Deck 1: Managerial Accounting

Question 1

The verification process for managerial accounting requires an independent audit by chartered accountants.

Answer 1

False

Question 2

The content of managerial accountants' reports is very detailed and includes non-financial data relevant to business decision-making.

Answer 2

True

Question 3

Managerial accounting applies only to manufacturing companies.

Answer 3

False

Question 4

Companies rely upon management accountants to collect non-financial information in order to assess how well the companies' resources are being used.

Question 5

Detailed reports scrutinized by managerial accountants include those focused on business sub-units.

Question 6

Organization charts are common in companies but not relevant to managerial accounting.

Question 7

Management accounting and financial accounting, while in the same field, are mutually exclusive disciplines.

Question 8

Management accounting is a discipline with a rather narrow scope for career advancement.

Question 9

Decision-making is an integral part of the planning, directing, and motivating functions, but not of the controlling function.

Question 10

Given the decision to employ straight-line amortization or a usage-based amortization method, the management accountant's need to report the most relevant economic information to external users will determine which method is used.

Question 11

Reports prepared in managerial accounting are general-purpose reports, whereas reports prepared in financial accounting are usually special-purpose reports.

Question 12

A primary outcome of managerial accounting is the determination of costs for manufactured items and services.

Question 13

The management function of planning is mainly concerned with setting goals and objectives for the entity.

Question 14

Management accounting is a sub-discipline within accounting focusing solely on the provision of economic and financial information for external users.

Question 15

Managerial accounting information generally pertains to an entity as a whole and is very detailed.

Question 16

An organization chart in a manufacturing company replaces the chart of accounts.

Question 17

Managerial accounting internal reports are prepared less frequently than are classified financial statements.

Question 18

Fundamentally, managerial accounting applies best to the manufacturing context.

Question 19

Directing is the process of determining whether planned goals are being met.

Question 20

Determining the unit cost of manufacturing a product is an output of managerial accounting.

Question 21

Lean manufacturing is in contrast to traditional mass-production operations.

Question 22

The triple bottom line focuses on assessing a company's performance in three areas: people, planet, and profit.

Question 23

The CEO is directly responsible for the company's complement of accounting and financial goals.

Question 24

The controller, treasurer, and internal audit staff are direct reports of the CFO.

Question 25

Activity-based costing is a method of allocating overhead costs to products.

Question 26

Lean manufacturing is being used less often by manufacturing firms.

Question 27

The Sarbanes-Oxley Act in the U.S.and similar legislation in Canada aims to guide ethical standards used in management accounting practices.

Question 28

The theory of constraints is used to measure performance.

Question 29

The term "line position" is interchangeable with "staff position."

Question 30

Generally Accepted Accounting Principles (GAAP)form the backbone of managerial accounting conventions, and local and/or regional standards and professional judgement allow for variations among practitioners.

Question 31

The focus of a TQM system is to reduce defects in finished products.

Question 32

Employees with staff positions serve other employees, while those with line positions work directly in line with the company's revenue generating goals.

Question 33

A value chain refers to all the activities associated with providing a product or service.

Question 34

The CFO has overall responsibility for managing the business.

Question 35

The value chain is affected by technology through business-to-business on the Internet.

Question 36

Whereas management accountants used to be responsible for strategic cost management, their modern-day responsibilities are more focused on collecting and reporting costs to management.

Question 37

Managerial accounting information

A)pertains to the entity as a whole and is highly aggregated.
B)must be prepared according to generally accepted accounting principles.
C)pertains to subunits of the entity and may be very detailed.
D)is prepared only once a year.

Question 38

The balanced scorecard approach attempts to maintain as little inventory on hand as possible.

Question 39

Managerial accounting

A)is concerned with costing products.
B)is governed by generally accepted accounting principles.
C)pertains to the entity as a whole and is highly aggregated.
D)places emphasis on special-purpose information.

Question 40

Managerial accounting information is generally prepared for

A)stockholders.
B)managers.
C)regulatory agencies.
D)investors.

Question 41

How often are internal managerial reports communicated?

A)as frequently as needed
B)annually
C)during every audit by the company's ca
D)monthly

Question 42

Which of the following statements about internal reports is true?

