Principles of Financial and Managerial Accounting Exam (D196)
Access The Exact Questions for Principles of Financial and Managerial Accounting Exam (D196)
💯 100% Pass Rate guaranteed
🗓️ Unlock for 1 Month
Rated 4.8/5 from over 1000+ reviews
- Unlimited Exact Practice Test Questions
- Trusted By 200 Million Students and Professors
What’s Included:
- Unlock Actual Exam Questions and Answers for Principles of Financial and Managerial Accounting Exam (D196) on monthly basis
- Well-structured questions covering all topics, accompanied by organized images.
- Learn from mistakes with detailed answer explanations.
- Easy To understand explanations for all students.
Pass all you wgu subjects with confidence .Instant Access for metatile to Curated Practice Exams
Free Principles of Financial and Managerial Accounting Exam (D196) Questions
A firm must pay $700 in rent regardless of the amount they produce. This type of cost is known as:
-
variable cost.
-
diminishing cost.
-
implicit cost.
-
fixed cost.
Explanation
Correct Answer:
fixed cost
Explanation:
A fixed cost is an expense that does not change with the level of production or sales volume. Whether the firm produces nothing or thousands of units, the rent remains constant at $700. Fixed costs are an essential part of a firm’s overhead and are incurred regardless of operational output, making rent a clear example of a fixed cost.
Why Other Options Are Wrong:
variable cost
Variable costs change with production volume, such as materials or direct labor. Rent remains constant regardless of output, so it does not qualify as a variable cost.
diminishing cost
This term is vague and not standard in cost accounting. While some costs may appear to decrease per unit with higher volume, “diminishing cost” is not the correct classification for fixed rent.
implicit cost
Implicit costs represent the opportunity cost of using resources owned by the company, such as the owner’s time or capital. Rent, being a direct monetary payment, is an explicit and fixed cost—not an implicit one.
What does work in process inventory consist of?
-
Purchased items not entered the production process
-
Raw materials entered the manufacturing process but not yet done
-
Finished products ready to be sold as completed items
-
None of the above
Explanation
Explanation:
Work in process inventory represents products that have started the manufacturing process but are not yet finished. These items include costs for raw materials used, labor applied, and overhead assigned, but they still require further processing before becoming finished goods. It essentially captures the value of partially completed products at a given point in time.
Correct Answer:
Raw materials entered the manufacturing process but not yet done
Why Other Options Are Wrong:
Purchased items not entered the production process
This describes raw materials inventory, not work in process. These items have not yet been acted upon.
Finished products ready to be sold as completed items
This refers to finished goods inventory, which includes only items that are complete and ready for sale.
None of the above
This is incorrect because one of the listed options—raw materials entered but not yet finished—accurately defines work in process.
Which of the following is typically an example of an indirect cost?
-
shipping fee for goods sold
-
manufacturing plant electricity
-
wages paid to factory worker
-
wood used for furniture
Explanation
Correct Answer:
manufacturing plant electricity
Explanation:
An indirect cost is a cost that cannot be directly traced to a specific product, job, or cost object but supports overall production. Electricity in a manufacturing plant powers multiple machines and processes, making it impossible to assign a precise portion to each unit of product. As a result, it is categorized as an indirect manufacturing overhead cost.
Why Other Options Are Wrong:
shipping fee for goods sold – This is a direct selling expense since it is traceable to specific products delivered to customers.
wages paid to factory worker – Direct labor cost, as it is easily traceable to production of a specific product.
wood used for furniture – Direct material cost because it can be specifically attributed to the product being manufactured.
To calculate a contribution margin per unit, assume the following: variable cost per unit $60; total fixed cost $2,000; unit price for sales $100 and total sales $8,000. The contribution margin per unit amounts to:
-
$20
-
$40
-
$60
-
$80
-
None of the above
Explanation
Explanation:
Contribution margin per unit is calculated as:
Selling Price per Unit – Variable Cost per Unit
Here, the selling price per unit is $100 and variable cost per unit is $60. So, contribution margin per unit = $100 – $60 = $40.
