Deck 1: The Changing Role of Managerial Accounting in a Dynamic Business Environment

Question 1

The largest managerial accounting professional association in the U.S. is the Chartered Institute of Management Accountants.

Answer 1

False

Question 2

All financial professionals, including managerial accountants, have an obligation to themselves, their colleagues, and their organizations to adhere to high standards of ethical conduct.

Answer 2

True

Question 3

The role of managerial accounting in organizations is the same as it has been over many years.

Answer 3

False

Question 4

Two things that all organizations have in common are a set of goals and information needed by managers.

Question 5

Controlling involves the coordination of daily business functions within an organization.

Question 6

Decision making requires managers to choose among the available alternatives.

Question 7

Line positions are indirectly involved in operational activities.

Question 8

The nature of managerial accounting reports is to focus on the enterprise in its entirety.

Question 9

Legitimate ethical issues rarely impact the managerial accountant.

Question 10

All companies define the value chain in the same way.

Question 11

A controller is normally involved with preparing financial statements.

Question 12

The CMA is a professional certification that managerial accountants can earn to validate their skills and the specialized knowledge that they possess.

Question 13

Measuring the performance of managers and subunits is not an objective of managerial accounting.

Question 14

The value chain is a managerial accounting tool that primarily assists in the valuation of assets.

Question 15

The treasurer typically is responsible for raising capital and safeguarding the organization's assets.

Question 16

In most situations, managerial accounting reports solve decision problems.

Question 17

The position of chief financial officer (CFO) is typically a staff position.

Question 18

Which of the following statements about managerial accountants is false?

A) Managerial accountants more and more are considered "business partners."
B) Managerial accountants often are part of cross-functional teams.
C) An increasing number of organizations are segregating managerial accountants in separate managerial-accounting departments.
D) In a number of companies, managerial accountants make significant business decisions and resolve operating problems.
E) The role of managerial accountants has changed considerably over the past decade.

Question 19

The balanced scorecard is an important managerial accounting tool for short-run competitiveness.

Question 20

Middle-level managers would likely be considered internal users of accounting information rather than external users.

Question 21

Managerial accounting:

A) is unregulated.
B) produces information that is useful only for manufacturing organizations.
C) is based exclusively on historical data.
D) is regulated by the Securities and Exchange Commission (SEC).
E) generally focuses on reporting information about the enterprise in its entirety rather than by subunits.

Question 22

Which of the following is not an action performed in combination with information to pursue the goals of managerial accounting?

A) Identify.
B) Measure.
C) Invent.
D) Interpret.
E) Analyze.

Question 23

All of the following entities would have a need for managerial accounting information except:

A) the state of Michigan.
B) an Internet provider
C) a retail clothing outlet
D) a bookkeeping service
E) None of these responses is correct, as all of these entities would use managerial accounting information.

Question 24

Because managerial accounting reports rarely solve decision problems, what function does a managerial accountant use to assist managers in understanding issues contained within the information produced?

A) Internal business solution function.
B) Learning and growth function.
C) Theoretical capacity function.
D) Customer function.
E) Attention directing function.

Question 25

Which of the following is correct regarding the changing role of managerial accounting?

A) The managerial accountant is crunching more numbers than ever before in leading-edge companies.
B) The managerial accountant has been transformed into a financial historian in progressive companies.
C) Managerial accountants are typically isolated in separate departments.
D) Forward-looking goals have transformed managerial accountants into business advisors
E) Managerial accountants rarely have the title of analyst or take on leadership roles.

Question 26

Which of the following would likely be considered an internal user of accounting information rather than an external user?

A) Stockholders.
B) Consumer groups.
C) Lenders.
D) Middle-level managers.
E) Government agencies.

Question 27

The day-to-day work of management teams will typically comprise all of the following activities except:

A) decision making.
B) planning.
C) cost minimizing.
D) directing operational activities.
E) controlling.

Question 28

Which of the following functions is best described as choosing among available alternatives?

A) Decision making.
B) Planning.
C) Directing operational activities.
D) Controlling.
E) Budgeting.

Question 29

Managerial accounting:

A) focuses only on historical data.
B) is governed by GAAP.
C) focuses primarily on the needs of personnel within the organization.
D) provides information for parties external to the organization.
E) focuses on financial statements and other financial reports.

Question 30

Managerial accounting activity comprises a set of tools, systems and perspectives that add value to an organization by supporting five major objectives. Which one of these is not a supporting objective?