A)Most internal reports are summarized rather than detailed.
B)Internal reports focus on general purpose needs of users.
C)The content of internal reports extends beyond the double-entry accounting system.
D)Internal reports are often very general.

Question 43

Which one of the following describes internal reports?

A)They are often audited by CAs.
B)They must be prepared according to GAAP.
C)They are aggregated.
D)They are detailed.

Question 44

What broad functions do the management of an organization perform?

A)directing, manufacturing, and controlling
B)planning, directing, and controlling
C)planning, directing, and selling
D)planning, manufacturing and controlling

Question 45

Managerial accounting is also called

A)inside reporting.
B)cost accounting.
C)management accounting.
D)strategic management.

Question 46

Which term describes managerial accounting reports?

A)GAAP reports
B)special-purpose
C)general-purpose
D)regulatory reports

Question 47

Which of the following is NOT an internal user?

A)corporate officers
B)staff employees
C)stockholders
D)department manager

Question 48

How often should management receive or prepare reports on its internal process activities?

A)on a fixed time basis
B)as often as is necessary
C)never more than monthly
D)weekly

Question 49

A company must inform readers of its annual report of

A)all changes in financial accounting policies.
B)results of any overseas activities.
C)all changes in internal accounting information.
D)changes to management's bonus system.

Question 50

Which one of the following does the planning function involve?

A)analyzing financial statements
B)setting goals and objectives for an entity
C)hiring the right people for a particular job
D)coordinating the accounting information system

Question 51

Which of the following reports would management find useful in decision making?

A)monthly reports on activities to the Board of Directors
B)quarterly reporting to the Toronto Stock Exchange
C)specific purpose statements on services delivered
D)audited financial information in the annual report to shareholders

Question 52

Which of the following is NOT part of managerial accounting?

A)determining whether planned goals are being met
B)reporting financial information to the shareholders
C)calculating product costs
D)controlling costs

Question 53

In establishing a good internal reporting system, a company should

A)ensure that these reports agree to generally accepted accounting principles.
B)have the Board of Directors agree to the information provided.
C)establish clearly understood standards of performance.
D)All of the above are valid reasons.

Question 54

Which description identifies financial statements that are prepared for external users?

A)external reports
B)special-purpose
C)user-specific
D)general-purpose

Question 55

Which one of the following tasks would NOT be performed by a management accountant?

A)being concerned with the impact of cost and volume on profits
B)strategic cost management
C)assisting in budget planning
D)preparing reports primarily for external users

Question 56

How often should management receive or prepare reports on its external business process activities?

A)as they correspond to external financial reporting
B)never more than monthly
C)according to the company's business cycle
D)as often as is necessary

Question 57

The major reporting standard for management accounting is

A)the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management.
B)the Sarbanes-Oxley Act of 2002.
C)relevance to decisions.
D)generally accepted accounting principles.

Question 58

Which one of the following involves coordinating a company's activities to produce a smooth-running operation?

A)auditing
B)controlling
C)planning
D)directing

Question 59

Which of the following uses managerial accounting?

A)manufacturing and service entities, but not merchandising
B)profit-oriented businesses only
C)service, manufacturing, and merchandising entities
D)only manufacturing entities

Question 60

How could management information assist in motivating its employees?

A)keeping track of quality improvements
B)showing the company's percent of market share
C)showing statistics on plant safety
D)All areas would benefit from providing internal management information.

Question 61

Which function is achieved when a manager is determining whether planned goals are being met?

A)controlling
B)motivating
C)planning
D)directing

Question 62

Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion?

A)theory of constraints
B)just-in-time inventory
C)activity-based costing
D)total-quality management

Question 63

Which of the following is true?

A)Dissatisfied employees cite a decline in ethical behaviour is a result of a change in corporate culture.
B)Unethical corporate behaviour occurs only in the United States because of its capitalistic environment.
C)Unethical behaviour rarely causes a decline in investor confidence.
D)Unethical actions are reasonable in an environment wherein unreasonable budgets and targets have been set.

Question 64

One of the advantages of a just-in-time inventory system is that it reduces inventory quantities.Why is this considered to be a benefit?

