Question 1

To be useful to management, accounting information must:
A) be prepared in accordance with general-purpose financial reports.
B) have the potential to affect decisions and influence behaviour.
C) be completely accurate.
D) be in the form of financial statements.

Accepted Answer

Accounting information must have the potential to affect decisions and influence behavior to be useful to management. It does not necessarily have to be prepared in accordance with general-purpose financial reports or be completely accurate, although accuracy is important. Additionally, accounting information can take various forms other than financial statements.

Question 2

Which of the following factors influence the information available to the management of an organisation?
A) Size of the organisation
B) Needs of management
C) Organisation structure
D) All of the above

Accepted Answer

The size of the organisation can influence how much information can be collected and processed. The needs of management can dictate what type of information is important and necessary for decision-making. The organisation structure can impact how information flows within the organisation, affecting what information is available to management. Therefore, all of the above factors can influence the information available to the management of an organisation.

Question 3

Decisions that require managers to evaluate the accomplishments of their organisation, and to make changes if the organisation is not meeting its goals, are usually referred to as:
A) regulatory decisions.
B) implementation decisions.
C) planning decisions.
D) control decisions.

Accepted Answer

Control decisions involve evaluating the performance of an organisation and making necessary changes to ensure it meets its goals. Regulatory decisions involve compliance with external regulations, implementation decisions involve carrying out specific plans or initiatives, and planning decisions involve determining goals and strategies for the future.

Question 4

How are financial accounting information and management accounting information similar?
A) They are both used by managers.
B) They are both used in decision making.
C) They both involve quantitative and non-quantitative aspects.
D) All of the above are correct.

Accepted Answer

Financial accounting information and management accounting information are similar in that they are both used by managers, used in decision making, and involve both quantitative and non-quantitative aspects. Therefore, all of the above choices are correct.

Question 5

The purpose of financial accounting is to provide information for decision making. What is the primary purpose of management accounting?
A) To enable managers to ask for higher salaries
B) To maximise a company's profits
C) To provide information for decision making
D) To create a value chain

Accepted Answer

The primary purpose of management accounting is to provide information for decision making. This information is used by managers within a company to make important decisions that will affect the future of the business. This information includes financial data, as well as data on production, sales, and other areas of the business. The goal is to improve the efficiency and effectiveness of the company's operations, and to achieve its objectives in a more strategic manner.

Question 6

Decisions that require managers to identify goals and to develop strategies are usually referred to as:
A) authoritative decisions.
B) performance decisions.
C) planning decisions.
D) managed decisions.

Accepted Answer

Planning decisions involve identifying goals and developing strategies to achieve those goals. The other options do not specifically relate to this type of decision-making.

Question 7

Traditional management accounting information:
A) gives managers the only information they need to make decisions.
B) integrates production and marketing concerns with accounting.
C) is the same in every company.
D) assists managers in their roles.
)

Accepted Answer

Traditional management accounting information assists managers in their roles by providing financial and non-financial information about the organization's performance, costs, and resources. It helps managers make informed decisions and monitor the progress of their objectives. Therefore, option D is the correct answer. The other options (A, B, and C) are incorrect. Option A is incorrect because managers need various types of information beyond management accounting information to make decisions. Option B is incorrect because management accounting information primarily includes financial data, while production and marketing concerns have non-financial elements. Option C is incorrect because the traditional management accounting information may differ slightly among companies based on their type of business and operational processes.

Question 8

The basic difference between management and financial accounting is that:
A) the financial accounting system relies on accounting information, whereas management accounting does not.
B) financial accounting relies on information gathered from sources outside the business, whereas management accounting relies on internally generated information.
C) financial accounting is concerned with providing information to outsiders, whereas management accounting is concerned with providing information to managers for their use in directing the activities of the organisation.
D) None of the above is correct.

Accepted Answer

Financial accounting is focused on providing information to external parties such as investors, creditors, and regulatory agencies. Management accounting, on the other hand, is focused on providing information to internal managers to aid in decision-making, planning, and control. The information provided by financial accounting is generally historical and prepared according to accounting standards, while management accounting information is tailored to the specific needs of the organization and can include both financial and non-financial information. Therefore, option C is the best choice.

Question 9

The contingency theory accepts that different types of organisation require different types of accounting information for effective functioning.

Accepted Answer

The contingency theory recognizes that different kinds of organizations have unique characteristics and requirements that necessitate tailored accounting information for optimal management.

Question 10

Accounting information systems should be installed in an organisation when:
A) the financial controller decides they should.
B) benefits exceed the costs to an organisation.
C) another organisation in the same industry installs such a system.
D) the CEO decides they should.

Accepted Answer

Installing an accounting information system should only be done when the benefits exceed the costs to the organization. This means that the benefits of having a system, such as increased efficiency or more accurate financial reporting, outweigh the costs of purchasing and implementing the system. The decision should not be made based solely on the preferences of individual executives or other organizations in the same industry.

