Deck 1: An Introduction to Managerial Accounting

Question 1

Companies using the just-in-time (JIT)approach hope to achieve:

A)reduction of costs associated with setup by producing in large batches.
B)reduced defect rates, resulting in less waste and greater customer satisfaction.
C)gains in production flexibility.
D)the hiring of specialized workers to increase production.

Answer 1

reduced defect rates, resulting in less waste and greater customer satisfaction.

Question 2

Corporate governance:

A)if effective, should enhance stakeholders' confidence that the organization is being managed in their best interests.
B)ensures the personal interests of top management are fully achieved.
C)is only important to non-publicly traded companies.
D)is a department within Canada Revenue with a mandate to ensure all corporations file annual tax returns.

Answer 2

if effective, should enhance stakeholders' confidence that the organization is being managed in their best interests.

Question 3

Financial accounting is primarily concerned with:

A)reporting exclusively to internal users.
B)reporting to external investors and creditors.
C)feasibility analysis.
D)long term decision making.

Answer 3

reporting to external investors and creditors.

Question 4

A manufacturing business has four different departments involved in producing each unit of its product. Maximum daily production capacities of each are: Department A - 100 units; Department B - 135 units; Department C - 95 units, and Department D - 110 units. A consultant has suggested some alternatives to increase output capacities as follows: Alternative A - increase Department B's output to 200 units per day. Alternative B - increase Department C's output to 120 units per day.
Alternative C - increase both Department A's and Department C's outputs to 110 units per day.
Alternative D - increase Department D's output to 300 units per day.
Assuming the costs of each alternative are similar and that only one can be chosen, which alternative would yield the best results for the business?

A)A
B)B
C)C
D)D

Question 5

Which of the following statements is not true?

A)Managerial accounting has a strong orientation towards the future.
B)Financial accounting, due to the requirements of regulation, is mandatory for businesses.
C)Financial accounting and managerial accounting are independent of each other.
D)Financial accounting presents a historical perspective of business activities.

Question 6

Which of the following is NOT a benefit of a just-in-time (JIT)system?

A)Areas previously used to store inventories are made available for other more productive uses.
B)Funds that have been tied up in inventories can be used elsewhere.
C)The time required to fill an order is reduced, resulting in quicker response to customers and consequentially greater potential sales.
D)Production workers are always busy.

Question 7

In order to eliminate waste, companies must adopt and implement one or more management practices that focus on different aspects of the lean business model such as:

A)maintaining inventories large enough to shield against all unanticipated disruptions.
B)Just-in-Time.
C)Activity-Based Costing.
D)multi-dimensional performance measurement systems.

Question 8

A manufacturing company has implemented just in time (JIT)into their process. JIT is part of:

A)total quality management
B)the theory of constraints.
C)process re-engineering.
D)the lean business model.

Question 9

The implementation phase includes all of these activities EXCEPT:

A)making Short-term and Long-term decisions.
B)solve on-the-spot problems
C)selecting a course of action.
D)assign tasks to employees

Question 10

What is the professional designation for the majority of professional accountants in Canada?

A)Chartered Management Accountants
B)Certified Public Accountants
C)Chartered Professional Accountants
D)Chartered Certified Accountants

Question 11

Benchmarking begins with:

A)determining the constraints within a given manufacturing process.
B)completely redesigning a business process to improve it.
C)studying organizations that are the best at a particular task.
D)a determination to only build products to meet specific customer orders.

Question 12

A manufacturing business has four different departments involved in producing each unit of its product. Maximum daily production capacities of each are: Department A - 100 units; Department B - 135 units; Department C - 95 units, and Department D - 110 units. Which department would be considered first in looking at ways to improve output capacity?

A)A
B)B
C)C
D)D

Question 13

A manufacturing business which operates five days per week has four different departments involved in producing each unit of its product. Maximum daily production capacities of each are: Department A - 100 units; Department B - 135 units; Department C - 95 units, and Department D - 110 units. Maximum weekly output of completed units is?

A)475
B)675
C)550
D)440

Question 14

Managerial accounting emphasizes the future in addition to historical reports, whereas financial accounting:

A)emphasizes a historical perspective.
B)emphasizes timeliness.
C)emphasizes a future perspective.
D)emphasizes individual organizational units.

Question 15

Activities that do not add value to a product or service that customers are willing to pay for are considered to be:

A)a constraint.
B)part of the overhead costs of a business.
C)normal business activities.
D)non-value-added activities.

Question 16

The management cycle proceeds in what order?

A)Planning, implementation, control
B)Control, implementation, planning
C)Implementation, planning, control
D)Implementation, control, planning

Question 17

Which of the following is NOT included in Codes of Ethics for professional accountants?

A)Professional competence
B)Confidentiality
C)Objectivity
D)Compensation

Question 18

The planning phase includes all of these activities EXCEPT:

A)selecting a course of action.
B)preparing budgets.
C)organizing and allocating resources.
D)identifying alternatives

Question 19

In using total quality management (TQM), the key focus is:

A)customer focus.
B)executive focus.
C)employee focus.
D)management focus.

