Question 1

Decision quality
A) Refers to a decision that had a positive outcome
B) Refers to the characteristics of a decision that affects the likelihood of achieving a positive outcome
C) Is reduced by uncertainty and bias
D) Both (b) and (c) are correct

Accepted Answer

Decision quality involves the characteristics that affect the likelihood of a positive outcome, and it can be reduced by factors like uncertainty and bias.

Question 2

Lori is deciding whether to go to school full-time at the local community college or get a full time job. Which of the following is not relevant to her decision?
A) Tuition costs
B) Potential salary she could earn in a full-time job
C) Cost of books
D) Monthly rent on her apartment

Accepted Answer

The monthly rent on her apartment is not relevant to her decision between going to school or getting a job as it does not affect the potential outcomes of either option.

It is impossible to determine the best choice without additional information about Lori's personal goals and circumstances. Factors such as her desired career path, current financial situation, and personal preferences would all play a role in determining the best choice for her.

Question 3

All of the following are examples of internal reports except:
A) Cash flow analyses
B) News releases
C) Analyses of supplier quality
D) Product mix analyses

Accepted Answer

News releases are external reports, while the other choices are all examples of internal reports.

Question 4

Rewards for ethical behavior can include I. Integrity
II. Reputation
III. Higher profits
A) I, II, and III
B) I and III only
C) I and II only
D) II only

Accepted Answer

Ethical behavior can lead to an increase in integrity, which shows that an individual or company stands by their values and beliefs, which is highly valued. A good reputation can separate a company from the competition and result in increased customer loyalty. Companies that operate ethically usually have higher loyalty rates and are trusted more by their customers, resulting in higher profits. Therefore, all three options (I, II, and III) are correct.

Question 5

Which of the following statements is false?
A) Strategic cost management focuses on reducing costs as well as strengthening an organization's strategic position
B) The balanced scorecard is a formalized approach to strategic cost management
C) The balanced scorecard may include both financial and nonfinancial measures
D) Cost accounting information used for strategic cost management includes only measures of costs

Accepted Answer

Cost accounting information used for strategic cost management includes both cost and non-cost measures, such as quality, time, and innovation, to support strategic decision-making.

Question 6

Relevant information
A) Plays no part in decision making
B) Varies with the action taken
C) Must be based on the opinion of experts
D) Is the same as unavoidable cash flows

Accepted Answer

Relevant information varies with the action taken as it depends on the decision being made.

Question 7

Which of the following statements is true?
A) Managerial accounting and cost accounting are the same thing
B) Managerial accounting prepares reports used most frequently by external decision makers
C) Cost accounting information is used for both management and financial accounting
D) Preparation of the entity's income tax return is an example of a cost accounting activity

Accepted Answer

Cost accounting information is used for both management and financial accounting as it provides detailed cost data that is essential for internal decision-making and external financial reporting.

Question 8

An internal report is
A) Used for decision making primarily inside the organization
B) Used for decision making primarily outside the organization
C) Used to explain new personnel policies
D) Used by financial analysts

Accepted Answer

An internal report is primarily used for decision making within the organization, as it contains information and data specific to the company and its operations. While it may be shared with external stakeholders, such as investors or regulators, its primary purpose is to inform internal decision making processes.

Question 9

Relevant cash flows are
A) Unavoidable
B) Incremental cash flows
C) Constant across alternatives
D) Those that occurred in the past

Accepted Answer

Relevant cash flows are incremental cash flows, which are the additional cash flows that occur as a direct result of a decision or project.

Question 10

Which of the following statements is false?
A) Managers must determine the organizational vision before further planning can occur
B) Organizational strategies should take advantage of the organization's core competencies
C) Operating plans are long-term in nature
D) Organizational core competencies are an organization's strengths relative to competitors

Accepted Answer

Operating plans are typically short-term in nature, focusing on the day-to-day operations and activities of an organization.

Question 11

Decision quality can best be increased by
A) Thinking harder
B) Controlling for bias and uncertainties
C) Asking an expert for help
D) Using the most current technology

Accepted Answer

While thinking harder and asking for expert help can be helpful, they do not necessarily address potential biases and uncertainties that can affect decision quality. Using the most current technology may also be useful but is not a guarantee of better decision quality. Controlling for bias and uncertainties, on the other hand, can help ensure that decisions are based on accurate and reliable information, leading to higher quality outcomes.

Question 12

Avoidable cash flows are
A) Usually relevant to a decision
B) Cash flows that are incurred no matter which action is taken
C) Ignored in decision making
D) Are the same as irrelevant cash flows

Accepted Answer

Avoidable cash flows are usually relevant to a decision because they represent costs that can be avoided if a particular course of action is taken. These are the costs that will not occur if a project or activity is not pursued, making them crucial for accurate decision-making analysis.

