Deck 1: The Accountants Vital Role in Decision Making

Question 1

The text identifies six ways to classify the major differences between Management and Financial Accounting. The statement "Past oriented (reports on 2011 performance prepared in 2012)" is an example of which of the following classes?

A) Purpose of information
B) Primary users
C) Focus and emphasis
D) Rules of measurement and reporting
E) Time span and type of reports

Answer 1

C

Question 2

"Cost management" describes

A) the actions by managers to increase value for customers while continuously reducing and controlling costs.
B) the identification of excessive costs in the production process.
C) the satisfaction of customers' needs.
D) actions by managers to satisfy customers while maintaining current cost levels.
E) ensuring all costs remains constant.

Answer 2

A

Question 3

The text identifies six ways to classify the major differences between Management and Financial Accounting. The statement "Varies from hourly to 15 to 20 years" is an example of which of the following classes of differences?

A) Purpose of information
B) Primary users
C) Focus and emphasis
D) Rules of measurement and reporting
E) Time span and type of reports

Answer 3

E

Question 4

Which of the following is something management accountants should do to satisfy their users?

A) provide specialized information that given users can use
B) consider only financial measures
C) focus exclusively on internal users
D) follow generally accepted accounting principles
E) focus on planning more than control

Question 5

The text identifies six ways to classify the major differences between Management and Financial Accounting. The statement "Communicate organization's financial position to external users" is an example of which of the following classes?

A) Purpose of information
B) Primary users
C) Focus and emphasis
D) Rules of measurement and reporting
E) Time span and type of reports

Question 6

Companies generally follow one of two basic strategies: 1) providing a quality product or service at low prices, or 2) offering a unique product or service often priced higher than competing products.

Question 7

Managers typically receive reports on cost planning and controls that should be considered for internal use only.

Question 8

Managerial accounting and cost accounting both measure and report financial and non-financial information relating to the cost of acquiring or utilizing resources.

Question 9

The key to a company's success is always to be the low cost producer in a particular industry.

Question 10

In what way do managers benefit from the use of a database, or "data warehouse"?

A) Data can be entered at numerous input terminals within the organization.
B) The managers would not be completely responsible for the information that is entered into the database system.
C) The managers could combine or adjust these data to answer the questions from particular internal and external users.
D) The managers do not benefit, as the information requires technical expertise to retrieve.
E) Managers can store old documents in hard copy.

Question 11

Financial accounting is concerned primarily with

A) cost planning and cost controls.
B) external reporting to investors, government authorities, etc.
C) profitability analysis.
D) providing information for strategic and tactical decisions.
E) providing analysis to facilitate long term decision making.

Question 12

There are three (3) basic business strategies: low cost, premium products, and customer satisfaction.

Question 13

Cost accounting provides information for both management and financial accounting.

Question 14

The text identifies six ways to classify the major differences between Management and Financial Accounting. The "managers of the organization" is an example of which of the following classes of differences?

A) Purpose of information
B) Primary users
C) Focus and emphasis
D) Rules of measurement and reporting
E) Time span and type of reports

Question 15

Management accountants are required to follow the generally accepted accounting principles that are used for external financial reporting when preparing reports for internal users.

Question 16

Management accounting

A) helps creditors evaluate the company's performance.
B) helps managers make decisions.
C) is useful for external and internal users.
D) creates technical reports that require external audit for verification.
E) is the same as cost accounting.

Question 17

Cost management involves long-term and short-term decisions that attempt to increase value for customers and lower costs of products or services.

Question 18

Companies with a strategy of low prices compete on their ability to offer unique new products or services that are priced higher than their competition.

Question 19

Do you agree that prior management decisions affect cost management?

A) Yes. Managers should always follow prior management decisions, for example, in the determination of the EOQ.
B) No. Managers should ignore prior management decisions.
C) Yes. Managers should always strive to lower the costs incurred last year, as their number 1 priority.
D) Yes. The only prior management decisions that can affect cost management going forward, are concerned with employee wages. All other decisions can be changed.
E) Yes. Prior management decisions can affect any area of the business operations, and commit the organization to the subsequent or continued incurrence of costs in such areas as material handling, and plant construction, for example.

