Question 1

When making a decision,which of the following should not be considered?
A) Relevant costs
B) Opportunity costs
C) Sunk costs
D) Risk

Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, so they should not be a consideration in making a decision. Relevant costs, opportunity costs, and risk should all be taken into account when making a decision.

Question 2

The main focus of managerial accounting is:
A) decision making.
B) the preparation of financial statements.
C) the preparation of budgets.
D) documenting cash flows.

Accepted Answer

The main focus of managerial accounting is to help managers make informed decisions about the operations of their business. While preparing financial statements, budgets, and documenting cash flows may be a part of managerial accounting, the ultimate goal is to provide information that aids in decision making.

Question 3

ERP systems capture:
A) only qualitative data.
B) only quantitative data.
C) both qualitative and quantitative data.
D) the same information as traditional accounting information systems.

Accepted Answer

ERP systems capture both qualitative and quantitative data, which allows for a more comprehensive view of organizational operations and decision-making. This includes financial data, transactional data, customer data, employee data, and more. ERP systems go beyond traditional accounting information systems by integrating all departments and functions within an organization, providing real-time access to data, and supporting business processes.

Question 4

Which of the following is a characteristic of managerial accounting?
A) It is used primarily by external users.
B) It often lacks flexibility.
C) It is often future-oriented.
D) The information it provides is extremely precise.

Accepted Answer

Managerial accounting is primarily used for internal decision-making and planning purposes, so it is often future-oriented. Options A, B, and D are incorrect because managerial accounting is used primarily by internal users, requires flexibility, and provides information that is useful but not necessarily extremely precise.

Question 5

Relevant costs are costs that:
A) do not differ between alternatives.
B) differ between alternatives.
C) have already been incurred.
D) may not be eliminated by choosing one alternative over another.

Accepted Answer

Relevant costs are costs that differ between alternatives and have an impact on the decision-making process. These costs are important to consider because they can help determine the most cost-effective course of action. Costs that do not differ between alternatives (A), those that have already been incurred (C), and those that may not be eliminated (D) are not relevant costs.

Question 6

An example of quantitative data is:
A) company reputation.
B) number of customer complaints.
C) customer satisfaction.
D) product quality.

Accepted Answer

Number of customer complaints is a quantitative measure because it involves counting a numerical value, which is the total number of complaints received. Company reputation, customer satisfaction, and product quality are all more subjective measures that cannot be easily quantified.

Question 7

An example of qualitative data is:
A) product cost.
B) customer satisfaction.
C) net income.
D) operating costs.

Accepted Answer

Customer satisfaction is an example of qualitative data because it is subjective and based on individual opinions or experiences, rather than numerical measurements or objective facts. Product cost, net income, and operating costs are all examples of quantitative data, which can be measured and expressed in numerical terms.

Question 8

Mary Ann is trying to decide whether to fly to Florida or New York.The cost of her ticket will be the same either way.The cost of the ticket is an example of a(n):
A) sunk cost.
B) opportunity cost.
C) relevant cost.
D) irrelevant cost.

Accepted Answer

Since the cost of the ticket will be the same whether Mary Ann flies to Florida or New York, it does not affect her decision-making process. Therefore, it is considered an irrelevant cost.

Question 9

Which of the following statements about decision-making is true?
A) Risk should not be taken into account.
B) Objectives should be quantitative and not qualitative.
C) Managers often do not have a clear understanding of the real source of the problem.
D) Sunk costs should usually be taken into account.

Accepted Answer

Many managers struggle with decision-making because they fail to identify the root cause of the problem. This leads to ineffective solutions or solutions that only address the symptoms of the problem. It is important for managers to take the time to analyze the situation and identify the root cause before making a decision. Options A, B, and D are all incorrect. Risk is an important consideration in decision-making, objectives can be either qualitative or quantitative, and sunk costs should generally be ignored in decision-making.

Question 10

Relevant costs:
A) are sunk costs.
B) are costs that differ among alternatives.
C) are unavoidable.
D) can not be opportunity costs.

Accepted Answer

Relevant costs are costs that differ among alternatives. Sunk costs (A) are not relevant because they cannot be recovered and do not impact decisions going forward. Unavoidable costs (C) may be relevant, but not necessarily. Opportunity costs (D) may be relevant, but they are not the only type of relevant cost.

Question 11

Which of the following is not an example of an external user of accounting information?
A) Potential and existing stockholders
B) Government taxing agencies
C) Potential and existing creditors
D) Management

Accepted Answer

Management is considered an internal user of accounting information because they are directly involved in the operations and strategic planning of the organization.

Question 12

Costs that differ between alternatives are called:
A) sunk costs.
B) irrelevant costs.
C) relevant costs.
D) unavoidable costs.

