Deck 1: Introduction to Management Accounting

Question 1

Which of the following activities is NOT significant to the advancement of information technology?

A) enterprise resource planning software
B) emergence of electronic commerce
C) theory of constraints
D) decision support systems

Answer 1

C

Question 2

Financial accounting is primarily concerned with providing financial reports to all of the following EXCEPT

A) creditors such as banks and other financial institutions.
B) creditors such as suppliers.
C) shareholders of the company.
D) management of the firm.

Answer 2

D

Question 3

Which of the following characteristics does NOT pertain to management accounting?

A) provides information and estimates about future activity
B) generates specific-purpose financial statements and reports
C) provides financial and operating data multidisciplinary in scope
D) has externally imposed standards

Answer 3

D

Question 4

Total quality management emphasizes

A) zero defects.
B) continual improvement.
C) elimination of waste.
D) all of the above.

Question 5

Factors that have led to a global market for manufacturing and service firms are

A) improved transportation and communications systems.
B) improved telemarketing and communications.
C) improved distribution and transportation systems.
D) None of these factors have contributed.

Question 6

Competitive advantage is established by

A) providing more customer products than competitors.
B) providing better quality than competitors.
C) providing greater customer value for less cost than competitors.
D) providing greater efficiencies than competitors.

Question 7

Which of the following cost management tools supports the firm's concentration on the delivery of value to the customer?

A) service industry growth
B) global competition
C) preparing an earnings report for external reporting
D) value-chain analysis

Question 8

Which of the following activities is NOT associated with the financial accounting information system?

A) reporting on the cost of quality
B) reporting to the shareholders
C) preparing reports for the tax authorities
D) preparing a statement of cash flows

Question 9

Which of the following does NOT describe management accounting?

A) evaluation of segments or products within the firm
B) emphasis on the future
C) externally focused
D) detailed information

Question 10

_____ is devoted to providing information for external users.

A) Management accounting
B) Financial accounting
C) Internal accounting
D) Cost accounting

Question 11

Automation of the manufacturing environment is associated with increases in

A) inventory.
B) capacity.
C) processing time.
D) none of these.

Question 12

Software that has integrated system capability using real time data is

A) enterprise resource planning software.
B) on-line analytic programs.
C) computer-assisted engineering software.
D) none of the above.

Question 13

Cost accounting

A) is concerned with assigning costs to various cost objects.
B) attempts to satisfy the costing objectives of both financial accounting and management accounting.
C) provides cost information that supports planning, controlling, and decision making.
D) All of the above descriptions are true.

Question 14

Improvement in time performance is most likely NOT enhanced by

A) redesign of products.
B) adding processes in production.
C) eliminating waste.
D) eliminating nonvalue-added activities.

Question 15

Management accounting and financial accounting differ in that management accounting information is prepared

A) following prescribed rules.
B) using whatever methods the company finds beneficial.
C) for shareholders.
D) to summarize the whole company with little detail.

Question 16

Management accounting reports are prepared

A) to meet the needs of decision makers within the firm.
B) whenever shareholders request them.
C) according to guidelines prepared by the shares and Financial Services Authority.
D) according to financial accounting standards.

Question 17

Management accounting is the branch of accounting concerned with reporting to

A) internal managers.
B) shareholders.
C) the government.
D) bankers.

Question 18

Which of the following emerging themes in cost accounting deals with managers striving to create an environment that will enable workers to manufacture perfect (zero-defect) products?

A) advances in information technology
B) time as a competitive element
C) global competition
D) total quality management

Question 19

Which of the following costing activities is associated with the financial accounting system?

A) determining the cost of a department
B) determining the cost of goods sold for financial statements
C) preparing budgets
D) determining the cost of a customer

Question 20

The primary objective of management accounting is

A) to provide shareholders and potential investors with useful information for decision making.
B) to provide banks and other creditors with information useful in making credit decisions.
C) to provide management with information useful for planning and control of operations.
D) to provide the relevant taxation authorities with information about taxable income.

Question 21

Performance reports are accounting reports that compare

A) planned data with actual data.
B) audited data with actual data.
C) managers' bonuses with performance ratings by supervisors.
D) actual data with industry standards.

Question 22

Monitoring the number of defects produced is an example of the management function of

A) planning.
B) control.
C) decision making.
D) both a and c

Question 23

Which of the following statements correctly distinguishes between financial and management accounting?

A) Management accounting reports on the whole organization.
B) Financial accounting is oriented toward the future.
C) Financial accounting is primarily concerned with providing information for internal users.
D) Management accounting is oriented more toward the planning and control aspects of management.

