Question 1

Cost accounting is used in organizations to: Please select all that apply.
A) Determine selling prices for products and services.
B) Make long-term decisions.
C) Calculate product and service costs.
D) Monitor and review outcomes as they happen.

Accepted Answer

Cost accounting helps in determining selling prices by calculating the cost of products and services, it is used to calculate the actual costs of products and services to ensure profitability, and it is instrumental in monitoring and reviewing financial outcomes as they occur to manage budgets and costs effectively. However, it is primarily focused on short-term operational decisions rather than long-term strategic decisions, which is why option B is not included.

Question 2

The number of cost objects to which costs can be attached is limited to products, services, centres, activities, customers and distribution channels.

Accepted Answer

Costs can be attached to a wider range of objects beyond those listed, including projects, contracts, and programs, depending on the needs of the business for cost tracking and analysis.

Question 3

Costing is micro level, strategy is macro level.

Accepted Answer

Costing focuses on the detailed recording and analysis of costs of specific products or services within an organization, which is a micro-level approach. Strategy, on the other hand, involves high-level planning and decision-making that affects the entire organization, making it a macro-level approach.

Question 4

The provision of costing information to managers undermines organizational efficiency and effectiveness.

Accepted Answer

Costing information is crucial for managers as it aids in budgeting, controlling costs, and making informed decisions, thereby enhancing organizational efficiency and effectiveness.

Question 5

Which one of the following is the odd one out?
A) Informing operational decisions.
B) Gathering and attaching cost information to cost objects.
C) Establishing budgets and standard costs.
D) Analysing profitability.

Accepted Answer

The answer of Which one of the following is the...

Question 6

Management accounting is the application of the principles of accounting and financial management to create, protect, preserve and increase value for shareholders.

Accepted Answer

The answer of Management accounting is the application of the...

Question 7

Management accounting focuses on the long-term not the short term operations of organizations.

Accepted Answer

Management accounting focuses on providing information for internal decision-making, including both short-term and long-term operational and strategic decisions.

Question 8

Management accounting is an integral part of management. It requires the identification, generation, presentation, interpretation, and use of relevant information to: Please select all that apply.
A) Design reward strategies for executives and shareholders.
B) Safeguard tangible and intangible assets.
C) Measure and report financial and non-financial performance to management and other stakeholders.
D) Accumulate and allocate costs to cost objects.

Accepted Answer

The answer of Management accounting is an integral part of...

Question 9

Which of the following are descriptions of cost and management accounting? Please select all that apply.
A) Future focus.
B) Reports on the past and present to inform the future.
C) External user focus.
D) Accounting data at the micro level.

Accepted Answer

Cost and management accounting focuses on future planning and decision-making (A), uses past and present data to guide future actions (B), and provides detailed micro-level data for internal use (D). It is not primarily for external users (C).

Question 10

The form and content of both financial and cost and management accounting reports are highly regulated.

Accepted Answer

Financial accounting reports are highly regulated by standards such as GAAP or IFRS to ensure consistency and comparability across entities. However, cost and management accounting reports are more flexible and tailored to the internal needs of the organization, with no strict external regulations governing their form and content.

Question 11

Financial accounting reports exhibit a high degree of comparability with the financial accounting reports of other organizations while cost and management accounting reports of different organizations display no such comparability.

Accepted Answer

Financial accounting reports follow standardized principles and formats (such as GAAP or IFRS) making them comparable across different organizations, whereas cost and management accounting reports are tailored to the specific needs of an organization, lacking a standardized format, which reduces their comparability.

Question 12

Cost and management accounting information should: Please select all that apply.
A) Faithfully represent what it purports to represent.
B) Be understandable.
C) Be verifiable.
D) Be timely.

Accepted Answer

The answer of Cost and management accounting information should: Please...

Question 13

Cost and management accounting information is subject to the cost-benefit rule.

Accepted Answer

Cost and management accounting information adheres to the cost-benefit rule, meaning the benefits of having the information should outweigh the costs of obtaining it. This principle helps ensure that the information provided is useful and justifies the expense of its collection and analysis.

Question 14

Materiality is a fundamental consideration in the preparation and presentation of financial accounting reports. However, materiality has no role to play in the production of cost and management accounting reports as every detail is relevant.

