Deck 15: The Changing Business Environment - a Managers Perspective

Question 1

Financial accounting's main emphasis is on full and accurate accounting for and disclosure of a company's operating results.

Answer 1

True

Question 2

Financial information included in financial statements prepared for external use is past data,summarized for the user as of a particular date.

Answer 2

True

Question 3

Internal accounting reports should be prepared when they are needed,without regard to calendar dates or regularity of issue.

Answer 3

True

Question 4

Rules applicable to accounting information created and prepared for management use are the same as those for information reported to the general public.

Question 5

The overall guideline or limit for management accounting information is that the report or analysis must be meaningful and must answer the questions or issues under review.

Question 6

Similar to financial accounting reports,management accounting reports are standardized in format.

Question 7

Financial accounting is concerned primarily with planning and control of internal operations.

Question 8

Management accounting information is more subjective than financial accounting information.

Question 9

Management accounting is not a subordinate activity to financial accounting.

Question 10

Management accounting exists primarily for the benefit of people outside the company.

Question 11

Management accounting must observe both financial accounting standards and cost accounting standards if it is to be useful to the organization's management.

Question 12

Management accounting data may be gathered for small segments or large divisions and may be expressed in units of measurement other than historical dollars.

Question 13

Most management decisions are based on analyses using expected future dollars.

Question 14

The analyses and flow of accounting data inside a company need not depend on the double-entry format.

Question 15

Financial accounting comprises all rules governing the accounting for and reporting of financial information that must be disclosed to people outside the company.

Question 16

Financial accounting information is determined objectively and is verifiable,whereas management accounting usually represents subjective estimates of future events.

Question 17

Financial accounting usually involves analyses of various segments of a business,such as cost centers,profit centers,or departments,or of some specific aspect of its operations.

Question 18

Management accounting is the process of identifying,measuring,accumulating,analyzing,preparing,and communicating financial information used by management.

Question 19

Financial accounting is defined as the use of management information to plan,evaluate,and control within the organization and to ensure appropriate use and accountability for its resources.

Question 20

Management accounting provides reports that are future oriented.

Question 21

Management accounting complements each stage in the management process.

Question 22

In a JIT system,workers are trained to specialize in one specific task.

Question 23

The management process and management accounting are identical.

Question 24

Comparing actual performance with expected performance levels is an evaluation activity.

Question 25

The keys to successful report writing include identifying the who,what,when,and why of the report.

Question 26

In a JIT system,materials and parts are not stockpiled.

Question 27

A business plan is a comprehensive statement of how a company will achieve its objectives,but does not include budgets or performance goals.

Question 28

Each of the management tools can be used individually,or parts of them can be combined to create a new operating environment.

Question 29

An advantage of value chain analysis is that it allows a company to focus on what a company does best.

Question 30

A value chain includes only processes and services that add value to the final product or service.

Question 31

Hiring a janitorial service firm rather than employing full-time employees is an example of outsourcing.

Question 32

A manager should write the purpose of a report before preparing it.

Question 33

Support services,such as legal services,are critical to making an efficient and effective value chain.

Question 34

Neither the amount of detail nor the format of a management accounting report is affected by those to whom the report is sent.

Question 35

Management executes a plan by overseeing the daily operations of an organization.

Question 36

Management accounting accumulates,maintains,and processes an organization's financial and nonfinancial information.

Question 37

Total quality management has many of the same characteristics as the JIT philosophy.

Question 38

If a report is urgently needed,some accuracy may have to be sacrificed in the interest of timeliness.

Question 39

Like balance sheets and income statements,management accounting formats are much the same from company to company.

Question 40

The four stages of the management process are plan,perform,evaluate,and communicate.

Question 41

"Hours of inspection" is an example of a nonfinancial performance measure.

Question 42

The main goal of total quality management is to reduce product costs.

Question 43

The balanced scorecard has gained little acceptance as an approach to establish effective performance measurement.

Question 44

Total quality management focuses on reducing waste.

Question 45

In analyzing nonfinancial data,it is important to link the performance measures to the four perspectives of the balanced scorecard and to the objectives that are to be achieved.

Question 46

Benchmarking enables a company to determine whether it is making continuous improvement in its operations without regard to competition.

Question 47

Financial performance measures are useful in reducing waste and inefficiencies in operating activities.

Question 48

JIT,TQM,ABM,and TOC all make a contribution to continuous improvement and are applicable in service businesses as well as in manufacturing and retail businesses.

