Deck 1: Accounting As a Tool for Management

Question 1

The primary users of managerial accounting information are managers and other internal decision-makers.

Answer 1

True

Question 2

All other things held equal, the more frequent the controlling activity, the faster an out-of-control process can be corrected.

Answer 2

True

Question 3

Managerial accounting uses historical information, often with the purpose of comparing actual results to budgeted results.

Answer 3

True

Question 4

Long-term planning is often referred to as reporting.

Question 5

Decision makers might have a long list of information they would find helpful, and they are generally not willing to sacrifice accuracy for having the information quickly.

Question 6

Managerial accounting information is always prepared by the controller or cost accountant.

Question 7

Under a build strategy, a company aims to increase its market share and competitive position relative to others in the industry, maximizing its short-term earnings and positive cash flow.

Question 8

For the product differentiation strategy, companies will want information on quality, such as defect rates, percentage of on-time deliveries, and customer satisfaction.

Question 9

Managerial accounting is designed to assist managers with four general activities: planning, controlling, evaluating, and decision making.

Question 10

Managerial accounting provides reports and information for a range of decision makers outside an organization.

Question 11

Preparers of managerial accounting information are generally not active participants in the decision-making process.

Question 12

Management accounting is the generation of relevant information and analysis provided to external users.

Question 13

If a company follows a strategy of product differentiation, it will seek ways to set its products apart from competitors' in terms of quality, design or service.

Question 14

The task of assessing how well employees have performed relative to expectations is a controlling activity.

Question 15

Managerial accounting information provides feedback about how well the organization is implementing its strategy and achieving its goals.

Question 16

One purpose of planning activities is to monitor day-to-day operations to ensure that processes are operating as expected.

Question 17

The four strategies based on a firm's approach to market share growth are build, hold, harvest and divest.

Question 18

The American Institute of Certified Public Accountants is the leading organization for management accountants in the United States.

Question 19

A company that focuses on product differentiation does not need to monitor product costs because if the quality is sufficient, customers will pay the price.

Question 20

Managerial accounting differs from financial accounting in that managerial accounting has no comparable set of rules governing what information must be provided to decision-makers or how that information is presented.

Question 21

Just-in-time implementations are simple and take little or no effort to implement and will work for most companies.

Question 22

A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then into final products, and deliver the final products to customers through a distribution system.

Question 23

The supply chain's goal is to reduce or eliminate defects.

Question 24

Ethical business behavior is compliance with the law.

Question 25

An example of an external user is a

A)company president.
B)plant manager.
C)payroll supervisor.
D)creditor.

Question 26

The purpose of financial statements contained in annual reports is to

A)aid in monitoring day-to-day decisions of operations to ensure the company's strategy is followed.
B)aid external financial users in analyzing product costs for the company's segments and perform short-term planning.
C)provide information to external users for decision making.
D)communicate a company's strategic direction and controlling activities to external users.

Question 27

A firm's code of conduct is based on a set of core values that are meant to guide employees' behavior.

Question 28

Managerial accounting is used by managers to

A)plan, evaluate, and control financial statements and to assure appropriate use of and accountability for organizational resources.
B)generate and analyze relevant information to support managers' strategic decision making.
C)focus on past results to aid in decision-making for managers.
D)decide the long-term direction of a company and comply with GAAP.

Question 29

The balanced scorecard uses only nonfinancial information such as customer satisfaction or employee turnover to measure performance.

Question 30

The goal of an ERP system is to integrate all data from the company's many business processes into a single information system.

Question 31

Which of the following is not a way managers use managerial accounting?

A)Provide information used in planning, evaluation and controlling functions
B)Partner with management decision-making
C)Assure accountability for an organization's resources
D)Communicate information to stockholders

Question 32

Managerial accounting is used by managers to

A)partner with management decision-making, devise planning and performance management systems, and provide expertise to assist management in an organization's strategy.
B)assure accountability for an organization's resources, and provides information used in planning, evaluation and controlling functions.
C)provide information used in planning, evaluation and controlling functions, and provide expertise to assist management in an organization's strategy.
D)assure appropriate use of an organization's resources, accountability for an organization's resources, and provides information used in planning, evaluation and controlling functions within an organization.

Question 33

A harvest strategy focuses on short-term profits and cash, even at the expense of market share.

Question 34

A tool that managerial accountants have developed to assist in monitoring organizational performance is the balanced scorecard.

Question 35

Ethical behavior is knowing right from wrong and conducting yourself accordingly, so that your decisions are consistent with your own value system and the values of those affected by your decisions.

Question 36

The leading professional organization for management accountants is the

A)American Association of Management Accountants.
B)Institute of Management Accountants.
C)National Association of Accountants.
D)Society of Management Accountants.

Question 37

Just-in-time inventory management is an inventory strategy that focuses on reducing waste and inefficiency by ordering inventory items so that they arrive just when they are needed.

