Deck 1: Management Accounting: Information for Creating Value and Managing Resources

Question 1

Which of the following is necessary for management accounting information to be useful?

A) It must report to external users.
B) It must develop a framework of principles and guidelines.
C) It must adapt to accommodate changes in the business environment.
D) It must focus on the enterprise in its entirety.

Answer 1

C

Question 2

Which of the following statements is an element of confidentiality?
I) Accountants must not disclose information acquired in the course of their work.
Ii) Accountants must disclose information if there is a professional duty to do so.
Iii) Accountants may not use information gained in the course of their work for their own or another's personal advantage.

A) i
B) ii
C) iii
D) i, ii and iii

Answer 2

D

Question 3

Which of the following statements regarding management accounting information is false?

A) The cost of providing the information must be considered in the light of the benefits received from the information.
B) All information derived is necessary despite the cost.
C) The information entails both costs and benefits.
D) The cost of the information includes the time spent by the user to read, understand and use the information.

Answer 3

B

Question 4

A management accountant should be concerned with:

A) providing daily information on physical measures of operational performance.
B) assisting in interdepartmental communications.
C) developing and implementing information systems.
D) All of the given answers

Question 5

Budgeting can be used in an organisation to:

A) motivate managers to achieve organisational goals.
B) control operations.
C) provide managers with information for making decisions and planning.
D) All of the given answers

Question 6

Which of the following statement/s about management accounting is/are true?
I) It is a part of an organisation's management information system.
Ii) It is relied on by managers to plan and control an organisation's operations.
Iii) It is relied on by external users to make investment decisions.

A) i and ii
B) i, ii and iii
C) iii
D) ii

Question 7

Which of the following statement/s about management accounting is/are true?
I) It is concerned only with information obtained from the accounting records.
Ii) It is concerned with financial and non-financial information.
Iii) It can provide information useful for making decisions.

A) i
B) i and ii
C) ii and iii
D) ii

Question 8

The benefits of management accounting information include:

A) improved decisions.
B) more effective planning.
C) greater efficiency of operations.
D) All of the given answers

Question 9

Which of the following statements regarding the competence of an accountant is true? The accountant must:

A) strive continually to improve technical services and keep knowledge up-to-date.
B) not breach the trust of clients and employers.
C) not disclose information acquired in the course of professional work, except where there is a legal or professional duty to disclose.
D) at all times safeguard the interest of the clients and employers, provided it does not conflict with their duty to the community.

Question 10

The largest professional organisation for management accountants in Australia is the:

A) CPA Australia.
B) Australian Accounting Association.
C) Institute of Chartered Accountants in Australia.
D) Certified Institute of Management Accountants.

Question 11

A strategy is:
I) another name for a long-term objective
Ii) the same as an objective
Iii) a means by which an organisation plans to meet its mission and achieve its objectives

A) i
B) ii
C) iii
D) i and ii

Question 12

What type of accounting system is part of an organisation's management information system for internal use only?

A) Financial accounting
B) Management accounting
C) Governmental accounting
D) All of the given answers

Question 13

Planning is:

A) comparing actual performance against targets
B) setting objectives and formulating plans for future operations
C) measuring the performance of managers against preset targets
D) motivating managers towards achieving organisational goals

Question 14

Management accounting:

A) must comply with Australian accounting standards.
B) focuses primarily on the needs of managers internal to the organisation.
C) provides information for parties external to the organisation.
D) involves reports focusing on the enterprise in its entirety.

Question 15

Which of the following does not represent the ethics of professional accountants?

A) Competence and confidentiality
B) Integrity and objectivity
C) Professional scepticism and efficiency
D) Objectivity and confidentiality

Question 16

Both financial and management accounting:

A) draw on data from the organisation's basic information system.
B) provide information for external users.
C) must comply with Australian accounting standards.
D) rely exclusively on historical data.

Question 17

Part of the planning process involves:

A) formulating details of operations and finances for the next financial year
B) comparing actual performance against targets
C) making a choice between available alternatives
D) measuring the performance of managers against preset targets

Question 18

'Control' involves:

A) formulating details of operations and finances for the next financial year
B) comparing actual performance against targets
C) deciding whether to expand activities
D) All of the given answers

Question 19

The role of management accounting is to:

A) provide information to parties outside the organisation
B) provide information to managers within the organisation.
C) provide information to government agencies.
D) All of the given answers

Question 20

Which of the following is not an objective of management accounting?

A) Providing information for making decisions
B) Providing information for planning
C) Providing information for control
D) Providing information for profit and loss statements

Question 21

Which of the following are management accounting responses to the changing business environment?

A) Activity-based costing.
B) E-commerce.
C)
C) Supplier cost analysis.
D) A and

Question 22

Eddy Gunn is a management accountant. Which of the following is most likely to be Eddy's responsibility?