Question 13

Cost accounting is all of the following except
A) A process of gathering and summarizing information
B) Preparing employee evaluation reports
C) Preparing information for internal reporting and decision making
D) Preparing information used in financial statements

Accepted Answer

Cost accounting involves the collection, analysis, and reporting of information related to the costs of production in order to provide information for internal decision making. It is not involved in preparing employee evaluation reports, which are typically part of human resources functions. Additionally, while cost accounting information may be used in financial statements, the primary focus is on providing internal decision-making information, not external financial reporting.

Question 14

Which of the following is not one of the steps in ethical decision making?
A) Identify the ways you might get caught doing something unethical
B) Identify the stakeholders to the decision
C) Identify the ethical dilemma
D) Identify the effects of the decision on the stakeholders

Accepted Answer

Identifying the ways you might get caught doing something unethical is not a step in ethical decision making. Ethical decision making involves recognizing the ethical dilemma, identifying stakeholders, and considering the effects of decisions on those stakeholders.

Question 15

Which of the following can influence ethical behavior in organizations? I. Employee personal values
II. Systems for measuring, monitoring and motivating
III. Organizational culture
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Accepted Answer

All three options can influence ethical behavior in organizations. Employee personal values affect how individuals perceive and prioritize ethical behavior. Systems for measuring, monitoring, and motivating can establish standards of ethical behavior and reinforce those standards through rewards and consequences. Organizational culture can create a shared understanding of what is considered ethical behavior and provide guidance for decision-making in uncertain situations.

Question 16

Ethical decision making
A) Does not include ongoing improvement
B) Considers the well-being of those affected by the decision
C) Has little to do with professional reputation
D) Is not important for accountants

Accepted Answer

Ethical decision making involves considering the well-being of those affected by the decision, as well as other ethical principles and values. It is important for accountants and all professionals to make ethical decisions, and ongoing improvement in ethical decision making is also necessary. Professional reputation may be affected by ethical decision making, but it is not the only factor to consider.

Question 17

All of the following are examples of external reports except:
A) Tax returns
B) Credit reports
C) Financial statements
D) Budgets

Accepted Answer

Budgets are internal reports used for planning and controlling within an organization, while the other options are external reports shared with outside parties.

Question 18

If a manager is deciding whether to repair equipment or replace it, which of the following is irrelevant to the decision?
A) Cost of the repair
B) Original cost of the equipment
C) Warranty period for the repair
D) Expected life of the equipment if it is not repaired

Accepted Answer

The original cost of the equipment is no longer relevant in the decision-making process since it cannot be changed. The decision should be based on the cost of the repair, warranty period for the repair, expected life of the equipment if it is not repaired, and other relevant factors.

Question 19

Financial accounting is all of the following except
A) A process of gathering and summarizing information primarily for external reports
B) Preparing financial statements according to Generally Accepted Accounting Principles
C) Information used by shareholders, creditors, and regulators for decision making
D) Preparing information for internal reporting and decision making

Accepted Answer

Financial accounting is primarily focused on producing information for external reporting to shareholders, regulators, and creditors. While information for internal reporting and decision making can be derived from financial accounting data, it is not the primary purpose of financial accounting.

Question 20

Fraudulent financial reporting I. Is an example of unethical behavior
II. Eventually is likely to decrease organizational market value
III. Decreases the value of the accounting profession
A) I only
B) II only
C) I and III only
D) I, II, and III

Accepted Answer

Fraudulent financial reporting is a clear example of unethical behavior because it involves the manipulation of financial information to mislead stakeholders. This behavior is likely to decrease organizational market value as stakeholders may lose trust in the company and its reported financial information. Additionally, it reflects poorly on the accounting profession as a whole, suggesting that the profession cannot be trusted to provide objective and accurate financial information. Therefore, all three statements are accurate, and the best choice is D, I, II, and III.

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

Decision quality

Lori is deciding whether to go to school full-time at the local community college or get a full time job. Which of the following is not relevant to her decision?

All of the following are examples of internal reports except:

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

Which of the following statements is false?

Relevant information

Which of the following statements is true?

An internal report is

Relevant cash flows are

Which of the following statements is false?

Decision quality can best be increased by

Avoidable cash flows are

Cost accounting is all of the following except

Which of the following is not one of the steps in ethical decision making?

Which of the following can influence ethical behavior in organizations? I. Employee personal values II. Systems for measuring, monitoring and motivating III. Organizational culture

Ethical decision making

All of the following are examples of external reports except:

If a manager is deciding whether to repair equipment or replace it, which of the following is irrelevant to the decision?

Financial accounting is all of the following except

Fraudulent financial reporting I. Is an example of unethical behavior II. Eventually is likely to decrease organizational market value III. Decreases the value of the accounting profession