Deck 1: Introduction to Managerial Accounting

Question 1

Evaluating operations by comparing actual results to budgeted results is a part of the controlling responsibility of management.

Answer 1

True

Question 2

Controlling means overseeing the company's day-to-day operations.

Answer 2

False

Question 3

Which of the following is not one of the primary responsibilities of management?

A)Adhering to GAAP
B)Planning
C)Directing
D)Controlling

Answer 3

A

Question 4

When management analyzes whether to move production to another country or to keep the production located where it currently is, which of the following management responsibilities is being performed?

A)Adjusting
B)Controlling
C)Planning
D)Directing

Question 5

Planning involves which of the following activities?

A)Evaluating the results of operations
B)Overseeing the company's day-to-day operations
C)Setting goals and objectives for the company
D)None of the above

Question 6

Budgets are the quantitative expression of management's plans.

Question 7

Budgets are a way for managers to communicate their

A)control.
B)decision-making.
C)hiring practices.
D)plans.

Question 8

________ gathers, summarizes, and reports on the financial impact of changes to business operations.

A)Managerial accounting
B)Planning
C)Directing
D)Controlling

Question 9

Planning, directing, and controlling are a manager's three primary responsibilities.

Question 10

Directing means setting goals and objectives for the company and determining how to achieve them.

Question 11

Comparing actual results to budgets is an example of which of the following management functions?

A)Analyzing
B)Planning
C)Controlling
D)Directing

Question 12

Using product cost information to determine sales prices is an example of

A)directing.
B)directing and controlling.
C)controlling, directing, and planning.
D)controlling and planning.

Question 13

Which one of the following items is not one of the three primary manager responsibilities?

A)Controlling
B)Planning
C)Directing
D)Adjusting

Question 14

Creating budgets are part of which primary management responsibility?

A)Controlling
B)Planning
C)Managerial accounting
D)Directing

Question 15

The purpose of managerial accounting is to gather, summarize, and report the cost and revenue data relevant to each decision that is made.

Question 16

Budgeting is the process of evaluating the results of business operations against a plan and then making adjustments to that plan.

Question 17

When management uses feedback to take corrective action on the budgets, which of the following management responsibilities are being fulfilled?

A)Controlling
B)Adjusting
C)Directing
D)Planning

Question 18

Overseeing the day-to-day operations of a company is an example of which of the following management functions?

A)Directing
B)Planning
C)Analyzing
D)Controlling

Question 19

When management reviews product sales reports to set goals and objectives and then evaluates the results of sales operations against the plan and performance results, which of management's three primary responsibilities is fulfilled?

A)Controlling and planning
B)Directing and planning
C)Directing, controlling, and planning
D)Analyzing, directing, and planning

Question 20

Which of the following is being fulfilled when management compares the budget to actual results?

A)Directing
B)Planning
C)Adjusting
D)Controlling

Question 21

Managerial accounting develops reports that help internal parties effectively and efficiently run the company.

Question 22

The primary managerial accounting product is the company's audited financial statements.

Question 23

The managerial accountant at Strategic Group Consulting reported the following information about the sales budget for the period ending December 31, 20XX: Observe the Sales Budget and determine which primary responsibility the managerial accountant uses to
Determine which quarter generated the most per-unit product sales data in order to adjust the marketing strategy?

A)Planning
B)Controlling
C)Directing
D)Analyzing
E)Eliminating

Question 24

The design of a management accounting system should consider how reports affect employees' behavior.

Question 25

The management accountant at Light Manufacturing oversees the company's day-to-day operations at the firm. The management accountant observed that the company generated $800,000 in product sales and the management accountant uses that information to run the daily business operations. The information is also to the management accountant because the data reveals which products generate the most sales; and, the management accountant uses that information to adjust products and develop the marketing strategy. Which of the following management accounting responsibilities is the management accountant using in this example?

A)Planning
B)Directing
C)Controlling
D)Designing
E)Implementing

Question 26

Managers and other internal users are the primary users of managerial accounting information.

Question 27

Managerial accounting reports are always prepared on a quarterly and annual basis.

Question 28

What are the three primary responsibilities of managers that use managerial accounting as described in the chapter? Give an example of each type of responsibility applicable to a managerial accountant.