Question 20

A cost report which focuses on a 10% reduction of costs in the upcoming period is an example of:

A)a company's objectives.
B)a company's vision
C)a company's mission
D)a company's strategy

Question 21

Reduction in tariffs, quotas, and other barriers to free trade; improvements in global transportation system; and increasing sophistication in international trade markets, are several factors that have led to an increase in worldwide competition in many industries.

Question 22

Managerial Accounting reports are prepared for external users while Financial
Accounting reports are prepared for internal users.

Question 23

One major implication of globalization for many organizations is that they must find new ways of conducting business.

Question 24

Managers everywhere carry out three major activities: planning, implementation, and control.

Question 25

Codes of ethics almost always provide employees with very specific and detailed instructions about what they can do and not do.

Question 26

Managerial accounting is regulated by:

A)IFRS.
B)GAAP.
C)ASPE.
D)no prescribed standards are followed.

Question 27

Effective corporate governance enhances stakeholders' confidence that an organization is being managed in their best interests rather than solely in the interests of top management and certain key individuals.

Question 28

Strategy pertains to the general direction in which an organization plans to move to achieve its goals and objectives.

Question 29

The control phase includes analysing actual results, comparing to the budget and identifying why differences occurred.

Question 30

Control involves the process of instituting procedures and then obtaining feedback to ensure that all parts of the organization are functioning effectively and moving toward overall company goals.

Question 31

Companies that use the just-in-time (JIT)approach purchase materials and produce units only as needed to meet actual customer demand.

Question 32

Among other things, companies using the just-in-time (JIT)approach, produce only in response to a customer order meaning that workers will not be idle whenever demand falls below the company's production capacity.

Question 33

Process reengineering diagrams a business process in detail, questions it, and then completely redesigns it to eliminate unnecessary steps, reduce opportunities for errors, and reduce costs.

Question 34

The Code of Ethics for Professional Accountants established by the International Federation of Accountants governs only the activities of accountants in public practice.

Question 35

Service firms do not sell any products but generate revenues by offering one or more types of services.

Question 36

Planning includes identifying alternatives and then selecting the one that does the best job of furthering the organization's objectives.

Question 37

The main idea underlying the lean business model is the elimination of waste.

Question 38

Process reengineering is usually strongly accepted by all employees within an organization.

Question 39

Merchandising and manufacturing firms generate revenue by selling products.

Question 40

Merchandising firms buy and sell finished goods whereas manufacturing firms make their products and then sell them to retailers.

Question 41

Merchandising firms largely refer to retail and wholesale outlets that buy goods from suppliers and resell them to customers.

Question 42

The theory of constraint (TOC)framework focuses on effectively managing constraints as the key to success.

Question 43

Explain the importance of ethical responsibility and explain the need for ethical codes of conduct.

Question 44

Planning involves selecting a course of action and specifying how the action will be implemented.

Question 45

Management accountants are not required to follow the generally accepted accounting principles that are used for external financial reporting when preparing reports for internal users.

Question 46

Describe factors that have led to an increase in worldwide competiveness as part of the globalization on business.

Question 47

List four major potential benefits of successfully implementing a just-in-time (JIT)system in a manufacturing company.

Question 48

Performance reports provide formal feedback to assist in determining whether operations and performance are on track.

Question 49

List four management practices (programs of continuous improvement)that may be used to achieve the objectives of the lean business model.

Question 50

Classify the following activities as planning (P), implementation (I), or control (C).
1. Estimating the amount of units that will be sold in the upcoming quarter.
2. Assigning production line workers to stations in the production plant.
3. Choosing between manual labor or purchasing a machine that will automate the production process.
4. Preparing a performance report which compares actual sales to budgeted sales for the last month.
5. Solving a bottleneck issue in the production plant by moving one production line worker from station 2 to station 5 on the production line.
6. Negotiating discounts with suppliers for materials needed in the production process.

Question 51

Many Canadian organizations have successfully implemented quality management principles and have received recognition from Excellence Canada (formerly the National Quality Institute)whose mission is to inspire excellence in Canada.

Question 52

List seven key differences between Managerial Accounting and Financial Accounting.

Question 53

The PDCA Cycle is a system of continuous improvement in which a planning committee selects from a list of alternatives for improvement and moves to fully implement immediately the chosen improvement.

Question 54

Explain the lean business model and its corresponding management practices and potential benefits.

Question 55

Management accounting information is primarily concerned with reports on the organization as a whole while financial accounting focuses more on the individual segments of the organization.

Question 56

The control phase includes preparing budgets for the upcoming period.

Question 57

Managers assign tasks to employees, arbitrate disputes, answer questions, solve on the spot problems, and make many decisions that affect customers and employees, which in turn, will likely influence future financial and nonfinancial performance.

Question 58

Determine if the following is an emphasis o accounting:
1. Estimating the amount of materials needed for next month's production
2. Information in reports focuses on objectivity and verifiability
3. Reports follow GAAP or IFRS
4. Precise information that is more readily available is included in reports.
5. The focus and reporting emphasizes segments of an organization
6. Organizations may follow their own guidelines for reports generated.

Question 59

Defects can be tolerated in a just-in-time (JIT)system.

Question 60

There are four major characteristics of total quality management.