an example of a merchandising company?

a.Furniture maker

b.Locksmith

c.Landscaper

d. Clothing store

d

31. Actual manufacturing overhead includes which of the following?

a.Direct labor and direct materials expenses

b.Manufacturing costs other than direct labor and direct materials

c. Manufacturing costs including direct labor and direct materials

d .Non-manufacturing costs other than direct labor and direct materials

b

32. Activity based costing could be used by which of the following companies?

a.Large commercial and industrial construction

b.Healthcare organization

c.Car manufacturing company

d. All of the above could use activity based costing

d

33. How are the wages of a production supervisors classified in a manufacturing company?

a.Direct labor expense

b. Manufacturing overhead

c. Selling expense

d .Direct materials expense

b

34. Which of the following is not an example of a cost driver?

a. Administrative expenses

b. Direct labor hours

c. Machine hours

d .Number of inspections

a

35. What is not an example of direct materials?

a. Cost of aluminum in making an airplane

b. Cost of saws and hammers in constructing a house

c .Cost of fabric in making clothing

d. Cost of wood in making furniture

b

36. Which describes overapplied overhead?

Less has been spent than anticipated for the level of achieved production

b. More has been spent than anticipated for the level of achieved production

c. More has been spent than anticipated for direct labor and materials

d None of the above

a

37. Which statement is true with respect to activity-based costing (ABC) systems?

a. An ABC system helps to provide more accurate product costing and better decision making

b. Implementing an ABC system requires very little analysis of the factors that create overhead costs

c. Implementing an ABC system requires only a careful calculation of total direct labor hours

d. An ABC system assumes that all products, projects, and processes consume the overhead infrastructure services in direct proportion to a single measure of activity.

a

38. What is the first budget that is prepared in a manufacturing business?

a .Direct materials

b. Production

c. Sales

d .Direct labor

c

39. What does a manager have control over in an investment center? a. Costs , Revenue , and Assets

b. Investments

c .Costs and .Revenue

d. Assets

a

40. If budgeted costs are higher than actual costs, which statement is true?

a. The cost variance is favorable

b .Budgeted cost are estimated too low

c. Actual costs are too high

d. The cost variance is unfavorable

a

41. A company repays $80,000 borrowed from a bank. How does this transaction affect the accounting equation of the borrowing company?

a. Assets decrease by $80,000; owners' equity increases by $80,000 b. Assets decrease by $80,000; revenues decrease by$80,000

c. Assets decrease by $80,000; liabilities decrease by $80,000

d. Assets decrease by $80,000; liabilities increase by $80,000

c

42. For purposes of cash flow classification in the statement of cash flows, which item is an investing activity?

a. Repaying loans

b. Borrowing money

c. Distribution to owners

d. Purchasing land

d

43. Which of the following is used by creditors, investors and other external users?

a. Balance Sheet

b. Statement of Cash Flows

c. Corporate tax returns

d. All of the above

d

44. Which type of account is common stock?

a. Asset

b. Liability

c. Equity

d. Revenue

c

45. Which type of account is inventory?

a. Expense

b. Equity

c. Asset

d. Liability

c

46. Which budget would include salaries of sales managers and a company president?

a. Manufacturing overhead budget

b. Selling and administrative expense budget

c. Direct labor budget

d. Sales

b

47. Which label is given to the cost of wages for an assembly line worker?

a. Manufacturing overhead

b. Direct labor

c. Direct materials

d. Selling and administrative

b

48. Which statement is true about sunk cost?

a. Sunk cost are future unavoidable costs

b. Sunk costs are recoverable

c. Sunk costs are future costs that cannot be changed

d. Sunk costs are past costs that cannot be changed

d

49. Liabilities are summarized on which financial statement?

a. Balance Sheet

b. Income Statement

c. Statement of Retained Earnings

d. Statement of Cash Flows

a

50. Which of the following statements is true about financial information?

a. Financial information is for internal users only

b. Financial information should be relevant and reliable

c. Financial information is for external users only

d.Financial information is only used by accountants

a/b

51. Managers should not be evaluated based on which of the following?

a. Noncontrollable costs

b. Controllable costs

c. Noncontrollable and controllable costs

d. A profit center in which the manager does not have control over both costs and revenues.