Accepted Answer

Materiality also plays a role in cost and management accounting as it helps in focusing on significant data, simplifying decision-making, and ensuring efficient use of resources by not overemphasizing inconsequential details.

Question 15

Which one of the following statements is not true?
A) The cost accounting system is just an extension of the financial accounting system.
B) Cost and management accounting reports have both an internal and an external focus.
C) Financial accounting reports present internal information to external parties.
D) Internal financial costs are the only information that entities require to set the selling prices of products and services.

Accepted Answer

Cost and management accounting systems provide information for internal decision-making, including setting selling prices, which involves more than just internal financial costs. Factors such as market conditions, competitor pricing, and customer demand also influence pricing decisions, making statement D incorrect.

Question 16

Which one of the following statements is not true?
A) Cost and management accounting information is generated as frequently as required.
B) Accounting is the foundation of strategic and operational decision making.
C) Financial accounting and management accounting reports derive their financial information from completely diverse sources.
D) Costs are the foundation for decision making by management

Accepted Answer

Financial accounting and management accounting both derive their financial information from the same sources, such as the company's financial transactions and records. The difference lies in how the information is processed, presented, and used, not in the source of the information.

Question 17

Cost and management accounting reports: Please select all that apply.
A) Are produced as frequently as required for the effective management of organisations.
B) Present detailed analysis of costs and selling prices.
C) Are highly comparable with the reports of other organisations.
D) Present information in a fluid format.

Accepted Answer

Cost and management accounting reports are produced as needed for effective management (A), provide detailed analysis of costs and selling prices (B), and present information in a flexible format to suit management needs (D). They are not necessarily comparable with reports of other organizations (C) due to differing internal processes and requirements.

Question 18

As long as management are confident that the output of the accounting system is accurate, cost and management accounting information does not have to meet the enhancing qualitative characteristic of verifiability.

Accepted Answer

Verifiability is not an enhancing qualitative characteristic of cost and management accounting information.

Question 19

Financial accounting reports: Please select all that apply.
A) Display a high degree of comparability with current and previous reports for the same and other organisations.
B) Are highly relevant for decision making and management purposes.
C) Present the required information in a highly regulated format.
D) Are usually produced annually.

Accepted Answer

Financial accounting reports are designed to be comparable across different periods and organizations (A), follow a highly regulated format to ensure consistency and reliability (C), and are typically produced on an annual basis (D). While they are useful for decision-making, especially by external stakeholders, they are not primarily designed for management purposes, which is more the focus of managerial accounting.

Question 20

Which one of the following is not a qualitative characteristic of both financial accounting information and cost and management accounting information?
A) Comparability
B) Faithful representation
C) Relevance
D) Understandability

Accepted Answer

Faithful representation is a qualitative characteristic specific to financial accounting information, not typically emphasized in cost and management accounting.

Quiz 7: Cost and Management Accounting in Context

Cost accounting is used in organizations to: Please select all that apply.

The number of cost objects to which costs can be attached is limited to products, services, centres, activities, customers and distribution channels.

Costing is micro level, strategy is macro level.

The provision of costing information to managers undermines organizational efficiency and effectiveness.

Which one of the following is the odd one out?

Management accounting is the application of the principles of accounting and financial management to create, protect, preserve and increase value for shareholders.

Management accounting focuses on the long-term not the short term operations of organizations.

Management accounting is an integral part of management. It requires the identification, generation, presentation, interpretation, and use of relevant information to: Please select all that apply.

Which of the following are descriptions of cost and management accounting? Please select all that apply.

The form and content of both financial and cost and management accounting reports are highly regulated.

Financial accounting reports exhibit a high degree of comparability with the financial accounting reports of other organizations while cost and management accounting reports of different organizations display no such comparability.

Cost and management accounting information should: Please select all that apply.

Cost and management accounting information is subject to the cost-benefit rule.

Materiality is a fundamental consideration in the preparation and presentation of financial accounting reports. However, materiality has no role to play in the production of cost and management accounting reports as every detail is relevant.

Which one of the following statements is not true?

Which one of the following statements is not true?

Cost and management accounting reports: Please select all that apply.

As long as management are confident that the output of the accounting system is accurate, cost and management accounting information does not have to meet the enhancing qualitative characteristic of verifiability.

Financial accounting reports: Please select all that apply.

Which one of the following is not a qualitative characteristic of both financial accounting information and cost and management accounting information?