Question 24

Setting the company's profit targets for the upcoming year is an example of the management function of

A) planning.
B) control.
C) variance analysis.
D) internal auditing.

Question 25

Inspecting units produced to determine if they meet specifications is an example of

A) planning.
B) control.
C) decision making.
D) both a and c

Question 26

Accounting

A) always has an external orientation.
B) always has an internal orientation.
C) information assists in planning and controlling.
D) terms serve as a model of the organization.

Question 27

The formulation of a scheme or program for the accomplishment of a specific purpose or goal is referred to as

A) controlling.
B) motivating.
C) organizing.
D) planning.

Question 28

The setting of objectives and the identification of methods to achieve those objectives is called

A) planning.
B) controlling.
C) performance evaluation.
D) decision making.

Question 29

The monitoring of a plan's implementation is called

A) planning.
B) controlling.
C) decision making.
D) budgeting.

Question 30

Comparing actual quality costs with planned quality costs is an example of

A) planning.
B) controlling.
C) performance evaluation.
D) both b and c

Question 31

Continuous improvement is NOT

A) critical in a dynamic environment.
B) important to finding and maintaining a competitive advantage.
C) an effort to find ways to increase overall efficiency, improve quality, and reduce costs.
D) a responsibility of managers in world-class organizations.

Question 32

Setting the selling price of a company's product is an example of

A) planning.
B) control.
C) decision making.
D) all of the above.

Question 33

Principles of personal ethical behaviour that are essential to an ethical life include

A) integrity.
B) respect for others.
C) accountability.
D) all of the above.

Question 34

Which of the following statements is NOT true about world-class firms?

A) World-class firms are firms that are poor in customer support.
B) World-class firms know their market and their products.
C) World-class firms strive continually to improve product design, manufacture, and delivery.
D) World-class firms can compete with the best of the best in a global environment.

Question 35

Developing a company strategy for responding to anticipated new markets is an example of

A) planning.
B) control.
C) decision making.
D) all of the above.

Question 36

Determining the bid your company should submit on a construction contract is an example of

A) planning.
B) control.
C) decision making.
D) both a and b

Question 37

Investigating production variances and adjusting the production process is an example of

A) planning.
B) control.
C) internal auditing.
D) both a and c

Question 38

The planning process includes

A) setting objectives.
B) identifying means of achieving the objectives.
C) making decisions.
D) all of the above.

Question 39

In a performance report,

A) differences between actual costs and allowed costs are always undesirable.
B) expenditures of less than allowed amounts are undesirable.
C) expenditures of more than allowed amounts are not permitted to occur.
D) expenditures of less than allowed amounts are desirable.

Question 40

Evaluating the performance of a segment of the company is an example of

A) planning.
B) control.
C) internal auditing.
D) both a and c

Question 41

The standards of ethical conduct for management accountants include

A) competence and performance.
B) integrity and respect for others.
C) confidentiality, confidence, integrity, and observance.
D) competence, confidentiality, integrity, and objectivity.

Question 42

Which of the following statements most accurately describes an effect of employee empowerment?

A) Employee empowerment reduces the cost of implementing decisions.
B) Employee empowerment decreases the speed in which decisions are made.
C) Employee empowerment leads to an increased number of corporate staff positions
D) Employee empowerment places greater emphasis on decisions made by upper management.

Question 43

Which one of the following statements about ethical behaviour is true?

A) Ethical behaviour is not guided by well-defined rules and is often subjective.
B) Ethical behaviour is best described as doing actions that are permitted by law.
C) Ethical behaviour always involves choosing between actions that are clearly right or wrong.
D) Ethical behaviour is best guided by a policy of placing corporate performance above individual ends.

Question 44

Management accounting is primarily concerned with:

A) providing investors with useful information for valuing securities.
B) providing creditors information on the status of their loans.
C) providing managers with relevant information to help achieve organizational goals.
D) providing the relevant taxation authorities with information to determine the amount of taxes owed.

Question 45

In resolving an ethical conflict, which of the following would never be appropriate?

A) discussing the matter with the chief executive officer
B) discussing the matter with an external member of the board of directors
C) taking the matter to the press where there is no legal requirement
D) resigning from the position because of a conflict

Question 46

Management accounting:

A) provides a framework to evaluate information in light of an organization's goals.
B) provides relevant information to managers.
C) provides relevant information to meet specific needs of persons inside the organization.
D) all of the above

Question 47

The value chain includes which of the following activities?

A) designing and developing products and services
B) producing products and services
C) marketing and delivering products and services
D) all of the above

Question 48

The overall objective of accounting information systems is to

A) provide information to users.
B) manage the organization.
C) prepare financial reports.
D) report to the government.

Question 49

Classify the activity of handling raw materials according to its value-chain category.