Question 29

Managerial accountants fulfill three primary responsibilities: planning, directing and controlling. Review each of the following tasks that managerial accountants complete in their role as a managerial accountant:
In the space provided below, indicate whether the task is (1)planning; (2)directing; or, (3)controlling.
Planning
Directing
Controlling

Question 30

Managerial accounting information tends to report on segments of the business.

Question 31

Managerial accountants must comply with Generally Accepted Accounting Principles (GAAP)standards when they prepare managerial accounting reports.

Question 32

Evaluating results against the plan is an example of which of the following management functions?

A)Planning
B)Controlling
C)Analyzing
D)Directing

Question 33

The management accountant at Technology Innovators determined $500,000 is the organization's earning goal to accommodate the organizational plan during the first quarter during a new year. The accountant realizes that to achieve the new earning goal, the operations manager needs to increase the price of technology parts charged to a consumer to $250.00 per unit. The manager is scheduling a new staff meeting to determine if they need to increase the marketing efforts at the firm, or if they need to design a new part that uses materials that are less expensive to produce. Which of the following management responsibilities is the managerial accountant using in this example?

A)Directing
B)Planning
C)Controlling
D)Implementing
E)Designing

Question 34

The SEC requires an independent certified public accountant (CPA)to audit reports generated by managerial accounting systems.

Question 35

Preparing budgets is an example of which of the following management functions?

A)Planning
B)Directing
C)Analyzing
D)Controlling

Question 36

Management accounting requires an independent audit of the firm's books.

Question 37

The management accountant at Woodhaven Cycle Shoppe developed a budget to establish the sales goals at the store in 2012. In 2013, the management accountant evaluated the performance in the organization, reviewed the performance of the sales staff, and compared the sales results to the actual budget that the managerial accountant developed in 2012. Which of the following management accounting responsibilities is the management accountant using in this example?

A)Planning
B)Directing
C)Controlling
D)Designing
E)Implementing

Question 38

Managerial accounting information emphasizes relevance over reliability and objectivity.

Question 39

The primary purpose of managerial accounting information is to help external users make investing and lending decisions.

Question 40

Managerial accounting information is always based on historical transactions with external parties.

Question 41

A company's budget information is most likely to be used by which of the following groups?

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

Question 42

Which of the following groups are external users of financial information?

A)Customers of the company
B)Potential investors of the company
C)Vendors of the company
D)All of the above

Question 43

The primary goal of managerial accounting is to provide information to

A)internal decision-makers.
B)shareholders.
C)creditors.
D)both shareholders and creditors.

Question 44

Which one of the following financial reports is required to be audited by an outside entity?

A)Monthly financial statements
B)Annual financial budgets
C)Annual financial statements
D)All of the above

Question 45

________ are owners of a company.

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

Question 46

The primary goal of financial accounting is to provide information to

A)government regulators.
B)creditors.
C)potential investors.
D)all of the above.

Question 47

Which of the following statements is false about financial accounting?

A)Financial accounting helps investors make decisions.
B)Financial accounting provides sufficient information for managers to effectively plan and control operations.
C)Financial accounting reports help creditors make decisions.
D)Financial accounting provides external reports.

Question 48

Managerial accounting differs from financial accounting because it focuses on the future rather than historical transactions.

Question 49

________ are a company's decision makers.

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

Question 50

Which statement is true?

A)Management uses financial information to analyze costs.
B)Management uses financial information to plan internal operations.
C)Management uses reports created for internal parties.
D)All of the above are true.

Question 51

Which of the following statements is true regarding managerial accounting information?

A)Managerial accounting information is audited by CPAs.
B)Managerial accounting information emphasizes relevance.
C)Managerial accounting information is prepared annually and quarterly.
D)Managerial accounting information must be prepared in conformity with Generally Accepted Accounting Principles (GAAP).

Question 52

Which of the following are the internal decision makers of a company?

A)Vendors
B)Managers
C)Shareholders
D)Customers

Question 53

How often should managerial accounting reports be prepared?

A)Annually
B)Quarterly
C)Monthly
D)As often as necessary

Question 54

The focus of management accounting is on

A)tax preparation.
B)external reporting.
C)internal reporting.
D)auditing.

Question 55

________ is designed to meet the needs of internal decision makers.

A)Tax accounting
B)Managerial accounting
C)Financial accounting
D)Audit accounting

Question 56

Which of the following persons or groups would be least likely to receive detailed managerial accounting reports?

