Deck 16: Introduction to Managerial Accounting

Question 1

The IMA Statement of Ethical Professional Practice includes confidentiality, competence, credibility, and integrity.

Answer 1

True

Question 2

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):
$\begin{array}{l|l}\text { Statement } & \begin{array}{c}\text { Applies to } \\\text { MA or FA }\end{array} \\\hline \text { How reports will affect employee behavior is a } & \\\text { concern. } & \\\hline \text { Summary reports are prepared primarily on the } & \\\text { company as a whole, usually on a quarterly or annual } & \\\text { basis. } & \\\hline \text { Relevant information and focus on the future. } & \\\hline \text { Primary users include investors, creditors, and } & \\\text { government authorities. } & \\\hline \text { There is no requirement to follow GAAP. } & \\\hline\end{array}$

Answer 2

$\begin{array}{|l|c|}\hline& \text { Applies to } \\\text { Statement } & \text { MA or FA }\\\hline\text { How reports will affect employee behavior is a } & \\\text { concern. } & \text { MA } \\\hline \text { Summary reports are prepared primarily on the } & \\\text { company as a whole, usually on a quarterly or annual } & \text { FA } \\\text { basis. } & \\\hline \text { Relevant information and focus on the future. } & \text { MA } \\\hline \text { Primary users include investors, creditors, and } & \\\text { government authorities. } & \text { FA } \\ \hline\text { There is no requirement to follow GAAP. }&\text { MA }\\\hline\end{array}$

Question 3

The IMA standards of ethical practice require managerial accountants to maintain their professional competence.

Answer 3

True

Question 4

Financial accounting prepares reports for internal purposes, whereas managerial accounting provides information to external stakeholders.

Question 5

Which of the following statements is true of managerial accounting?

A) The external stakeholders of a company are the primary users of managerial accounting.
B) Managerial accounting information is used to help managers plan, direct and control their operations.
C) An external audit by an independent CPA is required for managerial accounting information.
D) Managerial accounting information must comply with Generally Accepted Accounting Principles.

Question 6

Managerial accounting provides financial statements that report results of operations, financial position, and cash flows both to managers and to external stockholders.

Question 7

Define planning. List and briefly discuss the two types of planning managers perform.

Question 8

Which of the following is the primary focus of managerial accounting?

A) providing information that managers need to make operational decisions
B) providing historical data to investors and creditors
C) providing summarized results of operations
D) providing information to comply with laws and regulations of government bodies

Question 9

Managerial accounting information for a company is primarily used by ________.

A) its customers to understand the pricing of the product
B) its creditors to understand the credibility of the business
C) its employees to plan, direct and control operations
D) its investors to make their investment decisions

Question 10

Which of the following is a focus of managerial accounting?

A) to generate a company's financial statements for tax reporting
B) to provide information to business managers to assist them in controlling their businesses
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are GAAP compliant

Question 11

Comparing actual results to expected results is part of the

A) controlling function of managerial accounting.
B) planning function of managerial accounting.
C) reporting function of managerial accounting.
D) organizing function of managerial accounting.

Question 12

The accountant for Myra Lido deliberately recorded operating expenses as operating assets in order to record a higher net income for the company. As long as the amount of the misstatement was not material, this would not be considered unethical behavior.

Question 13

Managerial accounting focuses on providing information for internal planning and control.

Question 14

Which of the following statements is true of financial accounting?

A) It provides information to investors needed for their investment decisions.
B) It provides future focused information needed for managing and delegating operations.
C) It focuses on detailed reports for parts of the company rather than the whole company.
D) It focuses on planning, directing and controlling day-to-day operations.

Question 15

Managerial accounting reporting by a public firm is required to follow the rules of GAAP.

Question 16

Financial statements prepared for investors and creditors often include forward-looking information because they make decisions based on a company's future prospects.

Question 17

Planning requires managers to look to the future and establish goals for the business.

Question 18

Financial reporting is typically much more detailed than managerial accounting.

Question 19

Which of the following is the primary focus of financial accounting?