a

52. Job costing and process costing have similarities. Which statement is true about both?

a. Both cost systems have the same goal: to determine the cost of products

b. Both cost systems are appropriate for companies that cannot specifically

c. identify each job or product. Both cost systems should be used when manufacturing unique products

d. Both cost systems should be used when cost cannot be differentiated from one product to another

a

53. What is an example of a financial cost that would result from poor direct materials budgeting and planning?

a. Increased hiring training, and overtime costs

b. Increased depreciation costs for facilities

c. Excessive inventory storage costs

d. Delayed cash collections from credit customers

c

54. A company decides to purchase a piece of equipment with cash. Which accounts are affected by this transaction?

a. Increase and decrease to asset

b. Increase and decrease to owner's equity

c. Increase in asset and decrease in revenue

d. Increase in asset and increase in liability

a

55. Accurate cost data is needed for which of the following?

a. Valuing assets

b. Setting sales prices

c. Making good business decisions

d. All of the above

d

56. Type of accounts payable and notes payable are

a .Liability

b. asset .

c. equity

d. none of the answers

a

57. Purposes of accounting cycle?

a. potential gain from other alternatives when one alternative is chosen.

b. To turn information in to financial

c. turn off employees

d. All of the answers

b

The amount of liabilities and equity must equal

a. Asset

b. balance sheet

c. retained of cash flows

d. none of the answers

a

salary is

a. liability

b. expense

c. a and b

d. none of the answers

b

Example of Operating activity in the company is :

a. selling land

b. taxes activities

c .paying employees

d. all of the answers

c

Manufacture business sequences of budgets are

a. production, sales, and direct material

b.Sales, Production, direct material

c. direct material , production , and sales

d. none of the answers

b

Example of direct material

a . wood use in the construction of piece of wooden furniture.

b. office supplies

c. Cost of saws and hammers in constructing a house

d. all of them

a

Example of manufacturing Overhead:

a.. Cost of electricity

b. raw material

c. a and b

d. none of them

a

Flow of costs manufacturing operation:

a. work in process ,cost of goods sold, and raw material

b. Raw materials, work in process, finished goods, cost of goods sold.

c. Raw materials, finished goods work in process, and cost of goods sold.

d. cost of goods sold,work in process , and raw material

b

what is the CVP EQUATION IS?

a .raw materials - variable cost - fixed costs

b. sales- variable cost - work in process = Profit

c. cost of goods sold +work in process = and raw material

d. sales- variable cost - fixed costs = Profit

d

Wages of office staff in a company headquarters building classified is

a. raw material

b. adminitrative expense

c.

b

Accounting is formally defined as a system for providing

a. quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.

b. letters provided

c. a and b

d. None of the answers

a

What is activity under ABC?

a. product line , batch unit , non product line

b. unit level , non unit level , and batch

c. Unit level, Batch unit, and product line.

d. none of the anwers

c

You will use a search tool on the SEC's website called

a. IRS website

b.EDGAR

c. CIK

D. none of the answers

b

Which business document involves the process of tracking the actual performance of a company?

a. balance sheet

b.sales invoice and purchase order.

c. money order

d. none of the anwers

b

Your company purchases new equipment for cash. Which accounts are increased and decreased because of this transaction?

a. Cash increases and Equipment increases

b. Cash decreases and equipment decreases

c.Equipment increases and owners equity decreases

d .Equipment increases and cash decreases.

d

What factors should the production supervisor consider in assembling her production?

a.Projected sales, desired ending inventory, and amount of beginning inventory.

b.desired ending inventory, sales, and beginning inventory

c. beginning inventory, sales, and ending inventory

d. none of the answers

a

BEP (units) formula

a. sales- cm

b.fixed costs / CM per unit

c.fixed cost / variance cost

d. fixed costs - cm per unit

b

Earnings (Loss) Per Share (EPS)

a.net income /outstanding number of shares of stock.

b. number of shares of stock - net income

c. both alternatives

d. none of the alternatives

a

What is the impact of expenses on the accounting equation?

a. Expenses decrease owners' equity.

b. revenue increases owner's equity

c. owners 's equity increase revenue

d. liability decrease owner's equity

a

For purposes of cash flow classification in the statement of cash flows, which item is an investing activity?

a. Repaying loans

b. Borrowing money

c. Distribution to owners

d. Purchasing land

d

Is true or false that :

FASB : accounting standards for publicity listed companies

GAAP : rules governing financial . Set by private, non-governate group Fasb and IASB

GASB : private non-governmental that seeks improve acct practices and procedures.