Question 38

A divest strategy is appropriate when a company desires to enter a particular market.

Question 39

In the context of managerial accounting, relevant information

A)is information that will make a difference in the decision.
B)is information that has been provided by the controller.
C)must be provided in quantitative terms.
D)must be reviewed by the chief financial officer before being provided to managers.

Question 40

Good managerial accounting information helps

A)creditors decide on good credit risks.
B)managers to do their jobs.
C)stockholders make informed investment decisions.
D)creditors assess liquidity.

Question 41

Which of the following is not an activity in which managerial accounting is designed to assist managers?

A)Reporting
B)Controlling
C)Decision-making
D)Evaluation

Question 42

Managerial accounting reports

A)provide future projections and strategic goals to external users.
B)provide information to users to determine the profitability of individual product lines.
C)use information contained only in reports provided to external users.
D)use historical information, compare actual results to budgeted results, and project the results of certain decisions.

Question 43

The information provided by managerial accountants is not distributed to the general public because to do so

A)could provide competitors with vital information about corporate strategies and capabilities.
B)would be against the Institute of Management Accountants' code of conduct.
C)would be against generally accepted accounting principles.
D)would violate federal trade laws.

Question 44

Most managerial decisions are made at which of the following levels?

A)Organization-level
B)Operating-segment level
C)Managerial accounting level
D)Presidential level

Question 45

The basic financial statements always report on transactions and events

A)that have already occurred.
B)that will occur in the future.
C)that are projected.
D)that have been audited.

Question 46

All public companies that are traded on a stock exchange and governed by the Securities and Exchange Commission must prepare financial statements following

A)accounting principles set by the Federal Trade Commission.
B)generally accepted accounting principles.
C)generally appropriate accounting standards.
D)standards set by the Accounting Principles Board.

Question 47

An example of an external user is a

A)managerial accountant.
B)Vice-President of Marketing.
C)potential Investor.
D)Payroll Manager.

Question 48

Which of the following statements is not true?

A)A company is unlikely to be successful in the long run without adequate managerial accounting information to support decision making.
B)Managerial accounting is less detailed than external reporting.
C)Managerial accounting reports are covered by rules comparable to those governing financial accounting.
D)Internal users have access to all the underlying data in managerial accounting reports.

Question 49

Frequent feedback from planning, controlling, evaluating, and decision-making activities creates which of the following types of decision-making process?

A)Linear
B)Circular
C)Scattered
D)Operational

Question 50

Since internal users have access to all the underlying data used for managerial accounting reports,

A)they can create reports that suit their particular decision-making needs.
B)there is no need to use financial data in making decisions.
C)they can easily incorporate it into financial statements and provide to external users.
D)they should provide it to potential investors when requested.

Question 51

The information provided by managerial accountants is not disseminated to the general public because

A)to do so would violate federal trade laws.
B)it would be too expensive to distribute the information.
C)to do so would provide competitors with vital information about corporate strategies and capabilities.
D)external users only need information about a company's financial position, profitability, and cash flows.

Question 52

Which of the following statements is not true?

A)Managerial accounting reports often uses historical information.
B)Managerial accounting does not use estimates in preparing reports.
C)Managerial accountants use historical amounts in developing future projections.
D)Managerial accounting reports attempt to project the results of certain decisions.

Question 53

GAAP "rules" govern how

A)controlling activities are performed.
B)strategic plans should be designed.
C)a company evaluates its operational activities.
D)transactions are valued, recorded, and presented.

Question 54

Managerial accounting is designed to assist managers with which of the following activities?

A)Planning, allocating, and operating
B)Leading, controlling, and planning
C)Evaluating, formulating, and leading
D)Planning, controlling, and evaluating

Question 55

Which of the following is not a correct statement?

A)Managerial accounting benefits internal users.
B)Managerial accounting reports must comply with generally accepted accounting principles.
C)Managerial accounting includes reports and information prepared for a range of decision makers within the organization.
D)Managerial accounting reports come in a variety of formats.

Question 56

Which of the following is a characteristic of managerial accounting reports?

A)Managerial accounting reports are designed to provide the internal decision-makers with the appropriate information.
B)Managerial accounting reports require compliance with a particular format.
C)Managerial accounting reports are distributed to the general public.
D)Managerial accounting reports are used by investors.

Question 57

Decision makers sometimes may need to sacrifice precision for timeliness because

A)receiving highly accurate information after the deadline has passed would enhance decision making for future periods.
B)the nature of many business decisions requires precision in managerial accounting reports.
C)receiving highly accurate information after the deadline has passed would be of no help.
D)the nature of many business decisions focuses on the past rather than the future.

Question 58

Since external users of financial statements have no way to verify the reported information,

A)they cannot make informed decisions from financial information.
B)FASB provides consequences to companies who distribute false managerial accounting reports to outsiders.
C)GAAP provides a level of protection or assurance that the reports will follow certain standards.
D)internal reports are provided to them by management.

