Question 1

Management accountants working in purchasing must decline gifts from company vendors, because acceptance of a gift might influence or be perceived as influencing their performance or decision analyses.

Accepted Answer

Management accountants are required to maintain objectivity and avoid conflicts of interest, and accepting gifts from vendors could compromise their ability to make unbiased decisions. Therefore, they must decline such gifts to avoid any perception of impropriety or favoritism.

Question 2

In comparing management accounting with financial accounting, which of the following statements is true?
A) Both use historical costs as their primary unit of measurement.
B) Both depend on the double-entry system of accounting.
C) Both require adherence to GAAP.
D) Financial accounting reports are more objective, whereas management accounting reports are more subjective.

Accepted Answer

Financial accounting reports are prepared to cater to external stakeholders while management accounting reports are prepared to cater to internal stakeholders. Therefore, the objective of financial accounting is to provide accurate financial information to external users based on GAAP, whereas management accounting reports are more subjective and can be tailored to meet the needs of specific internal users. Both use historical costs as their primary unit of measurement, and financial accounting depends on the double-entry system of accounting. However, management accounting does not require adherence to GAAP.

Question 3

The unit of measurement used in management accounting is
A) primarily the historical dollar.
B) usually current replacement cost.
C) any measurement unit that is useful in a particular situation.
D) the measurement unit used by competing companies.

Accepted Answer

Management accounting involves using information to make decisions within an organization. Therefore, the unit of measurement used in management accounting can vary depending on the situation and the type of decision being made. It could be historical dollars, current replacement cost or any other measurement unit that is relevant and helpful in the specific scenario. The unit of measurement used by competing companies may not be relevant to the decision making process in a different organization.

Question 4

If a management accountant gives information about a future merger of his or her company to a relative, the accountant has acted unethically.

Accepted Answer

Giving confidential information to a relative is a breach of ethical behavior, as the accountant should maintain the confidentiality of the information and keep it within the boundaries of the organization.

Question 5

Management accounting reports can
A) use a flexible format.
B) use financial and nonfinancial data.
C) be prepared for any time period.
D) include all of these.

Accepted Answer

Management accounting reports can use a flexible format, including financial and nonfinancial data, and can be prepared for any time period. Therefore, the correct choice is D, which includes all of these options.

Question 6

Which of the following types of information is not essential for a manager to run a business effectively?
A) Product or service costing information
B) Data for planning and controlling of operations
C) Special reports and analyses to support decisions
D) Quote of the current price of the company's stock

Accepted Answer

The quote of the current price of the company's stock is not essential for a manager to run a business effectively. While it may be of interest to shareholders, it does not provide information that directly impacts the day-to-day operations of the business. The other options listed (product or service costing information, data for planning and controlling of operations, and special reports and analyses to support decisions) are all essential for a manager to effectively run a business.

Question 7

Management accountants who alter reports to meet targeted levels of performance are not acting unethically, because their job is to provide information that will aid in communicating the goals of the business.

Accepted Answer

Management accountants have a responsibility to present accurate and truthful information in their reports, regardless of whether it meets targeted levels of performance or not. Altering reports to meet specific goals and objectives that are not reflective of the true state of the business is unethical and undermines the integrity of financial reporting.

Question 8

The management process includes all of the following stages except
A) evaluate.
B) communicate.
C) plan.
D) record.

Accepted Answer

The management process typically involves planning, organizing, leading, and controlling. While communication, evaluation, and planning are all key stages within these broader categories, recording is not typically seen as a distinct stage of the process. However, some aspects of recording may be included within the controlling stage, such as monitoring performance metrics or documenting decisions and outcomes.

Question 9

When unable to resolve an ethical conflict, the accountant should consider consulting with an attorney as to the legal obligations and rights concerning the ethical conflict.

Accepted Answer

If an accountant is unable to resolve an ethical conflict, it is appropriate to seek the advice of legal counsel to ensure that they are meeting their legal obligations and rights in addition to resolving the ethical conflict.

Question 10

Accumulating, interpreting, and reporting financial information is important for
A) service-related firms only.
B) manufacturing firms only.
C) virtually all types of organizations.
D) not-for-profit organizations only.

Accepted Answer

Accumulating, interpreting, and reporting financial information is important for virtually all types of organizations, including service-related firms, manufacturing firms, and not-for-profit organizations. Financial information is essential for evaluating performance, making informed decisions, and ensuring financial sustainability.

Question 11

The management accountant who is responsible only for nonfinancial reports to management does not have to remain objective, using the doctrine of fairness, when preparing all reports and analyses.

Accepted Answer

The management accountant, regardless of whether their reports are financial or non-financial, must remain objective and use the doctrine of fairness when preparing all reports and analyses.