A) Providing an environmental assurance report for his company's shareholders
B) Compiling the company tax return
C) Ensuring that the internal accounting system is compliant with generally accepted accounting standards
D) Developing a production cost report for each of the company's three production lines

Question 23

Animus Ltd is a mining company. Which of the following is an example of 'control'?

A) Awarding bonuses to Aimus Ltd's top performing executives
B) Setting production targets for the company's new mines
C) Developing correction actions to respond to lower-than-expected production levels in the existing mines.
D) Pursuing legal actions against environmental activists who stole mining equipment.

Question 24

Animus Ltd is a mining company. Which of the following is an example of 'planning'?

A) Awarding bonuses to Aimus Ltd's top performing executives
B) Setting production targets for the company's new mines
C) Developing correction actions to respond to lower-than-expected production levels in the existing mines
D) Pursuing legal actions against environmental activists who stole mining equipment

Question 25

Which of the following statements is correct?

A) A financial controller is only responsible for financial accounting.
B) The primary role of the finance function of an organisation is to liaise with banks and financial intuitions to obtain finance to fund operations.
C) In some organisations, management accountants are located in factories.
D) Management accountants are responsible for external reporting as well as providing information to internal managers.

Question 26

Strategies:

A) are directions that a firm intend to take in the long term.
B) describe the way the firm competes.
C) are the same as objectives and goals.
D) are independent of the firm's mission statement.

Question 27

Which of the following are ethical standards for management accountants?
I) Competence
Ii) Objectivity
Iii) Confidentiality
Iv) Integrity

A) i, ii, iii and iv
B) ii, iii and iv
C) i, ii and iv
D) i, iii and iv

Question 28

The 'vision' of an organisation:

A) refers to the desired future state of an organisation.
B) refers to a statement that defines the purpose of the organisation.
C) refers to specific statements of objective, upon which goals can be set.
D) is only useful for non profit organisations.

Question 29

The focus of management accounting over time has changed. Which is the correct historical order for the following foci?
I) Cost
Ii) Profitability
Iii) Resource management
Iv) Waste reduction

A) i, ii, iii and iv
B) ii, iii, i and iv
C) i, ii, iv and iii
D) i, iii, iv and ii

Question 30

Which of the following statement/s is/are false? Management accountants should:
I) help in the provision of physical data to managers.
Ii) be included in the management of information systems.
Iii) present their information in monetary terms only.
Iv) help to ensure effective interdepartmental communications.

A) i and ii
B) iii and iv
C) iii
D) iv

Question 31

The costs of providing information to management should be less than the benefits. Which of the following are costs of management accounting information?
I) Salary cost of management accounting personnel
Ii) Computer operating costs
Iii) Managers' time in reading and acting on the information

A) i, ii and iii
B) ii and iii only
C) i and iii only
D) None of the given answers

Question 32

Animus Ltd is a mining company. Which of the following is an example of a business strategy decision?

A) Should Animus Ltd operate in the mining industry only or expand to heavy machinery manufacturing and distribution?
B) Should Animus Ltd compete based on price or product differentiation?
C) Should Animus Ltd hire a new financial controller?
D) Should Animus Ltd develop a new management accounting system?

Question 33

Choose the statement that best completes this sentence: 'All management accounting information ....'

A) has a focus on past costs.
B) has a focus on future costs.
C) is collected as required by internal management of the firm.
D) is constrained by the requirements of the Australian Accounting Standards.

Question 34

Animus Ltd is a mining company operating in Australia. The company has recently developed a new environmental management accounting system. According to institutional theory:

A) the new system is likely to be the result of the Australian culture of being environmentally conscious and the fact that negative environmental impacts can result in significant fines to the company.
B) the new system is likely to be the result of gaining legitimacy and to imitate other mining companies who are 'doing the right thing'.
C) the new system is likely to be the result of stringent government regulations.
D) the new system is likely to be the result of careful, rational, cost-benefit analysis.

Question 35

Which of the following is the most logical sequence for a commencing organisation?

A) Control, feedback, planning
B) Planning, control, feedback
C) Feedback (feedforward), planning, control, feedback
D) Control, planning, feedback

Question 36

Animus Ltd is a mining company. Which of the following is an example of a decision relating to formulating Animus Ltd's corporate strategy?

A) Should Animus Ltd operate in the mining industry only, or expand to heavy machinery manufacturing and distribution?
B) Should Animus Ltd compete based on price or product differentiation?
C) Should Animus Ltd hire a new financial controller?
D) Should Animus Ltd develop a new management accounting system?

Question 37

Which of the following would not be likely as a consistent focus for a firm following a product differentiation strategy?

A) Quality
B) Delivery
C) Product innovation
D) Cost reduction

Question 38

Which of the following statements is correct?