A)Carrying inventory incurs storage costs, hence reducing inventory quantities reduces costs.
B)Carrying large inventory raises the risk that customers will want an item that you do not have.
C)Carrying large inventory reduces the risk that customers will want an item that you do not have.
D)none of the above

Question 65

Which of the following represents two management functions?

A)regulating and directing
B)controlling and directing
C)controlling and auditing
D)auditing and planning

Question 66

What activities and responsibilities are NOT associated with management's functions?

A)planning
B)accountability
C)controlling
D)directing

Question 67

Directing includes

A)providing a framework for management to have criteria to terminate employees when needed.
B)running a department under quality control standards universally accepted.
C)coordinating a company's diverse activities and human resources to produce a smooth-running operation.
D)developing a performance ranking system to give certain high performers good raises.

Question 68

Which one of the following is true concerning the managerial function of controlling?

A)It includes performance evaluation by management.
B)It is concerned mainly with operating a manufacturing segment.
C)It is performed only by the controller of a company.
D)It includes hiring and training employees.

Question 69

Which is the best definition of fraud?

A)unknowingly misrepresenting the facts
B)using business supplies for personal use
C)the intentional misstatement of facts
D)misappropriating funds for personal financial gain

Question 70

In Canada, which of the following professional accounting organizations play an important role in promoting high standards of ethics in the accounting profession?

A)Chartered Professional Accountants of Canada (CPA Canada)
B)The Financial Planning Standards Council (FPSC)
C)The Canadian Institute of Financial Planning (CIFP)
D)all of the above

Question 71

The Ontario Securities Commission introduced regulations governing the composition and duties of audit committees, as well as their members' behaviour.The new rules

A)are as robust as parallel rules required by the U.S.Sarbanes-Oxley Act.
B)were adopted by all provincial and territorial securities regulators, except for British Columbia's.
C)were introduced in conjunction with the Canadian Securities Administrators.
D)all of the above.

Question 72

Which of the following is true?

A)Managerial accountants are the employees who are principally responsible for ethical behaviour.
B)Investment losses have been precipitated by lax ethical standards.
C)Corporate fraud was found to have decreased between the years 1998 and 2003.
D)Expense account abuse has been cited as one of the rarest forms of unethical employee behaviour.

Question 73

Which management function is a manager performing when objectives are being established?

A)regulating
B)planning
C)motivating
D)directing

Question 74

The organization chart of a company shows

A)the interrelationships of activities within a company.
B)the delegation of authority within a company.
C)the delegation of responsibility within a company.
D)all of the above.

Question 75

The production manager at ABC Inc.is responsible for formulating the budget for his department.He will be evaluated on his ability to control costs.After considerable thought, he arrives at his best estimate of costs, and then adds a further 10% to the projections.Chances are he has inflated the cost projections because

A)that is the way it has always been done.
B)conservative accounting practise requires that he not under report expenses.
C)by overestimating expenses, it will make it easier for him to come in under budget and receive a favourable evaluation.
D)none of the above.

Question 76

Which one of the following is NOT a main component of the value chain sequence?

A)ERP
B)sales and marketing
C)production
D)customer relations

Question 77

What is one primary benefit of an enterprise resource planning (ERP)system?

A)It reduces inventory levels.
B)It permits companies to be more streamlined in production.
C)It replaces research and development in a company.
D)It requires an increased emphasis on product quality.

Question 78

A company acting ethically must adapt its external reports to any changes required

A)instantly.
B)as it is appropriate for its business cycle.
C)as stipulated by the CPA Canada handbook and GAAP.
D)if they are considered pertinent to its business activities.

Question 79

A company acting ethically must adapt its internal reports to any changes required

A)instantly.
B)as it is appropriate for its business cycle.
C)as stipulated by the CPA Canada handbook and GAAP.
D)if they are considered pertinent to its business activities.

Question 80

Choose the INCORRECT answer.

A)While generally not encouraged, lapses in ethical behaviour are irrelevant to a company's operating income.
B)Proper incentives need to be implemented to foster an ethical business environment.
C)Manufacturing companies need to establish effective and realistic production goals for their processes.
D)As a result of the Sarbanes-Oxley Act, companies now pay more attention to the composition of the board of directors.