IASB : founded in 1973- international accounting standards.

true

Direct Labor Budget (memorize)

a. schedule of direct labor requirements for budget period.units needed to produce * hours of labor per unit / # of hours per week to work / 4 weeks in a month = how many employees needed

a.

Prints Plus reported the following data:

Sales price per unit $60

Variable cost per unit 30

Fixed costs $120,000

What is Prints Plus's contribution margin per unit?

a. $30

b. $50

c.$60

d.$ 4,000

a

Prints Plus reported the following data:

Sales price per unit $60

Variable cost per unit 30

Fixed costs $120,000

What is Prints Plus's contribution margin ratio?

a. .030

b . 0.50

c.0.80

d. 0.90

b

Prints Plus reported the following data:

Sales price per unit $60

Variable cost per unit 30

Fixed costs $120,000

What is Prints Plus's variable cost ratio?

a. .030

b . 0.50

c.0.80

d. 0.90

b

Prints Plus reported the following data:

Sales price per unit $60

Variable cost per unit 30

Fixed costs $120,000

What is Prints Plus's break-even point in units?

a. 5,000

b.8,000

c. 4,000

d.12.000

c

Prints Plus reported the following data:

Sales price per unit $60

Variable cost per unit 30

Fixed costs $120,000

What is Prints Plus's break-even in sales dollars?

a.240.00

b.245.00

c.500.00

d.600.00

a

Jana's Jeans reported the following data:

Total sales revenue $750,000

Total variable costs 500,000

Break-even in units 100,000

Calculate total fixed costs when Jana's Jeans sells 100,000 pairs of jeans.

a. 100.000

b. 200.00

c.230.00

d. 250.00

d

CM per unit formula is :

a.Sales-variable cost

b. CM Per UNIT /sales

c. Variable cost /Sales

d. Fixed cost / CM per unit

a

CM ratio formula is :

a.Sales-variable cost

b. CM Per UNIT /sales

c. Variable cost /Sales

d. Fixed cost / CM per unit

b

Variable cost ratio formula is

a.Sales-variable cost

b. CM Per UNIT /sales

c. Variable cost /Sales

d. Fixed cost / CM per unit

c

Break even in unit formula is:

a.Sales-variable cost

b. CM Per UNIT /sales

c. Variable cost /Sales

d. Fixed cost / CM per unit

d

Break even in sales dollars is:

a.Sales-variable cost

b. CM Per UNIT /sales

c. Variable cost /Sales

d. Fixed cost /CM ratio

d

Dividends is

a.. earnings distributed to stockholders

b. loans

c. mortgage

d. all of the answers

a

.............................is unique identifying number for SEC

a. Stock

b. Money order

c. CIK ( Central Index Key)

d. Social security

c

Annual SEC form is

a. 20k

b.10k

c. 40k

d.60k

b

Quarter sec form is

a. 20q

b.10 q

c. 40q

d.60q

b

What is book value?

a. a expensive book for the bookstore

b.The value of a company measured by the amount of owner's equity in the company

c. The value of a company measured by the amount of revenue in the company.

d. none of the answers

b

.............

is refers to the relationship between an operating statement (the income statement or the statement of cash flows) and comparative balance sheets, whereby an item on the operating statement helps explain the change in an item on the balance sheet from one period to the next.

A.book value

B. Articulation

C. Bookkeeping

D. None of the answers

b

Which statement about managerial accounting data is true?

Managerial accounting data are created based on competitive needs that are unique to the organization.

a.Managerial accounting can be a competitive tool.

Managerial accounting data are used by competitors to exploit weaknesses in a company.

b. Managerial accounting data are primarily used by creditors and investors.

c. Managerial accounting data are not made publicly available, so creditors and investors do not have access to them. Financial accounting data are publicly available.

d. Managerial accounting reports are based on generally accepted accounting principles.

a

Which characteristic is a unique feature of management accounting information?

a. Management accounting information is often made available for public consumption.

b. Management accounting information is composed of both financial and nonfinancial data.

c. Management accounting information is generally restricted to only financial data.

d. Management accounting information is primarily used to produce financial statements.

b

Which group represents the primary users of managerial accounting information?

a. Bankers

b. Public stockholders

c. customers

d. Managers

d

Which type of business purchases finished goods for resale?

a. Merchandising

b.Nonprofit

c. Manufacturing

d. Service

a

Which types of costs does a merchandiser have?

a. Both product and period costs

b. Merchandisers have both product and period costs

c. Product costs only

d. Neither product nor period costs /Period costs only

a