Question 1

Line departments support or service staff departments.

Accepted Answer

Line departments are directly involved in core business activities, while staff departments provide support and services to line departments.

Question 2

________ is a formal mechanism for gathering, organizing, and communicating information about an organization's activities.

Accepted Answer

An accounting system is designed to formally gather, organize, and communicate information about an organization's financial activities, making it the correct choice.

Question 3

Organizations that do not make or sell tangible goods are called service organizations.

Accepted Answer

Service organizations provide intangible services such as education, healthcare, transportation, and banking, among others. They do not produce tangible goods for sale.

Question 4

According to the Financial Executives Institute, the controller's function is to obtain both short-term and long-term loans.

Accepted Answer

The controller's function is primarily to oversee a company's financial accounting and reporting, budgeting and forecasting, and financial analysis. Obtaining loans is typically the responsibility of the treasurer or CFO.

Question 5

________ is the accumulation and classification of data.

Accepted Answer

Scorekeeping involves the accumulation and classification of data to track performance and outcomes.

Question 6

________ refers to accounting information developed for users within an organization.

Accepted Answer

Management accounting is the process of developing accounting information for use by managers within an organization. This information is meant to assist managers in making informed decisions to achieve organizational goals.

Question 7

The CMA program focuses on management accounting and its role in Canadian business.

Accepted Answer

The CMA Program is designed to teach management accounting skills and their importance in the context of Canadian businesses.

Question 8

Line authority is authority exerted downward over subordinates.

Accepted Answer

Line authority is also known as direct authority, which is the authority that is exerted in a vertical chain of command from the highest level to the lowest level in an organization. It involves the power to direct and control the activities of subordinates and to make decisions that affect the organization as a whole.

Question 9

The cost-benefit balance is the primary consideration in choosing among accounting systems and methods.

Accepted Answer

The cost-benefit balance is a key factor to be considered while selecting an accounting system or method. The ultimate goal is to have a system that provides useful information while also being cost-effective.

Question 10

Planning refers to setting objectives, implementing plans, and evaluating objectives.

Accepted Answer

Planning refers to setting objectives and developing plans to achieve them, but it does not include implementing plans or evaluating objectives, which are separate management functions.

Question 11

Sales growth occurs in the mature market stage of product life cycle.

Accepted Answer

Sales growth occurs in the growth stage of product life cycle, not the mature market stage. In the mature market stage, sales may still be steady but growth has typically peaked and may even be declining.

Question 12

The Society of Management Accountants of Canada (SMAC) has developed standards of ethical conduct for management accountants, which include standards of competence, confidentiality, integrity and objectivity.

Accepted Answer

The Society of Management Accountants of Canada (SMAC) has indeed developed standards of ethical conduct for management accountants, which include standards of competence, confidentiality, integrity and objectivity.

Question 13

A budget is a quantitative expression of a plan of action.

Accepted Answer

A budget is a financial plan that quantitatively outlines expected revenues and expenses during a specific period of time. It is used to control and monitor spending and to ensure that financial goals are achieved.

Question 14

The essence of the just-in-time philosophy is to eliminate waste.

Accepted Answer

The just-in-time philosophy aims to eliminate waste in order to improve efficiency and reduce costs. This is done by producing or receiving goods only when they are needed in the production process, rather than having excess inventory on hand.

Question 15

Internal accounting reports must follow generally accepted accounting principles and account for assets at historical cost.

Accepted Answer

Internal accounting reports do not need to strictly follow generally accepted accounting principles and assets can be accounted for at fair market value, rather than historical cost. Internal accounting reports are typically used for managerial decision-making and do not need to conform to external reporting requirements.

Question 16

The factors causing changes in management accounting today include increased global competition, technological advances and increased production by Canadian companies.

Accepted Answer

The answer of The factors causing changes in management accounting...

Question 17

Both internal managers and external parties use accounting information.

Accepted Answer

Both internal managers and external parties such as investors, creditors, and regulators use accounting information to make decisions about the financial health and performance of a company.

Question 18

Management accounting refers to accounting information developed for

Accepted Answer

Management accounting refers to the accounting information that is designed for managers within an organization to make informed decisions about the organization's future. It includes reports on cost, revenue, budgets, and forecasts that are used to plan, control, and evaluate the organization's operations. The other options, such as shareholders, governmental authorities, and loan officers, may require financial statements or other types of accounting information, but they are not the primary users or recipients of management accounting information.

Question 19

Management by exception involves a detailed analysis of all deviations from planned performance regardless of the amount.

Accepted Answer

Management by exception only focuses on significant deviations or exceptions from planned performance, rather than analyzing all deviations regardless of their amount.

Question 20

A survey of managers selected which of the following business areas as the most common starting-point for future managers?

Accepted Answer

Accounting is often considered a foundational area for future managers because it provides essential skills in financial analysis and understanding business operations.

Quiz 1: Management Accounting and Management Decisions