Fixed cost and total sales are irrelevant for this specific calculation.
Correct Answer:
$40
Why Other Options Are Wrong:
$20
This figure might be confused with profit per unit or an unrelated value. It does not reflect the correct difference between selling price and variable cost.
$60
This is the variable cost per unit—not the contribution margin. It reflects the cost, not the profit margin from each sale.
$80
This would suggest the variable cost is $20, which is not the case here. The numbers provided show a $40 margin, not $80.
None of the above
This is incorrect because the correct contribution margin is included among the options: $40.
Which of the following would be INCREASED with a debit?
-
contributed capital
-
retained earnings
-
revenues
-
expenses
Explanation
Explanation:
In double-entry accounting, debits and credits do not universally mean increase or decrease but instead depend on the type of account. Assets and expenses increase with debits, while liabilities, revenues, and equity increase with credits. Contributed capital, retained earnings, and revenues are all equity-related accounts and therefore increase with credits. Expenses, on the other hand, represent outflows that reduce equity, and they are increased through debits. This makes expenses the correct answer.
Correct Answer:
expenses
Why Other Options Are Wrong:
contributed capital
This is part of the equity section of the balance sheet and increases with credits, not debits. A debit to contributed capital would reduce equity, which is the opposite of what the question is asking.
retained earnings
Retained earnings is also an equity account and grows with credits when the company earns profit. Debiting retained earnings decreases the account, usually when dividends are declared or losses occur. Therefore, it is not increased with a debit.
revenues
Revenues increase with credits, as they represent inflows that expand equity. Debiting revenues reduces them, such as when adjusting for returns or allowances. Thus, they are not increased with a debit.
Which is an example of an indirect cost if the cost object is one unit?
-
Materials used to manufacture one unit
-
Utilities cost
-
Labor to assemble unit
-
Labor to fabricate one unit
Explanation
Correct Answer:
Utilities cost
Explanation:
Indirect costs are not easily traceable to a single cost object, like one unit of product. Utilities, such as electricity or water used in a manufacturing facility, are shared across all units produced and cannot be directly allocated to a specific unit. Therefore, when the cost object is one unit, utilities are considered an indirect cost because they support the production process in general rather than a particular output.
Why Other Options Are Wrong:
Materials used to manufacture one unit
These are direct materials, clearly traceable to the finished product. Since the cost of these materials can be directly linked to one unit, they are not considered indirect costs.
Labor to assemble unit
This is a direct labor cost. It involves workers whose efforts directly result in the creation of a product. If the labor is tied to a single unit’s production, it's not an indirect cost.
Labor to fabricate one unit
Like assembly labor, fabrication labor is directly involved in producing a single unit and can be directly traced to it. Therefore, it is a direct cost, not an indirect one.
Stockholders are to financial accounting as _______ are to managerial accounting.?
-
auditors
-
computers
-
creditors
-
internal users
Explanation
Explanation:
Financial accounting is primarily designed to provide information to external stakeholders, such as stockholders, creditors, and regulators. In contrast, managerial accounting focuses on providing detailed information for decision-making within the organization. Therefore, the equivalent of stockholders in managerial accounting is internal users, such as managers and employees who rely on the reports to plan, control, and make decisions.
Correct Answer:
internal users
Why Other Options Are Wrong:
auditors
Auditors are external parties who review financial statements for accuracy and compliance. They are not the primary users of managerial accounting, which is intended for internal purposes.
computers
Computers may be tools used in both financial and managerial accounting, but they are not users of information. This option does not align with the idea of who actually relies on the reports.
creditors
Creditors are external stakeholders who use financial accounting reports to assess a company’s ability to repay obligations. They are not internal users of managerial accounting information.
The activity in a processing department is performed ______.
-
specifically, to each unit
-
uniformly on all units
-
in small batches
-
to differentiate units of product
Explanation
Explanation:
In process costing, activities in a processing department are applied uniformly to all units passing through that department. This is because products are generally mass-produced, and each unit receives the same type and amount of processing. The system is designed for industries like chemicals, food, or textiles, where identical units are produced in continuous flows.