Question 20

Management accounting is guided by generally accepted accounting principles.

Question 21

In designing strategy, a company must match the opportunities and threats in the marketplace with

A) those of the CFO (Chief Financial Officer).
B) its resources and capabilities.
C) branding opportunities.
D) capabilities of current suppliers.
E) its competitors.

Question 22

Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Assume you are opening a small food outlet across the street from your campus. How might that business be operated under each of the two broad strategies? Consider the following specific operational areas:
a. target customers
b. products offered
c. product pricing
d. location choice
e. advertising content
f. advertising media

Question 23

In the value chain, Research and Development generates and experiments with new ideas related to new products.

Question 24

Key success factors such as quality, time, and innovative products and services, must be executed well to achieve corporate performance.

Question 25

Strategy specifies

A) how an organization matches its own capabilities with the opportunities in the marketplace.
B) standard procedures to ensure quality products.
C) incremental changes for improved performance.
D) the demand created for products and services.
E) that a company's financial procedures are in compliance with GAAP.

Question 26

There are 8 business functions in the value chain.

Question 27

A budget is a quantitative expression of a proposed plan of action by management.

Question 28

Sub-contracting a business function is part of supply chain management.

Question 29

Value chain and supply chain are two (2) terms describing the same set of business functions.

Question 30

Describe management accounting and financial accounting.

Question 31

The value chain includes the following functions: research and development; design of products, services, or processes; production; marketing; distribution; customer service; and management satisfaction.

Question 32

TQM is a method for improving quality.

Question 33

Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Is it possible to follow a strategy that is "in the middle"?

Question 34

Financial accounting

A) focuses on the future and includes activities such as preparing next year's operating budget.
B) must comply with GAAP (generally accepted accounting principles).
C) reports include detailed information on the various operating segments of the business such as product lines or departments.
D) is prepared for the use of department heads and other employees.
E) is primarily concerned with profitability analysis.

Question 35

In the value chain, Research and Development is the detailed planning and engineering of products, services, or processes.

Question 36

Enterprise Resource Planning software (ERP)

A) integrates data and provide managers with reports that highlight the interdependence of different business activities.
B) facilitates "Easy Reporting for Proposals."
C) provides financial reports for each separate enterprise in a conglomerate.
D) is used only by plant managers to create "Exceptional Reports for Production."
E) is free software downloaded over the Internet.

Question 37

The approaches and activities of managers in short-run and long-run planning and control decisions that increase value for customers and lower costs of products and services are known as

A) value chain management.
B) enterprise resource planning.
C) cost management.
D) customer value management.
E) management information system.

Question 38

An Enterprise Resource Planning System can best be described as

A) a collection of programs that use a variety of unconnected databases.
B) a single database that collects data and feeds it into applications that support each of the company's business activities, such as purchases, production, distribution, and sales.
C) a database that is primarily used by a purchasing department to determine the correct amount of a particular supply item to purchase.
D) a sophisticated means of linking two or more companies to facilitate their planning processes.
E) exception reporting system for plant managers.

Question 39

Management accounting

A) measures, analyzes, and reports financial and nonfinancial information to internal managers.
B) provides information about the company as a whole.
C) reports information that has occurred in the past that is verifiable and reliable.
D) provides information that is generally available only on a quarterly or annual basis.
E) must follow generally accepted accounting principles.

Question 40

Information used to project budgeted amounts does not require non-financial information.

Question 41

Which of the following is true concerning the value chain of business functions?

A) Managers should always proceed sequentially through the value chain, since distribution, for example, cannot occur before production is completed.
B) Senior managers from individual parts of the value chain do not have a responsibility in deciding on the organization's overall strategy.
C) An organization can only realize gains from having individual parts of the value chain work sequentially.
D) The value chain refers to the value added to the customer from marketing.
E) Senior managers from individual parts of the value chain have a responsibility in deciding how resources are to be obtained and used, and how rewards are to be given.