A) providing information that managers need to make operational decisions
B) providing summarized information on operational results to investors and creditors
C) providing information to managers to assist in planning, directing and controlling operations
D) providing highly detailed information on product lines, regions, and divisions

Question 20

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?

A) comparing actual to expected results
B) choosing goals and deciding how to achieve them
C) monitoring operations to keep the company on track
D) monitoring and evaluating the results of operations

Question 21

A company's president or chief executive officer (CEO) is selected by the stockholders.

Question 22

A company's organizational chart shows the relationships between departments and divisions and the managers that are responsible for each section.

Question 23

Connie is analyzing the financial statements of MegaMart and Bullseye Company. She wants to invest in one of the companies and is trying to decide which company has the better past performance. Connie is examining ________.

A) managerial accounting information
B) financial accounting information
C) regulatory accounting information
D) organizational accounting information

Question 24

The managerial role that involves the day-to-day running of the business is the ________.

A) directing function
B) planning function
C) controlling function
D) strategic planning function

Question 25

Anika, a division manager, is purchasing materials to ensure she has enough to meet customers' demands. Anika is engaging in the ________.

A) planning function
B) directing function
C) controlling function.
D) decision function

Question 26

The jobs that are directly involved in providing goods or services to customers are called ________.

A) staff positions
B) functional positions
C) line positions
D) human relations positions

Question 27

Which of the following functions might be classified as a staff position as opposed to a line position?

A) Division Manager
B) Production Manager
C) Sales Manager
D) Payroll Processing Manager

Question 28

Seria, Inc. has received a bulk order from an overseas client. As a result, the reported earnings of this year are expected to be significantly higher than the estimates of financial analysts. Joshua, an accountant at Seria, tells this to one of his friends. Which of the IMA standards has Joshua violated?

A) objectivity
B) competence
C) confidentiality
D) technicality

Question 29

Most companies structure their organizations along departments or divisions.

Question 30

Strategic planning focuses on short term actions while operational planning involves developing long-term strategies.

Question 31

The chief financial officer, controller, and treasurer are all examples of staff positions.

Question 32

At the end of the year, Mary's supervisor asked her to record sales transactions for products that would not ship until the following year, and she complied. Mary has violated IMA ethical standards.

Question 33

Which of the following is one of the key standards of ethical practice published by the Institute of Management Accountants (IMA)?

A) social responsibility
B) environmental sensitivity
C) technicality
D) confidentiality

Question 34

Financial and managerial accounting both provide useful information, but each has a different emphasis. Briefly distinguish between financial and managerial accounting as they relate to the 1) primary users, 2) purpose of information, and 3) focus and time dimension of the information.

Question 35

The officer of the company who has the ultimate responsibility for implementing the company's long and short-term goals is the ________.

A) Chief Financial Officer
B) Chair of the Board
C) Chief Executive Officer
D) Chief Officer for Human Relations

Question 36

You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds. Which of the IMA standards appears to have been violated?

A) integrity
B) confidentiality
C) competence
D) objectivity

Question 37

Miguel, a manager for Sierra Company, is inspecting the reports provided by his company's accounting department. He wants to decide how to schedule his department's employees in production next week. Miguel is examining ________.

A) managerial accounting information
B) financial accounting information
C) regulatory accounting information
D) organizational accounting information

Question 38

Monitoring operations and keeping the company on track is part of the ________.

A) controlling function
B) directing function
C) planning function
D) strategic function

Question 39

A diagram that shows the relationships between departments and divisions, and the managers that are responsible for each section is called a(n) ________.

A) departmentalization chart
B) work specialization chart
C) organizational chart
D) chain of command chart

Question 40

Staff positions are directly involved in providing goods or services to customers.

Question 41

Match each term with its correct definition.

A) Controlling
B) Managerial accounting
C) Organizational chart
D) Planning
E) Line position
F) Financial accounting
G) Directing
The Board of Directors is shown at the top of this diagram.

Question 42

Which of the following will most likely be considered an indirect material cost for a bakery?