A) Provide information for decision making and planning.
B) Assist managers in directing and controlling operational activities.
C) Motivate managers and other employees toward the organization's goals.
D) Assess an organization's competitive position and long-term managerial efforts .
E) Focus on activities that occur at the top level of the organization.

Question 31

Wembley Company has set various goals, and management is now taking appropriate action to ensure that the firm achieves these goals. One such action is to reduce outlays for overhead, which have exceeded budgeted amounts. Which of the following functions best describes this process?

A) Decision making.
B) Planning.
C) Coordinating.
D) Controlling.
E) Organizing.

Question 32

Employee empowerment involves encouraging and authorizing workers to take initiatives to:

A) improve operations.
B) reduce costs.
C) improve product quality.
D) improve customer service.
E) all of the answers are correct.

Question 33

The role of managerial accounting information in assisting management is a(n):

A) financial-directing role.
B) attention-directing role.
C) planning and controlling role.
D) organizational role.
E) problem-solving role.

Question 34

Which of the following perspectives is normally absent in a balanced scorecard?

A) Financial.
B) Customer.
C) Internal operations.
D) Learning and innovation/growth.
E) None of these.

Question 35

Which of the following managerial functions involves a detailed financial and operational description of anticipated operations?

A) Decision making.
B) Planning.
C) Directing operational activities.
D) Controlling.
E) Measuring.

Question 36

Which of the following involves the coordination of daily business functions within an organization?

A) Decision making.
B) Planning.
C) Directing operational activities.
D) Controlling.
E) Motivating.

Question 37

Which of the following business models considers financial, customer, internal operating, and other measures in the evaluation of performance?

A) Deterministic simulation.
B) Balanced scorecard.
C) Payoff matrix.
D) Decision tree.
E) Chart of operating performance (COP).

Question 38

The process of encouraging and authorizing workers to take appropriate initiatives to improve the overall firm is commonly known as:

A) planning and control.
B) employee empowerment.
C) personnel aggressiveness.
D) decision making.
E) problem recognition and solution.

Question 39

In pursuing its goals, an organization does all of the following except:

A) Acquire resources.
B) Hire personnel.
C) Engage in an organized set of activities.
D) Focus on reducing the budget.
E) Engage in management team activities to make the best use of resources and people.

Question 40

Which of the following is not an objective of managerial accounting?

A) Providing information for decision making and planning.
B) Assisting in directing and controlling operations.
C) Maximizing profits and minimizing costs.
D) Measuring the performance of managers and subunits.
E) Motivating managers toward the organization's goals.

Question 41

In order for a company to achieve a sustainable competitive advantage, it must:

A) perform one or more activities in the value chain at the same quality level as its competitors.
B) perform all activities in the value chain at the same quality level as its competitors.
C) perform its value chain activities at a higher quality level than one of its competitors.
D) perform at lower quality and higher cost than competitors.
E) two of the answers are correct.

Question 42

Managerial accountants:

A) often work with regulators like the SEC.
B) are responsible for issuing a company's annual financial statements.
C) are found primarily at lower levels of the organizational hierarchy.
D) are found primarily at higher levels of the organizational hierarchy.
E) often work on cross-functional teams and are located throughout an organization.

Question 43

All of the following are common reasons for forming cross-functional teams except:

A) to make decisions.
B) to engage in planning exercises.
C) to address operational problems from many perspectives.
D) to pull together individuals from a variety of specialties.
E) to minimize physical location requirements that a company occupies.

Question 44

Which of the following employees would be considered as holding a line position?

A) Townhouse Corporation's vice-president for government relations.
B) The controller of Margin Motors.
C) A secretary employed by Signal Communications.
D) The manager of food and beverage services at a theme park.
E) None of the answers is correct.

Question 45

A company's leading executive is:

A) chief financial officer (CFO).
B) treasurer.
C) vice-president of accounting.
D) internal auditor.
E) chief executive officer (CEO).

Question 46

Which of the following employees at Fresh Brew Co. would likely be considered as holding a staff position?

A) The company's chief operating officer (COO).
B) The manager of a store located in Kansas City, Missouri.
C) The company's manager of the Midwest division.
D) The company's president of products nationwide.
E) The company's lead, in-house attorney and the company's chief financial officer (CFO).

Question 47

A restaurant's value chain includes:

A) supplier development.
B) upstream contributors.
C) downstream contributors.
D) management of inventory
E) all of the answers.

Question 48

Which of the following characteristic(s) relate(s) more to managerial accounting than to financial accounting?