Question 42

Whose perceptions of the company's products or services are the most important to the manager?

A) board of directors' perception
B) customers' perception
C) president's perception
D) stockholders' perception
E) competitors' perception

Question 43

Determining the number of components to put into a computer monitor is an example of which of the following value chain functions?

A) research and development
B) design of products, services, and processes
C) production
D) marketing
E) distribution

Question 44

To be successful a company should be

A) customer driven.
B) "driven" by the board of directors.
C) employee driven.
D) management driven.
E) executive driven.

Question 45

________ describe(s) the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations.

A) Supply chain
B) Key success factors
C) Continuous improvement
D) Customer focus

Question 46

The value chain is the sequence of business functions in which

A) value is deducted from the products or services of an organization.
B) value is proportionately added to the products or services of an organization.
C) rational experimentation is performed to enhance product compatibility.
D) products and services are evaluated with respect to their value to the supply chain.
E) usefulness is added to the products or services of an organization.

Question 47

When a company works with its supplier to reduce material-handling costs, this is an example of

A) the customer-driven approach.
B) a conflict of interest.
C) a key success factor.
D) a strategic marketing focus.
E) total value chain or supply chain analysis.

Question 48

________ is a strategy that integrates people and technology in all business functions to enhance relationships with customers, partners, and distributors.

A) Supply-chain analysis
B) Customer relationship management
C) Value-chain analysis
D) Continuous quality improvement
E) Differentiation

Question 49

The value chain is the

A) sequence of business functions in which value is deducted from the products or services of an organization.
B) sequence of business functions in which value is proportionately added to the products or services of an organization.
C) process by which products and services are critiqued for their value.
D) sequence of business functions in which customer usefulness is added to the products or services of an organization.
E) sequence of functions in which value is added at specific target areas of improvement.

Question 50

R&D, production, and customer service are business functions that are all included as part of

A) the value chain.
B) benchmarking.
C) marketing.
D) the supply chain.
E) the company strategy.

Question 51

There is many aspects of a company that managers should focus on. Which of the following sets describes key success factors for managers in terms of delivering performance to customers?

A) cost and efficiency, time, quality, innovation
B) cost and efficiency, quality, innovation
C) cost and efficiency, shareholder value, quality, innovation
D) cost and efficiency, management by exception, quality, innovation
E) cost and efficiency, budgeting, quality, innovation

Question 52

The supply chain refers to the sequence of business functions in which customer usefulness is added to products or services.

Question 53

For best results, cost management emphasizes independently coordinating supply chain activities within your company and not interfering with other companies.

Question 54

Developing a new web site to display and demonstrate the company's products would be part of which value chain function?

A) research and development
B) design of products, services, and processes
C) production
D) marketing
E) distribution

Question 55

Place the five business functions in the order they appear along the value chain: A = Customer service
B = Design
C = Distribution
D = Production
E = Research and Development

A) A, E, B, D, C
B) A, C, D, B, E
C) E, B, D, C, A
D) E, B, A, D, C
E) B, E, D, C, A

Question 56

Key success factors are geared to improving customer satisfaction.

Question 57

Customer relationship management initiatives use technology to coordinate all

A) production activities.
B) research activities.
C) customer-facing activities.
D) inventory management activities.
E) aspects of strategy implementation.

Question 58

________ is the generation of, and experimentation with, ideas related to new products, services, or processes.

A) Research and development
B) Design of products, services, or processes
C) Production
D) Marketing
E) Quality control

Question 59

What aspect of business analysis focuses on the sequence of business functions?

A) customer service
B) value chain
C) quality
D) research and development
E) product design

Question 60

Companies use the term customer relationship management (CRM) to describe

A) a strategy that integrates people and technology in all business functions to enhance relationships with customers.
B) a strategy that integrates people and technology in all business functions to enhance relationships with customers and partners.
C) a strategy that integrates people and technology in all business functions to enhance relationships with customers, partners, and distributors.
D) a strategy that integrates people and technology in a few business functions to enhance relationships with customers, partners, and distributors.
E) a strategy that integrates people and technology in a few business functions to enhance relationships with customers and partners.

