Deck 1: Managerial Accounting and the Business Environment

Question 1

Which one of the following is NOT a characteristic of a pull production system?

A) Inventories are reduced to a minimum by purchasing raw materials and producing units only as needed to meet consumer demand.
B) Raw materials are released to production far in advance of being needed to ensure no interruptions in work flows due to shortages of raw materials.
C) Products are completed just in time to be shipped to customers.
D) Manufactured parts are completed just in time to be assembled into products.

Answer 1

B

Question 2

Upon which of the following does managerial accounting place considerable weight?

A) Generally accepted accounting principles.
B) The financial history of the entity.
C) Ensuring that all transactions are properly recorded.
D) Detailed segment reports about departments,products,and customers.

Answer 2

D

Question 3

All three major professional accounting groups in Canada require their members to undertake professional development and/or continuing education.This practice is intended to directly satisfy which of these rules of ethical conduct?

A) Integrity.
B) Objectivity.
C) Competence.
D) Confidentiality.

Answer 3

C

Question 4

Which of the following groups should be the focal point of a company's strategy?

A) Employees
B) Board of directors
C) Shareholders
D) Target customers

Question 5

What would be an example of a performance report?

A) An income statement reporting actual results for the past month.
B) An income statement showing the amounts budgeted for the past month.
C) A balance sheet showing the actual financial position at the end of the past month.
D) A production report showing budgeted and actual production for the past month.

Question 6

Which of the following is NOT one of the three major customer value propositions discussed in the text?

A) customer intimacy
B) discount pricing
C) operational excellence
D) product leadership

Question 7

Day-to-day decision making is most common to which of the following activities managers are expected to carry on in organizations?

A) Strategy formulation.
B) Directing and motivating.
C) Planning.
D) Controlling.

Question 8

For internal uses,managers are more concerned with receiving information that achieves which of the following standards?

A) Completely objective and verifiable.
B) Completely accurate and precise.
C) Relevant,flexible,and timely.
D) Relevant,completely accurate,and precise.

Question 9

Budgeting is part of which of the following activities managers perform in organizations?

A) Controlling.
B) Directing.
C) Planning.
D) Motivating.

Question 10

Which of the following is NOT one of the five steps in the lean thinking model discussed in the text?

A) Continuously pursue perfection in the business process.
B) Identify value in specific products/services.
C) Implement an enterprise system.
D) Create a pull system that responds to customer orders.

Question 11

After careful planning,Jammu Manufacturing Corporation has decided to switch to a just-in-time inventory system as a component of the lean thinking model.At the beginning of this switch,Jammu has 30 units of product in inventory.Jammu has 2,000 labour hours available in the first month of this switch.These hours could produce 500 units of product.Customer demand for this first month is 400 units.If just-in-time principles are correctly followed,how many units should Jammu plan to produce in the first month of the switch?

A) 370
B) 400
C) 430
D) 470

Question 12

Which of the following best describes the function of managerial accounting within an organization?

A) It has its primary emphasis on the future.
B) It is required by regulatory bodies such as the Ontario Securities Commission.
C) It focuses on the organization as a whole,rather than on the organization's segments.
D) It places more emphasis on precision of data than financial accounting does.

Question 13

Which of the following is NOT one of the five steps in the framework used to guide Six Sigma improvement efforts?

A) Analyze.
B) Control.
C) Digitize.
D) Measure.

Question 14

Both financial and managerial accounting rely on the same underlying financial data but there are major differences.Managerial Accounting:

A) Emphasizes financial consequences of past activities.
B) Emphasizes precision.
C) Emphasizes relevance.
D) Must follow GAAP.

Question 15

Obtaining feedback is generally identified most directly with which of these functions of management?

A) Planning
B) Directing and motivating
C) Controlling
D) Decision making

Question 16

Identifying alternatives and selecting the best among them is part of which of the following activities which managers carry on in organizations?

A) Controlling.
B) Directing.
C) Planning.
D) Motivating.

Question 17

Which of the following positions does the controller occupy in an organization?

A) A line position.
B) A staff position.
C) Neither a line nor a staff position,since the accounting department must be independent.
D) Both a line and a staff position.

Question 18

One consequence of a change from a push to a properly implemented pull production system can be which of the following?

A) an increase in work in process inventories.
B) an extremely difficult cultural change due to enforced idleness when demand falls below production capacity.
C) an increased mismatch between what is produced and what is demanded by customers.
D) an increase in raw materials inventories.