Question 12

Although management accountants should try not to engage in activities that would prejudice their ability to carry out their duties, they are not obligated to refrain from such activities after business hours, as long as these activities take place off company premises.

Accepted Answer

Management accountants are expected to maintain professional integrity and objectivity at all times, regardless of the time or location, to ensure their actions do not compromise their professional responsibilities.

Question 13

Practitioners of management accounting and financial management have a responsibility to communicate information fairly and objectively.

Accepted Answer

Practitioners of management accounting and financial management have a professional and ethical obligation to communicate financial information fairly and objectively, without bias or manipulation. This helps to ensure that stakeholders can make informed decisions based on accurate financial data.

Question 14

Although some management accountants strive to update their knowledge and skills, such updating is not within the realm of management accountants' ethical standards.

Accepted Answer

This statement is false. The Institute of Management Accountants (IMA) has established an ethical code that includes the responsibility of management accountants to maintain their level of competence and to continue their professional development in order to provide relevant and reliable information to stakeholders. Therefore, updating their knowledge and skills is within the realm of management accountants' ethical standards.

Question 15

Which of the following is a characteristic of management accounting?
A) It must follow generally accepted accounting principles.
B) It is used primarily by internal users.
C) It is concerned primarily with reporting past performance.
D) It uses historical costs as the sole measurement unit.

Accepted Answer

Management accounting is used primarily by internal users such as managers and executives to make decisions related to planning, controlling, and evaluating business operations. It does not necessarily follow generally accepted accounting principles and can use various measurement units, including historical costs or other methods that provide relevant information for decision-making. It is also concerned with predicting and preparing for future performance, in addition to reporting past performance.

Question 16

When there is an ethical conflict, the management accountant should resign if the immediate supervisor is involved with the conflict.

Accepted Answer

Resigning is not the first step; the management accountant should follow the organization's established procedures for resolving ethical conflicts, which may include discussing the issue with higher levels of management or the audit committee.

Question 17

Management accounting
A) deals primarily with people and organizations outside of the business entity.
B) requires only periodic reporting on a regular basis.
C) uses any type of useful measurement unit, including physical as well as monetary measures.
D) deals only with the double-entry recording system.

Accepted Answer

Management accounting uses any type of useful measurement unit, including physical as well as monetary measures. It focuses on internal decision-making, planning, and control. A is incorrect because it deals with internal stakeholders. B is incorrect because it requires timely and frequent reporting. D is incorrect because it also uses other recording systems besides double-entry.

Question 18

The management accountant must be knowledgeable about all relevant laws, regulations, and technical standards that pertain to his or her duties.

Accepted Answer

The management accountant is responsible for ensuring compliance with relevant laws, regulations, and technical standards that affect the company's financial reporting and decision-making processes. They must stay up-to-date with changes in regulations and standards and apply them appropriately in their work. Failure to comply with these requirements could result in legal and financial consequences for the organization.

Question 19

Management accounting and financial accounting are similar in which of the following respects?
A) Both use the same unit of measurement.
B) Both rely heavily on the double-entry system.
C) Both produce almost all of their respective informational reports on a routine monthly basis.
D) Both provide relevant and useful information to management.

Accepted Answer

Management accounting and financial accounting both provide information to enable decision-making by management. However, they differ in terms of the level of detail and the frequency of reporting. Financial accounting focuses on external financial reporting, while management accounting is geared towards internal decision-making and planning.

Question 20

Although the purpose of the confidentiality standard is to encourage management accountants to remain loyal to their company, failure to disclose knowledge of internal illegal acts to outside authorities can result in the accountants being charged as an accessory to the crime.

Accepted Answer

The statement is true. While confidentiality is important for management accountants to remain loyal to their company, they are also legally obligated to disclose any knowledge of internal illegal acts to the appropriate authorities. Failure to do so can result in charges as an accessory to the crime.

Quiz 18: The Changing Business Environment-A Managers Pers

Management accountants working in purchasing must decline gifts from company vendors, because acceptance of a gift might influence or be perceived as influencing their performance or decision analyses.

In comparing management accounting with financial accounting, which of the following statements is true?

The unit of measurement used in management accounting is

If a management accountant gives information about a future merger of his or her company to a relative, the accountant has acted unethically.

Management accounting reports can

Which of the following types of information is not essential for a manager to run a business effectively?

Management accountants who alter reports to meet targeted levels of performance are not acting unethically, because their job is to provide information that will aid in communicating the goals of the business.

The management process includes all of the following stages except

When unable to resolve an ethical conflict, the accountant should consider consulting with an attorney as to the legal obligations and rights concerning the ethical conflict.

Accumulating, interpreting, and reporting financial information is important for