A) developing
B) designing
C) producing
D) distributing

Question 50

Which of the following costs would be included in value-chain product costs?

A) research and development
B) production
C) customer service
D) all of the above

Question 51

Financial accounting information is least useful in providing:

A) information for stating corporate wide goals.
B) information for internal decision makers.
C) periodic reports for shareholders.
D) aggregate information about an organization's assets, obligations and performance.

Question 52

One advantage of employee empowerment is

A) it frees up some of the time of upper management for more strategic decision making
B) workers can improve production processes in a timely manner
C) employees closest to the work can provide valuable input in increasing efficiency
D) all of the above are advantages

Question 53

A(n) _____ is a computerized information system that strives to input data once and make it available to people across the company for different purposes.

A) cost management information system
B) enterprise resource planning system
C) internal accounting system
D) financial accounting information system

Question 54

World-class companies must continuously struggle to improve performance in the dimensions of:

A) price/cost
B) service
C) quality
D) all of the above

Question 55

Briefly discuss the differences between financial and management accounting.

Question 56

Relationships among activities that are performed within a firm's portion of the industrial value chain are

A) internal linkages
B) external linkages
C) customer linkages
D) none of the above

Question 57

Management accounting is concerned with which kind of decision?

A) product costing and pricing
B) continuous operational improvement
C) financial control
D) all of the above

Question 58

The _____ is an accounting information subsystem that is primarily concerned with producing outputs for external users.

A) cost management information system
B) computer system
C) internal accounting system
D) financial accounting information system

Question 59

Breakthroughs in technology this century have given rise to which one of the following effects?

A) Direct materials have GREATLY decreased as a percentage of total manufacturing costs.
B) Manufacturing overhead has only SLIGHTLY decreased as a percentage of total manufacturing costs.
C) Direct labour has GREATLY decreased as a percentage of total manufacturing costs.
D) Manufacturing overhead has GREATLY decreased as a percentage of total manufacturing costs.

Question 60

To compete on the basis if price, the seller must carefully manage:

A) cost
B) service
C) quality
D) none of the above

Question 61

What is cross-functional expertise and why is it important to the systems approach?

Question 62

Describe the connection between planning, controlling, and feedback.

Question 63

Briefly discuss the three dimensions on which competition takes place.

Question 64

Describe a cost management information system, its objectives, and major subsystems.

Question 65

Discuss how the goal of profit maximization is affected by ethical considerations. What incentives are there for managers to manipulate accounting data in unethical ways in order to increase profits?

Question 66

Identify and discuss the emerging themes that are affecting the way cost accounting is practiced.

Question 67

Identify the trends impacting management accounting and discuss the implications for management accounting.

Question 68

How has the nature of accounting systems shifted in response to technology?

Question 69

Personal computers significantly increase a manager's capabilities to process and use accounting information. Do you agree? Explain.

Question 70

You are a management accountant for the Eugene Division of Lowden Company. Your longtime friend, David Orth, is the Eugene Division manager. David was instrumental in helping you obtain your current position. Because the manager's annual bonus is based on the amount of profit the Eugene Division reports for the year, David has asked you to "massage the numbers" to make the Eugene Division appear more profitable.
Considering the Standards of Ethical Conduct for Management Accountants, how would you respond to David Orth's request?

Question 71

What can a company do to increase the likelihood of its employees being ethical in all their undertakings?

Question 72

You are a management accountant for Burn's Ltd. Ruth Hamilton, the sales representative for one of Burn's suppliers, invited you to attend a professional sporting event. Because you are an avid sports fan, you accepted Ruth's invitation.
At the sporting event, Ruth begins talking about Burn's upcoming contract renewals with suppliers. Because there is intense competition and because it is the first bid she will submit to Burn's Ltd., she asks you to review her bid to make sure "it is good enough" before she submits it to the company. In addition, because you are knowledgeable about costs, especially regarding this contract, she asks you to tell her if her bid is "in the ballpark" or "needs improvement." She indicates that if she wins the contract, you will be provided with season tickets for the rest of the year.
Considering the Standards of Ethical Conduct for Management Accountants, how would you respond to Ruth's request?

Question 73

What is customer orientation? Why is it important in a global environment? What role does cost management play in serving customers?

Question 74

What is the role of management accounting information in strategic cost management?

Question 75

Discuss the change in composition of total manufacturing costs during the last century, using the three major cost categories: direct materials, direct labour, and manufacturing overhead.

Question 76

Explain what is meant by confidentiality and why it is important.

Question 77

Why has time become such an important factor in competition?

Question 78

Give some examples of reporting feedback that will assist in continuous improvement of a dry cleaning company.