Question 1

As an accountant, you are responsible for:
I. Your own behavior
II. The behaviour of any organizations you manage
III. The behaviour of outside vendors with whom you interact

Accepted Answer

As an accountant, you are directly responsible for your own behavior and the behavior of any organizations you manage, as you have a degree of control and influence over these areas. However, you are not directly responsible for the behavior of outside vendors, as they are independent entities.

Question 2

Rewards for ethical behavior can include:
I. Integrity
II. Reputation
III. Higher profits

Accepted Answer

Rewards for ethical behavior can include integrity, which is important for building trust and credibility. Reputation is also a reward as a company with a good reputation is more likely to attract customers and employees. Higher profits can also be a reward since ethical behavior can lead to customer loyalty and repeat business.

Question 3

When is the most appropriate time to identify ethical problems in organizations?

Accepted Answer

It is important to identify ethical problems as they arise in order to address them promptly and prevent further harm or negative consequences. Waiting until legal authorities, shareholders, or other outside parties discover the problems may result in greater damage to the organization's reputation and financial stability.

Question 4

Irrelevant cash flows are:

Accepted Answer

Irrelevant cash flows are unavoidable and do not affect the decision-making process. They are not considered in financial analysis because their inclusion or exclusion does not change the outcome of the decision. Therefore, they are not objective or subjective, but simply irrelevant.

Question 5

Which of the following statements about open-ended problems is true?

Accepted Answer

Open-ended problems are those problems that do not have a fixed answer or solution. These problems are open to interpretation and can be approached in multiple ways. As there is no absolute answer for open-ended problems, it cannot be solved with absolute certainty. Therefore, option A is the correct answer. Option B is incorrect because although it may not be possible to find the single best solution, multiple viable options can be explored. Option C is also incorrect because open-ended problems are not limited to one solution. Option D is incorrect because there is no guarantee that the best solution will lead to the most favorable outcome.

Question 6

Frank is considering transportation modes to a client's office. He can drive his own car, at an incremental cost of $0.55 per km, or take a company car. If he takes his own car, he can be reimbursed $0.45 per km. If Frank makes his decision strictly from his personal economic point of view, what is the relevant net cost associated with driving his own car?

Accepted Answer

The relevant net cost for Frank is the difference between the incremental cost of driving his own car ($0.55 per km) and the reimbursement he receives ($0.45 per km), which is $0.10 per km.

Question 7

In a decision to lease or borrow money and build office space, which of the following is relevant?

Accepted Answer

The answer of In a decision to lease or borrow...

Question 8

Irrelevant information may be:
I. Useful in decision making
II. Internally-generated
III. Accurate

Accepted Answer

The answer of Irrelevant information may be:
I. Useful in decision...

Question 9

Conflicts of interest often compromise managers' ability to make ethical decisions. Which of the following situations most likely includes a conflict of interest?

Accepted Answer

The answer of Conflicts of interest often compromise managers' ability...

Question 10

Choosing and implementing a solution to a business problem includes:
I. Making trade-offs among alternatives
II. Considering the organization's strategies
III. Motivating performance within the organization

Accepted Answer

Choosing and implementing a solution to a business problem involves making trade-offs among alternatives, considering the organization's strategies, and motivating performance within the organization. All three factors are essential for a successful solution. Making trade-offs among alternatives involves evaluating each option's costs and benefits and choosing the one that aligns best with the organization's goals. Considering the organization's strategies helps ensure that the solution is consistent with the overall direction and priorities of the company. Finally, motivating performance within the organization involves encouraging employees to adopt the new solution and ensuring that they have the resources and support they need to implement it effectively. All three factors work together to create an effective solution that delivers value to the organization.

Question 11

Analyzing the strengths and weaknesses of different alternatives includes all of the following except:

Accepted Answer

Analyzing the strengths and weaknesses of different alternatives involves recognizing assumptions, gauging information quality, and considering different viewpoints. However, drawing a conclusion about which alternative is best overall goes beyond the analysis and requires additional decision-making steps.

Question 12

The process of making higher quality business decisions requires each of the following except:

Accepted Answer

Relying on preconceived notions to make decisions more quickly can actually hinder the quality of the decision-making process. It is important to approach each decision with an open mind and consider all relevant information before coming to a conclusion.

Question 13

Why is it necessary to identify whether a problem is open-ended?

Accepted Answer

It is necessary to identify whether a problem is open-ended because more than one potential solution must be explored for open-ended problems. In contrast, closed-ended problems have only one correct solution, which requires less decision-making effort. Identifying the type of problem allows decision makers to approach it with an appropriate strategy. Additionally, biases are still important when addressing open-ended problems. While some management decisions may not be open-ended, the identification of open-ended problems is still crucial in business management.

Question 14

Which of the following often prevents managers from adequately exploring information before making a decision?

Accepted Answer

Managers' biases, such as confirmation bias (favoring information that confirms pre-existing beliefs) or anchoring bias (relying too heavily on the first piece of information encountered), can cause them to overlook or dismiss important information when making decisions. Uncertainties, distinguishing between relevant and irrelevant information, and the organization's values can also have an impact, but biases are the most significant factor.

Question 15

Relevant cash flows are:

Accepted Answer

The answer of Relevant cash flows are:
...

Question 16

Relevant cash flows are

Accepted Answer

Relevant cash flows are both avoidable (meaning they can be eliminated if a certain decision is made) and incremental (meaning they change as a result of a particular decision). These cash flows are important in evaluating the costs and benefits of a proposed project or investment.

Question 17

Management decisions require monitoring over time for all of the following reasons except:

Accepted Answer

Monitoring over time is not necessary to motivate employees to follow plans exactly, as there are other ways to ensure employee compliance such as performance evaluations and incentives.

Question 18

Whether a given type of information is relevant or irrelevant depends on:

Accepted Answer

The relevance of information is determined by its relation to the decision to be made. The other factors listed (accuracy, objectivity, and accounting basis) may also be important considerations, but they do not determine whether information is relevant or irrelevant.

Question 19

Which of the following is least likely to be an open-ended problem?

Accepted Answer

Identification of required courses for a college degree is a closed-ended problem because there is a specific list of courses that are required for a particular degree. The other options involve more subjective or personal decision-making, which lend themselves to open-ended exploration.

Question 20

John is creating next year's budget for PDC Corporation. He estimates that next year's sales volume will be 5% higher than this year and that the selling price per unit will remain at $75 per unit. He estimates that cost of goods sold will be $40 per unit, based on a purchase agreement the company has signed with its supplier. The company has done business with the supplier for many years. In creating the budget, which of the following tasks is most likely to be open-ended?

Accepted Answer

Determining that sales volume will grow by 5% is open-ended because it is an estimate based on various factors that could change throughout the year, such as market conditions or competitors' actions. The other options are more straightforward and based on established numbers or agreements.

Quiz 1: The Role of Ethical Accounting Information in Management Decision Making

As an accountant, you are responsible for: I. Your own behavior II. The behaviour of any organizations you manage III. The behaviour of outside vendors with whom you interact

Rewards for ethical behavior can include: I. Integrity II. Reputation III. Higher profits