Accepted Answer

Relevant costs are the costs that differ between alternatives and can have an impact on the decision-making process. Sunk costs are costs that have already been incurred and cannot be recovered, and therefore should not be considered. Irrelevant costs have no impact on the decision-making process, and unavoidable costs are costs that cannot be avoided regardless of which alternative is chosen.

Question 13

Which of the following statements is not true regarding enterprise resource planning (ERP)?
A) It integrates traditional accounting information systems with other information systems.
B) It can be customised to provide specific and relevant information to different types of users.
C) It has evolved in the past few years to address the shortcomings of traditional accounting information systems.
D) It captures quantitative but not qualitative information.

Accepted Answer

ERP systems capture both quantitative and qualitative information. In fact, they are often designed to capture and integrate a wide range of data from different areas of the business, including financial, operational, and customer-related data.

Question 14

Sunk costs are:
A) usually relevant.
B) costs that will occur in the future.
C) not relevant.
D) costs that can be avoided.

Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered or changed, therefore they are not relevant when making future decisions.

Question 15

Which of the following is an example of an internal user of accounting information?
A) Supplier
B) Stockholder
C) Manager
D) Federal tax agency

Accepted Answer

Managers are internal users of accounting information as they use this information for making decisions regarding the operations of the business. Suppliers and federal tax agencies are external users and stockholders can be either internal or external depending on whether they are employees of the company or not.

Question 16

Decision-makers should consider:
A) only qualitative factors.
B) only quantitative factors.
C) both quantitative and qualitative factors.
D) sunk costs as well as quantitative and qualitative factors.

Accepted Answer

Both quantitative and qualitative factors should be considered to make well-informed decisions that consider all aspects of the problem. Sunk costs should also be taken into account, but they should not drive the decision-making process alone.

Question 17

Which of the following is true regarding managerial accounting?
A) It often emphasises segments rather than the organisation as a whole.
B) It often must follow established rules called generally accepted accounting principles.
C) Its primary focus is on providing information to external users.
D) It is less flexible than financial accounting.

Accepted Answer

Managerial accounting often emphasises segments and specific departments or areas of the organisation rather than the organisation as a whole. This allows for more detailed analysis and decision making at a micro level.

Answer: B
 While financial accounting must follow generally accepted accounting principles (GAAP), managerial accounting does not have to follow these strict rules. Managerial accounting is more flexible and can be tailored to meet the specific needs of the organisation.

Answer: C
 Managerial accounting is primarily focused on providing information to internal users, such as management and employees, to help with decision-making and performance evaluation.

Answer: D
 This statement is not true. Managerial accounting is generally considered to be more flexible than financial accounting, as it is not constrained by GAAP and can be tailored to meet the needs of the organisation.

Question 18

Which of the following is not true about knowledge in the business environment?
A) It is the same as data and information.
B) It is the value added from shared information.
C) It includes both quantitative and qualitative information.
D) It must be managed in order for a company to remain competitive.

Accepted Answer

Knowledge is not the same as data and information. Data refers to raw facts and figures, while information is data that has been processed and made meaningful. Knowledge is the understanding and application of information to make informed decisions and solve problems.

Question 19

In the decision-making process,an example of a quantitative measure would include:
A) employee morale.
B) product satisfaction.
C) customer service.
D) number of kilograms needed.

Accepted Answer

A quantitative measure is a numerical value that can be measured objectively. The option "number of kilograms needed" is a quantitative measure as it can be measured in numerical values. The other options, such as employee morale, product satisfaction, and customer service are subjective measures and cannot be measured with numerical values.

Question 20

Which of the following statements is true?
A) External and internal users of accounting information have exactly the same information needs.
B) Financial accounting is less flexible than managerial accounting.
C) Managerial accounting provides the best information to external users.
D) Managerial accounting emphasises the organisation as a whole more than financial accounting.

Accepted Answer

Financial accounting follows strict rules and regulations set by accounting bodies such as GAAP and IFRS, while managerial accounting is more flexible and can be tailored to meet the needs of the organization. Therefore, financial accounting is less flexible than managerial accounting. The other options are false.

Quiz 1: Introduction to Managerial Accounting

When making a decision,which of the following should not be considered?

The main focus of managerial accounting is:

ERP systems capture:

Which of the following is a characteristic of managerial accounting?

Relevant costs are costs that:

An example of quantitative data is:

An example of qualitative data is:

Mary Ann is trying to decide whether to fly to Florida or New York.The cost of her ticket will be the same either way.The cost of the ticket is an example of a(n) :

Which of the following statements about decision-making is true?

Relevant costs:

Which of the following is not an example of an external user of accounting information?

Costs that differ between alternatives are called:

Which of the following statements is not true regarding enterprise resource planning (ERP) ?

Sunk costs are:

Which of the following is an example of an internal user of accounting information?

Decision-makers should consider:

Which of the following is true regarding managerial accounting?

Which of the following is not true about knowledge in the business environment?

In the decision-making process,an example of a quantitative measure would include:

Which of the following statements is true?