A) The primary objective of a firm's management is to increase the firm's value.
B) The management accounting system needs to accumulate information from both internal and external sources.
C) Managers may be faced with a conflict between increasing customer value and increasing shareholder value.
D) All the given statements are correct.

Question 39

Choose the statement that best completes this sentence: 'Traditional management accounting focuses on .....'

A) budgets, financial performance measures and cost control.
B) financial performance measures, external reporting and cost elimination.
C) non-financial performance measures, external reporting and cost control.
D) external reporting, labour-related activity measures and cost elimination.

Question 40

Which of the following statements is correct?

A) Management accounting is a subset of cost accounting.
B) Cost accounting is a subset of management accounting.
C) Cost accounting is no longer required in today's competitive environment.
D) Management accounting in today's environment is the same as it was many years ago.

Question 41

Objectivity in management accounting
What is meant by the following statement? 'The objectivity of the management accounting process is largely a myth.'

Question 42

'As global competition increases, businesses are being pressured to reach higher levels of productivity to price their products and services competitively.' Explain how management accountants can play a role in helping management meet these challenges.

Question 43

The systems and procedures implemented to provide regular information to assist with control are called control systems.

Question 44

Modern management accounting systems include techniques that support an organisation's:

A) strategy.
B) mission.
C) goals.
D) decisions.

Question 45

Which of the following changes in the business environment have led to more complicated relationships and business structures?

A) Rapid advances in technology
B) Increases in outsourcing and reliance on various forms of business networks
C) Increased global mobility in labour
D) Reliance on creating mutually strategic business alliances

Question 46

Behavioural issues are not taken into consideration when developing management accounting systems.

Question 47

If a firm's senior management decide to follow a differentiation strategy, their focus should be to NOT concentrate on:

A) product quality.
B) product delivery.
C) product innovation.
D) product costs.

Question 48

The theory that suggests that a firm's management accounting system is influenced by factors such as the external environment and technology is called contingency theory.

Question 49

Explain how the management accountant, with the use of computer technology, can provide information that will be useful for the management and control of operational tasks.

Question 50

There is no overlap between the two accounting streams management and financial accounting.
FALSE

Question 51

When a firm adopts a strategy of being a low-cost producer and sells its products at a price lower than its competitors, the firm is said to be using a strategy of cost leadership.

Question 52

Jasmine Dol is a junior management accountant at Hey Hey Toys Ltd. Jasmine is given the task of compiling a cost-benefit analysis report on whether the company should purchase an expensive new machine from Beta Ltd, where her brother is the new sales manager. Jasmine did not tell anyone in Hey Hey Toys about her brother's new job. In preparing her report, Jasmine overstates the qualitative benefits and understates the costs associated with this new machine, in order to help her brother make his first sale as the new sales manager.
Discuss why and how Jasmine has deviated from the IFAC's code of ethics.

Question 53

Organisations prepare a mission statement that describes the desired future position and/or goals of the organisation.

Question 54

Management accounting focuses on:

A) compliance with the accounting standards.
B) meeting the needs of external users.
C) effective and efficient management of resources.
D) financial data only.

Question 55

The firm's primary accounting system that produces financial data for external users is governed by:

A) accounting standards.
B) all of the choices are correct.
C) generally accepted accounting principles.
D) traditional accounting conventions.

Question 56

Identify and contrast management accounting and financial accounting information

Question 57

Management accounting and decision making
Give an example of management accounting information that could help a manager make each of the following decisions:
i. The managing director of a car rental company is deciding whether to add luxury cars to the rental car fleet.
ii. The production manager in an assembly plant is deciding whether to have routine maintenance performed on a machine weekly or fortnightly.
iii. The manager of a department store is deciding on the number of security personnel to employ to reduce shoplifting.
iv. The local council is deciding whether to build an addition to the local library.

Question 58

Which of the following is not a widely recognised professional accounting body?

A) The Institute of Production Accountants
B) CPA Australia
C) The Institute of Chartered Accountants
D) The Institute of Management Accountants

Question 59

List and define four ethical standards that are part of the IFAC's Code of Professional Conduct.

Question 60

Which of the following changes in the business environment have led to the emergence of virtual organisations?

A) Rapid advances in technology
B) Increases in outsourcing and reliance on various forms of business networks
C) Increased global mobility in labour
D) Reliance on creating mutually strategic business alliances

Question 61

Staff management and line management both have indirect responsibilities to the operations of an organisation.

Question 62

Value creation is a central focus for managers and only refers to shareholder value.

Question 63

Budgets provide information to help manage resources and are supported by the financial accounting function.

Question 64

The increased information needs of modern organisations have meant that management accounting has had to change its focus over the years.

Question 65

Accountants with a CPA qualification are only able to work as financial accountants.

Question 66

The costing system is the part of the accounting information system that is common to both financial and management accounting.

Question 67

Senior accountants are also known as the finance manager or financial controller.