A) A focus on reporting to personnel within an organization.
B) A focus on reporting to external parties.
C) An area of accounting that is heavily regulated.
D) A focus on providing information that is relevant for planning, decision making, directing, and control.
E) A focus on reporting to personnel within an organization and a focus on providing information that is relevant for planning, decision making, directing, and control.

Question 49

Which of the following statements represents a similarity between financial and managerial accounting?

A) Both are useful in providing information for external users.
B) Both are governed by GAAP.
C) Both draw upon data from an organization's accounting system.
D) Both rely heavily on published financial statements.
E) Both are solely concerned with historical transactions.

Question 50

Financial accounting focuses primarily on reporting:

A) to parties outside of an organization.
B) to parties within an organization.
C) to an organization's board of directors.
D) to financial institutions.
E) for financial institutions.

Question 51

Which of the following employees at Clear Flights would not be considered as holding a line position?

A) Pilot.
B) Chief financial officer (CFO).
C) Flight attendant.
D) Ticket agent.
E) Baggage handler.

Question 52

Which of the preceding activities would likely not be considered part of Forte Clothing Company's value chain?

A) Designing a new product line.
B) Locating and then negotiating terms with a clothing manufacturer.
C) Marketing an existing product line.
D) Distributing goods from regional warehouses to local stores.
E) All of these activities would be an element in the company's value chain.

Question 53

Which of the following would not be part of a value chain for a fast food restaurant?

A) All of the answers are a part of the value chain.
B) Buying produce.
C) Mopping the floor.
D) Refilling the napkin dispensers.
E) Hiring new cooks.

Question 54

Which of the following is not a function of the treasurer?

A) Safeguarding assets.
B) Managing investments.
C) Preparing financial statements.
D) Being responsible for an entity's credit policy.
E) Raising capital.

Question 55

The chief managerial and financial accountant of an organization is the:

A) chief executive officer (CEO).
B) treasurer.
C) vice-president of accounting.
D) internal auditor.
E) chief financial officer (CFO).

Question 56

Strategic cost management is:

A) the process of determining cost drivers.
B) the recognition of the importance of cost relationships among the activities in the value chain.
C) the process of managing cost relationships to the firm's advantage.
D) cost-causing factors.
E) two of the answers are correct.

Question 57

Which of the following typically does not relate to the role of a controller?

A) A controller supervises the accounting department.
B) A controller safeguards an organization's assets.
C) A controller oversees the preparation of reports required by governmental authorities.
D) A controller normally assumes a narrow role within the organization, often preventing the individual's rise to top management ranks.
E) A controller safeguards an organization's assets and a controller normally assumes a narrow role within the organization, often preventing the individual's rise to top management ranks.

Question 58

In order for a company to achieve a sustainable competitive advantage, it must perform value chain activities:

A) at the same quality level as competitors, at the same cost.
B) at the same quality level as competitors, but at a lower cost.
C) at a higher quality level than competitors, at a higher cost.
D) at a higher quality level than competitors, but at no greater cost.
E) More than one answer choice is correct.

Question 59

Managers directly involved in the provision of goods and services are ____________.

A) staff positions.
B) line positions.
C) general counsel positions.
D) human resource positions.
E) None of these is correct.

Question 60

A controller is normally involved with:

A) preparing financial statements.
B) managing investments.
C) raising capital.
D) safeguarding assets.
E) managing the firm's credit policy.

Question 61

The upper limit on the production of goods and services if everything works perfectly is known as:

A) practical capacity.
B) theoretical capacity.
C) utilized capacity.
D) management capacity.
E) capacity maximization.

Question 62

Which of the following statements about the ethical climate of business is false?

A) Greedy corporate executives are, in part, to blame for the rash of corporate scandals that occurred not too long ago.
B) Unethical business behavior can have a negative impact on our economy.
C) The Sarbanes-Oxley Act strives to improve the overall quality of corporate reporting.
D) The Robinson-Patman Act strives to improve the overall quality of corporate reporting.
E) Corporate scandals have served as the accounting profession's wake-up call to pay increased attention to ethical issues in the conduct of business.

Question 63

The process of managing the various activities in the value chain, along with the associated costs, is commonly known as:

A) activity-based costing.
B) strategic cost management.
C) total quality management.
D) computer-integrated costing.
E) sound management practices (SMP).

Question 64

The largest professional association for management accountants in the U.S. is:

A) The American Institute of Certified Public Accountants.
B) The Institute of Management Accountants (IMA).
C) The Chartered Institute of Management Accountants.
D) The Financial Executives International (FEI).
E) The Association for Chartered Global Management Accountants.