Correct Answer:
uniformly on all units
Why Other Options Are Wrong:
specifically, to each unit
This applies more to job-order costing, where costs are assigned to individual, unique jobs or products. In process costing, units are not worked on individually but as part of a continuous process.
in small batches
Batch processing relates to some production systems but is not the defining feature of process costing. Costs are accumulated for departments, not small batches.
to differentiate units of product
Process costing assumes units are homogeneous, not differentiated. The goal is uniformity, not uniqueness.
A company reports total sales of $500,000 and variable expenses amounting to $300,000. What is the contribution margin for this company?
-
$200,000
-
$300,000
-
$400,000
-
$500,000
Explanation
Explanation:
Contribution margin is calculated by subtracting variable expenses from total sales revenue. It represents the amount available to cover fixed expenses and contribute to profit. In this case, the company has $500,000 in total sales and $300,000 in variable expenses. Subtracting $300,000 from $500,000 results in a contribution margin of $200,000, which shows how much money is left over after covering variable costs.
Correct Answer:
$200,000
Why Other Options Are Wrong:
$300,000
This is the amount of variable expenses, not the contribution margin. It represents costs that vary with production, not the profit available to cover fixed costs and generate income.
$400,000
This would only make sense if variable expenses were $100,000 instead of $300,000. It overstates the contribution margin and miscalculates the subtraction.
$500,000
This reflects total sales, not contribution margin. It fails to consider that variable expenses must first be deducted to determine the true margin.
A firm decides to produce 100,000 baseballs. Which of the following would be its opportunity cost?
-
The wages paid to workers
-
The 50,000 footballs the firm could have produced otherwise
-
Price paid to power their factory
-
Price of cowhide to produce 100,000 baseballs
Explanation
Explanation:
Opportunity cost represents the value of the next best alternative forgone when a decision is made. In this scenario, by choosing to produce 100,000 baseballs, the firm gives up the chance to produce 50,000 footballs. The value of those forgone footballs reflects what the company sacrifices to pursue baseball production. Opportunity cost does not consider direct expenses like wages, utilities, or materials but instead focuses on potential lost benefits from alternative choices.
Correct Answer:
The 50,000 footballs the firm could have produced otherwise
Why Other Options Are Wrong:
The wages paid to workers: Wages are a direct production expense, not an alternative opportunity. These costs would be incurred in either scenario, so they do not represent a forgone benefit. While important for total cost analysis, they are not considered opportunity costs.
Price paid to power their factory: Utility expenses are part of the production costs for whichever product is chosen. Since they are incurred regardless of the decision, they do not represent a trade-off or lost benefit. Opportunity costs instead measure potential value lost from not selecting the alternative.
Price of cowhide to produce 100,000 baseballs: The cost of cowhide is a direct material expense specifically tied to producing baseballs. It is not related to what the firm sacrifices by choosing one option over another. Opportunity cost focuses on forgone outputs, not the cost of inputs.
How to Order
Select Your Exam
Click on your desired exam to open its dedicated page with resources like practice questions, flashcards, and study guides.Choose what to focus on, Your selected exam is saved for quick access Once you log in.
Subscribe
Hit the Subscribe button on the platform. With your subscription, you will enjoy unlimited access to all practice questions and resources for a full 1-month period. After the month has elapsed, you can choose to resubscribe to continue benefiting from our comprehensive exam preparation tools and resources.
Pay and unlock the practice Questions
Once your payment is processed, you’ll immediately unlock access to all practice questions tailored to your selected exam for 1 month .
Frequently Asked Question
Absolutely! Ulosca.com is fully optimized for both mobile and desktop devices for convenient learning on the go.
Yes, we provide free sample questions and resources. Premium subscriptions offer access to more advanced materials and features.
You can reach us through the "Contact Us" form on the website
Ulosca.com offers both timed and untimed practice exams to suit different learning styles and preparation needs.
Click on the "Sign Up" button on the homepage, fill in your details, and confirm your email to get started.