Question 1

Cost accounting is used in organisations 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 is primarily used to calculate the costs of products and services (C), which can then inform the determination of selling prices (A). It also plays a crucial role in monitoring and reviewing financial outcomes as they happen (D), allowing for real-time adjustments and decision-making. While it can inform some aspects of long-term decision-making, cost accounting is more focused on the operational and immediate aspects of financial management, making (B) less directly related to its primary functions.

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 cost objects beyond those listed, including projects, contracts, and programs, among others, depending on the organization's accounting and management needs.

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 organisational efficiency and effectiveness.

Accepted Answer

Costing information is crucial for managers as it aids in budgeting, pricing, and decision-making processes, thereby enhancing organizational efficiency and effectiveness by ensuring resources are used optimally.

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

A) Informing operational decisions is the odd one out because it is a broader, more general function of management, while the other options (B, C, D) are specific activities related to cost accounting and financial management.

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

Management accounting focuses on providing information to internal users for decision-making, planning, and control purposes, rather than specifically aiming to create value for shareholders.

Question 7

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

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

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 10

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

Accepted Answer

Financial accounting reports follow standardized principles and formats such as GAAP or IFRS, making them comparable across organizations. In contrast, cost and management accounting reports are tailored to the specific needs of an organization, leading to a lack of comparability with reports from other organizations.

Question 11

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 12

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

Accepted Answer

Cost and management accounting information is indeed subject to the cost-benefit rule, meaning that the benefits of having the information should outweigh the costs of obtaining it. This principle ensures that the information provided is useful and relevant for decision-making purposes without incurring unnecessary expenses.

Question 13

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 14

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

Entities require a variety of information, including market conditions, competitor pricing, and customer demand, in addition to internal financial costs, to set the selling prices of products and services.

Question 15

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 operations. The difference lies in how the information is processed and presented, not the source of the information.

Quiz 1: Cost and Management Accounting in Context

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