A) spices
B) flour
C) milk
D) eggs

Question 43

Manufacturing overhead includes indirect manufacturing costs, such as insurance and depreciation on the factory building.

Question 44

The cost of direct materials cannot easily be traced to the manufactured product, and therefore, it is a component of manufacturing overhead.

Question 45

Match each term with its correct definition.

A) Controlling
B) Managerial accounting
C) Organizational chart
D) Planning
E) Line position
F) Financial accounting
G) Directing
This role requires managers to look to the future.

Question 46

Indirect labor costs might include the salary of the production manager.

Question 47

In a manufacturing company, wages and benefits of assembly line workers are period costs.

Question 48

Direct costs and indirect costs can be easily traced directly to a cost object.

Question 49

Match each term with its correct definition.

A) Controlling
B) Managerial accounting
C) Organizational chart
D) Planning
E) Line position
F) Financial accounting
G) Directing
An accounting field that helps managers plan and control operations.

Question 50

The wages of factory janitors are considered to be direct labor costs because they are directly related to the manufacturing process.

Question 51

Match each term with its correct definition.

A) Controlling
B) Managerial accounting
C) Organizational chart
D) Planning
E) Line position
F) Financial accounting
G) Directing
Job that is directly involved in providing goods or services to customers.

Question 52

Product costs, such as manufacturing overhead, should be treated as an asset in an inventory account until the product is sold.

Question 53

Define direct cost.

Question 54

Match each term with its correct definition.

A) Controlling
B) Managerial accounting
C) Organizational chart
D) Planning
E) Line position
F) Financial accounting
G) Directing
The role managers play when they are motivating employees

Question 55

Anything for which managers want a separate measurement of cost is called a ________.

A) responsibility center
B) cost object
C) profit object
D) conversion cost

Question 56

Match each term with its correct definition.

A) Controlling
B) Managerial accounting
C) Organizational chart
D) Planning
E) Line position
F) Financial accounting
G) Directing
An accounting field that is required to follow Generally Accepted Accounting Principles.

Question 57

Match each term with its correct definition.

A) Controlling
B) Managerial accounting
C) Organizational chart
D) Planning
E) Line position
F) Financial accounting
G) Directing
The role managers play when they evaluate why results were different from expectations.

Question 58

All costs incurred in the manufacture of completed products are product costs.

Question 59

Define indirect cost.

Question 60

Manufacturing overhead includes all manufacturing costs, such as direct labor and direct materials.

Question 61

For a manufacturer, rent paid for an office building is an example of a period cost.

Question 62

In a manufacturing company, wages and benefits of factory managers are treated as product costs.

Question 63

Product costs, such as direct materials costs, are expensed in the period they are incurred.

Question 64

In a manufacturing company, advertising and marketing costs are included in manufacturing overhead.

Question 65

Indirect materials costs are included in manufacturing overhead.

Question 66

In a manufacturing company, advertising and marketing costs are examples of period costs.

Question 67

Sales commissions are included in manufacturing overhead.

Question 68

Repair and maintenance costs of vehicles used to deliver products to customers are product costs.

Question 69

Factory rent, as well as factory property taxes and insurance, are included in manufacturing overhead.

Question 70

Freight costs paid to ship raw materials to a company warehouse are considered product costs.

Question 71

In a manufacturing company, accounting, legal, and administrative costs are typical examples of product costs.

Question 72

The three categories of period costs are direct materials, direct labor, and manufacturing overhead.

Question 73

In a manufacturing company, the salary of the sales staff is an example of a period cost.

Question 74

Repair and maintenance costs for manufacturing equipment are included in manufacturing overhead.

Question 75

In a manufacturing plant, indirect materials costs from lubricants and cleaning fluids are product costs.

Question 76

Repair and maintenance costs for manufacturing equipment are product costs.

Question 77

Manufacturing companies have inventory accounts, but merchandising companies do not.

Question 78

In a manufacturing company, administrative costs are included in period costs.

Question 79

In a manufacturing company, wages and benefits of assembly line workers are included in manufacturing overhead.

Question 80

The salary of a manufacturing plant manager will be included in manufacturing overhead.