Question 49

TQM seeks to improve the quality of both the product and the work environment.

Question 50

Activity-based management is an extension of activity-based costing.

Question 51

Comparing the number of bytes processed per nanosecond by each computer is an example of using nonfinancial data analysis.

Question 52

Evaluating employees based upon their performance is an example of developing benchmarks.

Question 53

Performance measures are limited to financial data.

Question 54

JIT,TQM,and ABM all seek continuous improvement in operations.

Question 55

In making the transition from financial accounting to management accounting,you must become accustomed to using the historical dollar as the primary unit of measurement.

Question 56

Activity-based management focuses on enhancing activities that add value to the product and reducing those that do not.

Question 57

In order to obtain information about benchmarks,a manager might join a trade association for the company's particular industry.

Question 58

Performance measures are used only in the evaluation stage of the management process.

Question 59

Activity-based costing (ABC)is used most often to improve the assignment of overhead costs to products.

Question 60

The costs of quality consist entirely of rework costs and customer complaint costs.

Question 61

The management accountant must be knowledgeable about all relevant laws,regulations,and technical standards that pertain to his or her duties.

Question 62

The management accountant who is responsible only for nonfinancial reports to management does not have to remain objective,using the doctrine of fairness,when preparing all reports and analyses.

Question 63

If a management accountant gives information about a future merger of his or her company to a relative,the accountant has acted unethically.

Question 64

Management accounting reports can

A) use a flexible format.
B) use financial and nonfinancial data.
C) be prepared for any time period.
D) include all of these.

Question 65

The unit of measurement used in management accounting is

A) primarily the historical dollar.
B) usually current replacement cost.
C) any measurement unit that is useful in a particular situation.
D) the measurement unit used by competing companies.

Question 66

When unable to resolve an ethical conflict,the accountant should consider consulting with an attorney as to the legal obligations and rights concerning the ethical conflict.

Question 67

Accumulating,interpreting,and reporting financial information is important for

A) service-related firms only.
B) manufacturing firms only.
C) virtually all types of organizations.
D) not-for-profit organizations only.

Question 68

Management accounting

A) deals primarily with people and organizations outside of the business entity.
B) requires only periodic reporting on a regular basis.
C) uses any type of useful measurement unit, including physical as well as monetary measures.
D) deals only with the double-entry recording system.

Question 69

Although management accountants should try not to engage in activities that would prejudice their ability to carry out their duties,they are not obligated to refrain from such activities after business hours,as long as these activities take place off company premises.

Question 70

The management process includes all of the following stages except

A) evaluate.
B) communicate.
C) plan.
D) record.

Question 71

Which of the following is a characteristic of management accounting?

A) It must follow generally accepted accounting principles.
B) It is used primarily by internal users.
C) It is concerned primarily with reporting past performance.
D) It uses historical costs as the sole measurement unit.

Question 72

Which of the following types of information is not essential for a manager to run a business effectively?

A) Product or service costing information
B) Data for planning and controlling of operations
C) Special reports and analyses to support decisions
D) Quote of the current price of the company's stock

Question 73

In comparing management accounting with financial accounting,which of the following statements is true?

A) Both use historical costs as their primary unit of measurement.
B) Both depend on the double-entry system of accounting.
C) Both require adherence to GAAP.
D) Financial accounting reports are more objective, whereas management accounting reports are more subjective.

Question 74

Practitioners of management accounting and financial management have a responsibility to communicate information fairly and objectively.

Question 75

Management accountants who alter reports to meet targeted levels of performance are not acting unethically,because their job is to provide information that will aid in communicating the goals of the business.

Question 76

Although some management accountants strive to update their knowledge and skills,such updating is not within the realm of management accountants' ethical standards.

Question 77

Management accountants working in purchasing must decline gifts from company vendors,because acceptance of a gift might influence or be perceived as influencing their performance or decision analyses.

Question 78

Although the purpose of the confidentiality standard is to encourage management accountants to remain loyal to their company,failure to disclose knowledge of internal illegal acts to outside authorities can result in the accountants being charged as an accessory to the crime.

Question 79

Management accounting and financial accounting are similar in which of the following respects?

A) Both use the same unit of measurement.
B) Both rely heavily on the double-entry system.
C) Both produce almost all of their respective informational reports on a routine monthly basis.
D) Both provide relevant and useful information to management.

Question 80

When there is an ethical conflict,the management accountant should resign if the immediate supervisor is involved with the conflict.