Question 61

Customers are demanding that companies use the value chain and supply chain to deliver ever-improving levels of performance regarding key success factors. Briefly describe each of the following key success factors: cost and efficiency; quality; time; innovation. For each key success factor give an example an activity that relates to that factor; and, the effect of that activity on the value chain.

Question 62

Control includes deciding what feedback to provide that will help with future decision making.

Question 63

________ is a philosophy in which management improves operations throughout the value chain to deliver products and services that exceed customer expectations.

A) Cost-benefit approach
B) Customer focus
C) Customer relationship management
D) Total quality management
E) Management by objectives

Question 64

A budget is defined as

A) the qualitative expression of a plan.
B) an aid in controlling income.
C) the quantitative expression of a plan of action by management.
D) the quantitative expression of a plan and an aid in controlling income.
E) an aid in coordinating and implementing a plan.

Question 65

The problem identification function is the accumulation of data and reporting reliable results to all levels of management.

Question 66

Management should evaluate the difference between planned and budgeted amounts.

Question 67

In most organizations, customer satisfaction is one of the top priorities. As such, attention to customers is necessary for success. Briefly describe the four types of key success factors essential to successful corporate performance.

Question 68

The process of preparing a budget enhances coordination and communication throughout the company.

Question 69

Johnson Advertising Agency incurs the following costs in its service activities. Classify each one of them according to one of the value chain functions.
1. Amortization of the artist design desk.
2. Cost of computer time used to create designs for customers.
3. Cost of updating an ad for a customer.
4. Cost of computer time used by a salesperson.
5. Cost of changing an unsuccessful ad after client complains that ad targeted wrong customers.
6. Cost of materials used in the layout of a customer's magazine ad.

Question 70

________ is an operational activity that is essential to corporate performance.

A) Customer focus
B) A key success factor
C) Continuous improvement
D) Supply chain
E) Value chain

Question 71

Planning is choosing goals, predicting results under various alternative ways of achieving those goals, and then deciding how to attain the desired goals.

Question 72

Control includes the performance evaluation of personnel and operations.

Question 73

Describe the value chain and how it can help organizations become more effective.

Question 74

A bonus paid to high performing sales persons is an example of an intrinsic reward.

Question 75

A budget may be used as a planning tool, but not as a control tool.

Question 76

Hardcover Company incurs the following costs when it manufactures books.
1. Cost of customer order forms.
2. Cost of paper used in manufacture of books.
3. Cost of paper used in packing cartons to ship books.
4. Cost of paper used in display at national trade show.
5. Amortization of delivery trucks.
6. Amortization of the wood used in the manufacturing plant.
7. Salary of the scientists attempting to find another source of printing ink.
Required:
Classify each one of them according to one of the value chain functions below:
a. Research and development.
b. Design of products, services, and processes.
c. Production.
d. Marketing.
e. Distribution.
f. Customer service.

Question 77

Learning arises from comparing actual performance to expected performance.

Question 78

Cyclone Car Company tries to assign appropriate responsibilities to all of its managers. Production managers receive reports which accumulate information of the shop operations for each plant. Plant operations are further aggregated in the report received by the vice president of manufacturing. These reports show the budgeted and actual operating results for the current month and year-to-date. These, along with inventory status reports, provide the major source of production information for the next planning period. Managers evaluate the variances between actual and budgeted amounts and determine whether operations are in or out of control. If variances are large, appropriate action is taken, i.e., the plans are changed.
The company's profits have been decreasing, and management has requested similar aggregate sales data from marketing. It is felt that this added information will suffice for its decision-making needs.
Required:
Do you agree? Why? Do you foresee any needs that will not be met by this information? If so, what additional information do you suggest that management be provided by the management accounting system?

Question 79

List and briefly describe each function in the value chain. Provide an example for each of the value chain functions identified.

Question 80

Measuring and evaluating performance, and providing feedback are aspects of

A) scorekeeping.
B) information gathering.
C) problem identification.
D) record keeping.
E) control.