Question 65

Consider the descriptors that follow.
1. Is heavily involved with the recordkeeping and reporting of assets, liabilities, and stockholders' equity.
2. Focuses on planning, decision making, directing, and control.
3. Is heavily regulated.
4. A field that is becoming more "cross-functional" in nature.
5. Much of the field is based on costs and benefits.
6. Is involved almost exclusively with past transactions and events.
7. Much of the information provided is directed toward stockholders, financial analysts, creditors, and other external parties.
8. Tends to focus more on subunits within an entity rather than the organization as a whole.
9. May become involved with measures of customer satisfaction, and the amount of actual cost incurred vs. budgeted targets.

Question 66

Which of the following is not an element of competency?

A) To develop appropriate knowledge about a particular subject.
B) To perform duties in accordance with relevant laws.
C) To perform duties in accordance with relevant technical standards.
D) To refrain from engaging in an activity that would discredit the accounting profession.
E) To prepare clear reports after an analysis of relevant and reliable information.

Question 67

Give examples of each of the four primary management activities in the context of a national pizza franchise.

Question 68

The capacity concept that allows for normal occurrences such as machine downtime and employee fatigue is known as:

A) practical capacity.
B) theoretical capacity.
C) utilized capacity.
D) management capacity.
E) capacity maximization.

Question 69

Given the following information, what is the total cost of unused capacity? Cost of material supplied is $3,200; Cost of material used is $3,000; Cost of material used per cake is $3; Cost of material supplied per cake is $3.20.

A) $0.20.
B) $200.
C) $2,000.
D) $1,000.
E) There is no unused capacity.

Question 70

Which of the following is not an ethical standard of managerial accounting?

A) Competence.
B) Confidentiality.
C) Efficiency.
D) Integrity.
E) Credibility.

Question 71

The value chain of a manufacturer would tend to include activities related to:

A) manufacturing.
B) research and development.
C) product design.
D) marketing.
E) all of the answers are correct.

Question 72

Which of the following can be linked to a wave of corporate scandals that took place not too long ago?

A) Greedy corporate executives.
B) Managers who made over-reaching business deals.
C) Lack of oversight by companies' audit boards and boards of directors.
D) Shoddy work by external auditors.
E) All of these.

Question 73

The primary design of the CPA designation is to:

A) focus on practices in accounting and finance within the company.
B) to ensure competence of managerial accountants throughout Europe.
C) to ensure higher wages for accountants within companies.
D) to increase membership by academics and senior financial executives.
E) assure the competence of those working outside companies and the reliability of public company reports.

Question 74

Given the following information, what is the cost of unused capacity? Cost of material supplied is $8,600; Cost of material used is $8,000; Cost of material used per shelf is $8; Cost of material supplied per shelf is $8.60.

A) $600.
B) $6,000.
C) $0.60.
D) $1,000.
E) There is no unused capacity.

Question 75

The cost of resources supplied but unused is known as:

A) practical capacity costs.
B) the cost of theoretical capacity.
C) the cost of unused capacity.
D) the cost of resources supplied.
E) capacity cost.

Question 76

Magnum Overnight operates an overnight package delivery service that competes with Federal Express and United Parcel Service (UPS). Top management is considering the use of a balanced scorecard to evaluate operations.
A. What is a balanced scorecard and other than customer-satisfaction measures, what are its typical key components?
B. List four customer-satisfaction measures that Magnum might use to evaluate performance.

Question 77

Assume that a managerial accountant regularly communicates with business associates to avoid conflicts of interest and advises relevant parties of potential conflicts. In so doing, the accountant will have applied the ethical standard of:

A) objectivity.
B) confidentiality.
C) integrity.
D) credibility.
E) unified behavior.

Question 78

Cost management systems tend to focus on an organization's:

A) machines.
B) employees.
C) activities.
D) customers.
E) rules and regulations.

Question 79

Which of the following acts strives to improve corporate governance and the quality of corporate accounting/reporting?

A) Robinson-Patman.
B) Taft-Hartley.
C) Sarbanes-Oxley.
D) Bush-Cheney.
E) Franks-Ashcroft.

Question 80

Chaos in corporate governance and accounting after the Enron scandal spawned Congressional legislation that resulted in the creation of:

A) The American Institute of Certified Public Accountants.
B) The Public Company Accounting Oversight Board
C) The Chartered Institute of Management Accountants.
D) The Financial Accounting Standards Board.
E) The Institute of Management Accountants.