Question 19

Samantha Galloway is a managerial accountant in the accounting department of Mustang Industries,Inc.Samantha has just discovered evidence that some of the corporation's marketing managers have been wrongfully inflating their expense reports in order to obtain higher reimbursements from the firm.According to the Institute of Management Accountants' Standards of Ethical Conduct,what should Samantha do upon discovering this evidence?

A) Notify the controller.
B) Notify the marketing managers involved.
C) Notify the president of the corporation.
D) Ignore the evidence because she is not part of the Marketing Department.

Question 20

Which of the following facets of the lean thinking model is often called just-in-time production?

A) Identify value in specific products/services
B) Identify the business process that delivers value
C) Create a pull system that responds to customer orders
D) Organize work arrangements around the flow of the business process

Question 21

The controller occupies a staff position in an organization.

Question 22

A strategy requires effective use of Six Sigma improvement techniques.

Question 23

Monetary data are given equal weight by both managerial accounting and financial accounting.

Question 24

Persons occupying staff positions provide support and assistance to other parts of the organization.

Question 25

Which of the following types of information contained in a business plan is LEAST likely to be found in the accounting records of a typical company?

A) Financial
B) Competitors
C) Internal
D) Non-financial

Question 26

Codes of professional ethics regarding competence,confidentiality,integrity,and objectivity are more important for CAs and CGAs than CMAs.

Question 27

An important part of planning is to identify alternatives and then to select from among the alternatives the one that best meets the organization's objectives.

Question 28

Managerial accounting is not governed by generally accepted accounting principles (GAAP).

Question 29

Business codes of ethics prescribe minimum acceptable behaviours for all employees except employees belonging to one of the three major professional accounting groups in Canada.

Question 30

Managerial accounting places less emphasis on precision and more emphasis on timeliness of data than financial accounting does.

Question 31

A strategy is a game plan that enables a company to attract customers by distinguishing itself from competitors.

Question 32

Which of the following is the stakeholder group whose interests are to be directly and formally protected by effective corporate governance?

A) Customers
B) Creditors
C) Shareholders
D) Suppliers

Question 33

Companies that choose an operational excellence strategy are in essence saying to their customers,"Choose us rather than our competitors because we strive for zero defects."

Question 34

A customer value proposition is essentially a reason for customers to choose a company's products over its competitors' products.

Question 35

A business plan is usually formalized by means of which of the following management activities?

A) Strategic planning
B) Directing
C) Motivating
D) Controlling

Question 36

Companies that adopt a customer intimacy strategy are in essence saying to their target customers,"The reason you should choose us is because we understand and respond to your individual needs better than our competitors."

Question 37

Customer value propositions tend to fall into three broad categories--customer intimacy,operational excellence,and product leadership.

Question 38

In general,accounting data serve both financial accounting and managerial accounting purposes.

Question 39

Top management make most of the decisions in decentralized organizations.

Question 40

Informal relationships and channels of communication often develop that do not appear on the organization chart.

Question 41

How much it costs a company to manufacture a particular product is one of the many questions that reports typically provided by managerial accountants help to answer.
Required:
Comment on the usefulness of a unit product cost information in the preparation of a set of financial statements?

Question 42

The lean thinking model is a five step management approach that organizes resources such as people and machines around the flow of business processes and that pulls units through these processes in response to customer orders.

Question 43

Supply chain management involves acquiring and bringing inside the company all of the processes that bring value to customers.

Question 44

You have recently been hired by a manufacturing company.Two days ago,you met with the top management of the company to discuss future strategies for the firm.During the meeting,the president of the company expressed concern about the profitability of the company and the company's ability to compete effectively in the future.You responded to the president's concerns by mentioning some articles you had read in professional accounting journals regarding the lean thinking model.The president responded to your comments by saying that although the lean thinking model sounded interesting,no one in the company was knowledgeable about it.The president then requested that you prepare a brief summary of the lean thinking model for the next strategic planning meeting.
Required:
a.Define the lean thinking model.
b.List the five major steps in the lean thinking model.
c.List some of the benefits of the lean thinking model.

Question 45

The answers to many of the questions raised by prospective providers of funds can be found in the business plan.

Question 46

A value chain consists of the major business functions that add value to the company's products and services.

Question 47

Corporate governance is the legal framework that allows managers to control and direct lower-level workers on the job.

Question 48

The accounting process involves recording,estimating,organizing and summarizing of financial and operational data.
Required:
Describe briefly the nature of operational data and give examples for a hotel organization.