Question 59

Long-term planning is often referred to as

A)strategic planning.
B)operational planning.
C)goal-oriented planning.
D)external planning.

Question 60

Managerial accounting reports historical information often with the purpose of

A)comparing actual results to budgeted results.
B)helping managers to make decisions that will
C)improve the company's past performance.
D)providing information about organizational segments, such as divisions, locations, and product lines.

Question 61

Operational planning translates strategic planning into a plan to be completed within

A)three months.
B)one year.
C)five years.
D)ten years.

Question 62

A company that wants to be successful needs to

A)know what it wants to accomplish.
B)know how to increase market share.
C)maintain a high gross profit rate.
D)involve upper level managers in daily operations

Question 63

Which of the following are strategies based on a firm's approach to market share growth?

A)Handle, control, hold, or harvest
B)Build, hold, harvest, or divest
C)Handle, expand, low-cost, or divest
D)Build, expand, hold, or divest

Question 64

When a company approaches market share growth under a build strategy, the company

A)aims to increase its market share in the industry, even at the expense of short-term earnings and cash flow.
B)seeks to maintain its current market share, while building its return on investment.
C)seeks market share growth by purchasing companies exiting the market.
D)focuses on short-term profits and cash.

Question 65

To help managers with their evaluations, managerial accountants often perform

A)time tests.
B)spot checks.
C)variance analysis.
D)performance reviews.

Question 66

Which of the following are managers most likely to monitor, whether using product differentiation or low-cost production strategy?

A)Customer satisfaction
B)The production process
C)External information such as competitor actions
D)Customer satisfaction and the production process

Question 67

One of the primary products of the operational planning stage will likely be a

A)projected income statement.
B)pro forma balance sheet.
C)budget.
D)strategic plan.

Question 68

Short-term planning is often referred to as

A)strategic planning.
B)operational planning.
C)goal-oriented planning.
D)external planning.

Question 69

If a company follows a strategy of product differentiation, it will seek ways to set it products apart in terms of

A)quality, design, or service.
B)price, demand, or service.
C)design, price, or popularity.
D)quality, demand, or life cycle.

Question 70

Which of the following is not an input into the monitoring activities relating to production?

A)Actual production rate
B)Actual output
C)Anticipated production rate
D)Anticipation manufacturing capacity

Question 71

In monitoring product differentiation strategy and low-cost production strategy, a difference is that

A)for the product differentiation strategy, information on quality is emphasized, while for low-cost, production managers are more interested in the production process.
B)for the product differentiation strategy, information on the production process is emphasized, while for low-cost production managers are more interested in maintaining quality.
C)for the product differentiation strategy, information on design is emphasized, while for low-cost production, managers are more interested in quality.
D)for the product differentiation strategy, information on quality is emphasized, while for low-cost production managers are more interested in design.

Question 72

If a company chooses a low-cost production strategy, the company will set itself apart from competitors in terms of

A)quality.
B)lower selling price.
C)demand.
D)high-cost design.

Question 73

The forefront of managerial activity is

A)planning activities.
B)controlling activities.
C)evaluating activities.
D)decision-making.

Question 74

One purpose of controlling activities is to

A)monitor day-to-day operations to ensure that processes are operating as expected.
B)translate long-term strategy into a short-term plan.
C)perform variance analysis and prepare performance reports.
D)translate short-term strategy into a long-term plan.

Question 75

Michael Porter, a management strategy expert, developed a strategic framework in which a firm has ways to develop a competitive advantage.Which of the following is not one of the ways Porter suggested a firm use to develop a competitive advantage?

A)Product differentiation
B)Low cost production
C)Contribution differentiation
D)Customer satisfaction

Question 76

Which of the following is not a role of a managerial accountant?

A)Prepare reports for the SEC
B)Analyze and interpret financial data
C)Analyze and interpret operating data
D)Active participant in the decision-making process

Question 77

One of the planning activities that occupies managers is inventory planning.Which of the following is not an input into this planning process?

A)Projected sales forecasts
B)Variance analysis of actual versus budgeted inventory
C)Projected supply and prices
D)Anticipated manufacturing capacity

Question 78

Managerial accounting information is provided by which of the following individuals within an organization?

A)An investor
B)A payables accountant
C)A cost accountant
D)A controller or a cost accountant

Question 79

All other things held equal, the more frequent the controlling activity,

A)the slower an out-of-control process will be corrected.
B)the faster an out-of-control process can be corrected.
C)the more likely employees may ignore the control.
D)the less likely employees may ignore the control.

Question 80

Michael Porter, a management strategy expert, developed a strategic framework in which a firm has ways to develop a competitive advantage.Which of the following is one of the ways Porter suggested a firm use to develop a competitive advantage?

A)Supply chain management
B)Low-cost production
C)Just-in-time management
D)Enterprise Resource Planning