A)CEO
B)Plant managers
C)Current shareholders
D)Sales territory managers

Question 57

Managerial accounting reports are prepared whenever they are requested and contain specific data required by the managers of the company.

Question 58

Which of following statements is true?

A)Managerial accounting focuses on historical transactions.
B)Financial accounting focuses on future data.
C)Management accounting focuses on relevant data.
D)Managerial accounting uses the cash basis for recording transactions.

Question 59

Which of the following statements is true about managerial accounting?

A)Managerial accounting reports aid potential investors.
B)Managerial accounting reports must follow GAAP.
C)Managerial accounting reports are audited by CPAs.
D)Managerial accounting reports provide detailed internal information.

Question 60

Managerial accounting would use which of the following types of information?

A)Forecasts of future earnings
B)Financial information
C)Nonfinancial information
D)All of the above

Question 61

Is financial accounting or managerial accounting more useful to a plant (factory)manager? Explain your answer.

Question 62

Managerial accountants no longer perform routine mechanical accounting tasks in most companies.

Question 63

Managerial accountants are now considered to be similar to internal consultants and business advisors.

Question 64

In 2013, the accountant at Star Incorporated, a national time-share company, focused on an internal sales report that illustrates the sales projections to ensure the sales representatives achieve their goals in 2013; however, the report was not prepared in accordance with GAAP. The accountant observed that the total sales produced by the sales representatives in 2012 were $250,000,000. The accountant is in the process of establishing the new 2013 sales goals for the sales representatives and the accountant is concerned about the new sales goals in 2013 since the economy is slow and many individuals and groups are not purchasing time-share condos.
Is the accountant a management accountant or a financial accountant? What concept concerns the accountant when the new sales goals are revealed to the sales representatives and administrative staff? Why?

Question 65

Management accountants rarely interact with employees from other business functions such as marketing and customer service.

Question 66

In 2013, the employee at Lighthouse Services prepared an annual report for the bank that revealed total revenue in 2012 was $6,000,000. The manager needs the information to apply for a loan to purchase new equipment to maintain the operations at the organization. The report was prepared in accordance with GAAP and the report contained information about the 2012 financial performance at the company. Which of the following describes the role of the employee at Lighthouse Services?

A)Managerial Accountant
B)CFO
C)CEO
D)Board of Director
E)Financial Accountant

Question 67

The internal audit department reports directly to the audit committee, a subcommittee of the board of directors.

Question 68

The CFO is the person responsible for the day-to-day operations of the company.

Question 69

Oral and written communications skills are considered among the skills that are critical to management accountants.

Question 70

The new employee at Cork Manufacturing reported to work and the employee reviewed the following information that was audited by the CPA: Which of the following describes the role of the new employee?

A)Managerial Accountant
B)Financial Accountant
C)CEO
D)Receptionist
E)Secretary

Question 71

Technology has been a driving factor in the changing roles of management accountants.

Question 72

Management accountants spend more time planning, analyzing and interpreting accounting data and less time recording routine, every day accounting work.

Question 73

Discuss at least four differences between financial accounting and managerial accounting.

Question 74

The treasurer and the controller report directly to the CFO.

Question 75

Managerial accountants only need a solid understanding of managerial accounting, and not financial accounting.

Question 76

The only skill required of managerial accountants is that they have a solid knowledge of both financial and managerial accounting.

Question 77

The Board of Directors is made up of the same individuals that are on the Audit Committee.

Question 78

The new accountant at the Holiday Card Shoppe reviewed the following information:
Is the system a financial system or a managerial system? Is the accountant at the Holiday Card Shoppe a managerial accountant or a financial accountant? Why?

Question 79

An external party receives information about past performance from

A)planning reports.
B)budget reports.
C)financial statements.
D)internal managerial accounting reports.

Question 80

Review the following individual accounting system components that contain the skills and capabilities of individuals in Chart A and review the accounting system components that contain the skills and capabilities of individuals in Chart B. Which of the following describes the individual required to perform the accounting system skills and capabilities in Chart A and which individual is the responsible individual required to perform the skills and capabilities in Chart B?

A)Chart A: Independent Auditor; Chart B: Internal Audit Function
B)Chart A: Managerial Accountant; Chart B: Financial Accountant
C)Chart A: Audit Committee; Chart B: Cross Functional Teams
D)Chart A: Cross Functional Teams; Chart B: Treasurer
E)Chart A: Controller; Chart B: Treasurer