Question 1

The control function is comparing actual with budgeted results and taking corrective action when needed.This is the definition of the control function.

Accepted Answer

The control function is indeed about monitoring and comparing actual results with the budgeted or expected results in order to identify any discrepancies and take corrective action if necessary.

Question 2

Managers of small,private corporations use managerial accounting information whereas managers of large,public corporations use financial accounting information.Managerial accounting information is used by managers in all types of organizations: large and small,public and private,profit and nonprofit.

Accepted Answer

Managerial accounting information is used by managers in all types of organizations, regardless of size, ownership, or profit status.

Question 3

Financial accounting information is prepared according to generally accepted accounting principles.External financial statements are required to be prepared according to GAAP.

Accepted Answer

External financial statements must adhere to GAAP to ensure consistency, reliability, and comparability for stakeholders.

Question 4

Opportunity cost is the cost of not doing something.An opportunity cost is the foregone benefit of the path not taken - the cost of not doing something.

Accepted Answer

Opportunity cost is defined as the benefit that is forgone or sacrificed by choosing one alternative over another. Therefore, the cost of not doing something is the opportunity cost of that decision.

Question 5

Variable costs are always direct costs.Variable costs change,in total,in direct proportion to changes in activity levels.They are not always direct costs,which can be traced to a specific cost object.

Accepted Answer

Variable costs can be either direct or indirect. Direct variable costs are those that can be traced to a specific cost object, while indirect variable costs cannot be traced to a specific cost object. However, variable costs do change in total in direct proportion to changes in activity levels.

Question 6

Financial accounting information is generally used exclusively by internal parties such as managers.Financial accounting information is used by external parties;managerial accounting information is used by internal business owners and manager.

Accepted Answer

Financial accounting information is used by both internal and external parties, while managerial accounting information is primarily used by internal parties such as business owners and managers.

Question 7

The planning function is the arranging of the necessary resources to carry out the plan.Planning involves setting long-term goals and objectives,along with the short-term tactics necessary to achieve them.

Accepted Answer

The answer of The planning function is the arranging of...

Question 8

Financial accounting information is reported for the company as a whole.Financial accounting information is provided at the company-wide level.

Accepted Answer

Financial accounting information is reported and provided at the company-wide level, including financial statements and reports that summarize the overall financial performance of the organization. It is intended for stakeholders such as investors, creditors, and government agencies, who have a significant interest in the financial health of the company as a whole.

Question 9

Managerial accounting information includes such items as budgets,performance evaluations,and cost reports.Managerial accounting is used by internal business owners and managers,who need internal information such as budgets,performance evaluations,and cost reports.

Accepted Answer

Managerial accounting is focused on providing internal business owners and managers with key information to help them make informed decisions about how to run the business. This includes budgets, performance evaluations, and cost reports, among other types of information. By providing these insights, managerial accounting can help businesses optimize their operations and improve their overall performance.

Question 10

An indirect cost can be readily traced to a cost object while a direct cost is traced only to manufacturing costs.An indirect cost cannot be readily traced to a cost object.A direct cost can be traced to a specific cost object.It does not necessarily involve manufacturing costs.

Accepted Answer

The statement is incorrect as it states that a direct cost is traced only to manufacturing costs, which is not true. Direct costs can be traced to any specific cost object, not just manufacturing costs.

Question 11

Costs can be sorted or categorized in a number of ways including relevant or irrelevant costs.One of the ways that costs can be sorted or categorized is by whether they are relevant or irrelevant.

Accepted Answer

Costs can indeed be sorted or categorized as relevant or irrelevant. Relevant costs are those that are directly affected by a decision, while irrelevant costs are those that will not be affected by the decision.

Question 12

The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting reporting environment: ethics,fraud,and managers.The Sarbanes-Oxley Act of 2002 focuses on three factors that affect the accounting reporting environment: opportunity,incentives,and character.

Accepted Answer

The statement incorrectly lists the three factors addressed by the Sarbanes-Oxley Act of 2002. The correct factors are opportunity, incentives, and character. Ethics, fraud, and managers may be related to these factors, but they are not the focus of the act.

Question 13

Although there are numerous ways to categorize costs,each individual cost will only be classified in one particular way.A single cost can be classified in more than one way,depending on how the information will be used.

Accepted Answer

A single cost can indeed be classified in multiple ways depending on the context and purpose, such as fixed vs. variable, direct vs. indirect, or product vs. period costs.

Question 14

The Sarbanes-Oxley Act of 2002 places full responsibility on the board of directors for the accuracy of the reporting system.SOX places more responsibility on all managers (not just accountants)for the accuracy of the reporting system.SOX also places additional responsibilities on the boards of directors and external auditors to reduce the opportunity for errors and fraud.

Accepted Answer

The Sarbanes-Oxley Act of 2002 places responsibility on both management and the board of directors, but it does not place full responsibility solely on the board. It requires senior executives to certify the accuracy of financial statements and imposes additional responsibilities on auditors and the board to ensure accuracy and prevent fraud.

Question 15

Since hospitals,universities,and charitable organizations do not exist strictly to earn profit for shareholders,managerial accounting information is not vital to their operations.Managerial accounting information is vital to nonprofit organizations,including hospitals,universities,and charitable organizations.Although these organizations do not exist strictly to earn profit for shareholders,their managers still need managerial accounting information to prepare budgets,manage resources,and make strategic and operational decisions.

Accepted Answer

Managerial accounting information is crucial for nonprofit organizations to effectively manage resources, prepare budgets, and make informed strategic and operational decisions, even though they do not aim to earn profits for shareholders.

Question 16

Out-of-pocket costs involve an actual outlay of cash.Out-of-pocket costs are those paid for items purchased,and involve an actual outlay of cash.

Accepted Answer

Out-of-pocket costs refer to expenses that require actual payment in cash or through other forms of currency. This can include purchases made with a credit card or other loan, as long as the individual is responsible for paying the bill. In contrast, indirect costs may not involve a direct payment, but instead represent lost time or opportunities.

Question 17

Whether a cost is treated as direct or indirect depends on whether tracing the cost is either possible or feasible.Direct costs can be traced directly to a specific cost object,while indirect costs cannot be traced to a specific cost object or are not worth the effort of tracing.

Accepted Answer

This statement accurately describes the distinction between direct and indirect costs.

Question 18

Investors,creditors and regulators are the primary users of managerial accounting information.Managerial accounting information is used by internal business owners and managers.

Accepted Answer

Managerial accounting information is primarily used by internal business owners and managers, not by external parties like investors, creditors, and regulators.

Question 19

The directing/leading function provides motivation to achieve results.Directing/leading involves putting the plan into action,and motivating others to work toward the plan's success.

Accepted Answer

The statement is true. Directing/leading function involves providing motivation and putting the plan into action to achieve results.

Question 20

Properly applied,ethics provide a clear right or wrong answer to the business situations facing accountants and managers.Ethics refers to the standards of conduct for judging right from wrong,honest from dishonest,and fair from unfair.

Accepted Answer

Ethics often involve complex considerations and may not always provide a clear right or wrong answer, as they can be subjective and context-dependent.

Quiz 1: Introduction to Managerial Accounting