Question 11

Planning is the process of:
A) ensuring that a reasonable profit is made each year.
B) creating a 'roadmap' for achieving corporate goals and objectives.
C) just setting goals and objectives.
D) ensuring that assets are properly used.

Accepted Answer

Planning involves creating a strategic plan or roadmap for achieving corporate goals and objectives. It goes beyond just setting goals and objectives and also includes identifying the resources needed and how they will be allocated to ensure that assets are properly used. While ensuring a reasonable profit may be a goal for some organizations, it is not the sole purpose of planning.

Question 12

Planning and control decisions are similar in that both:
A) tend to have a short-run focus.
B) focus on achieving the organisation's goals.
C) increase the risk to owners and creditors.
D) involve the setting of goals.

Accepted Answer

Both planning and control decisions focus on achieving the organization's goals by ensuring that resources are used effectively and efficiently to meet these objectives.

Question 13

Which of the following characteristics of information is desired by management?
A) Regular
B) Timely
C) Detailed
D) All of the above

Accepted Answer

Management desires information that is regular, timely, and detailed to make informed decisions.

Question 14

Which of the following is essential for management before it decides whether the business is succeeding or failing?
A) Accounts receivable.
B) A set of objectives.
C) A large organisation.
D) More current assets than non-current assets.

Accepted Answer

A set of objectives is essential for management to determine whether the business is succeeding or failing because it provides a benchmark against which performance can be measured. Accounts receivable, a large organization, and the ratio of current assets to non-current assets are all important factors, but they are not sufficient on their own to determine overall success or failure.

Question 15

Which of the following is part of the planning process?
A) Deciding on the objectives.
B) Detailing how the plans are to be achieved.
C) Ensuring that the plans will be achieved.
D) All of the above.

Accepted Answer

The planning process includes deciding on the objectives, detailing how the plans are to be achieved, and ensuring that the plans are achieved. Therefore, all of the above choices are part of the planning process.

Question 16

Which of the following is not true of the control process? The control process:
A) is a part of the planning and control process.
B) involves monitoring action.
C) involves allocating resources for acquisitions of plant and equipment.
D) contains a corrective activity.

Accepted Answer

Allocating resources for acquisitions of plant and equipment is not a part of the control process. It is a part of the planning process specifically related to capital budgeting. The control process includes monitoring performance, comparing actual results with planned results, taking corrective actions as necessary, and adjusting the plan for the future.

Question 17

The primary difference between planning and control decisions is that:
A) the former must follow the latter.
B) planning decisions involve investing decisions, whereas control decisions focus on financing and operating decisions.
C) planning is future-oriented, while control decisions are past and present-oriented.
D) planning decisions involve components of the transformation process, whereas control decisions do not.

Accepted Answer

Planning decisions are made to set goals and objectives for the future, whereas control decisions are measures taken to ensure that the set objectives are met in the present or have been achieved in the past. In other words, planning is forward-looking, while control is retrospective or present-oriented.

Question 18

Decisions that require managers to evaluate the accomplishments of their organisation and to make changes if the organisation is not meeting its goals are usually referred to as: Planning decisions Control decisions
A) No No
B) No Yes
C) Yes No
D) Yes Yes

Accepted Answer

Control decisions are the ones that involve evaluating the performance of the organization and making changes if the goals are not being met. Planning decisions, on the other hand, are related to setting goals and determining the steps required to achieve them. Therefore, the correct answer is B, as control decisions involve evaluating the accomplishments of the organization and making changes if necessary.

Question 19

Which of the following is not an external user of financial information?
A) Shareholders
B) Management
C) Suppliers of goods and services
D) Government

Accepted Answer

Management is an internal user of financial information as they are the ones responsible for creating and analyzing the financial statements. Shareholders, suppliers of goods and services, and government are all external users who rely on financial information to make decisions about investments, credit, taxes, and regulations.

Question 20

The proper sequence for the planning and controlling process is:
A) set objectives, set goals, develop plans, implement plans, evaluate performance, modify goals or plans as needed.
B) develop plans, set objectives, set goals, implement plans, evaluate performance, modify goals or plans as needed.
C) set goals, set objectives, develop plans, implement plans, evaluate performance, modify goals or plans as needed.
D) set goals, develop plans, set objectives, implement plans, evaluate performance, modify goals or plans as needed.

Accepted Answer

The answer of The proper sequence for the planning and...

Quiz 12: An Introduction to Management Accounting: a Strategic Perspective

To be useful to management, accounting information must:

Which of the following factors influence the information available to the management of an organisation?

Decisions that require managers to evaluate the accomplishments of their organisation, and to make changes if the organisation is not meeting its goals, are usually referred to as:

How are financial accounting information and management accounting information similar?

The purpose of financial accounting is to provide information for decision making. What is the primary purpose of management accounting?

Decisions that require managers to identify goals and to develop strategies are usually referred to as:

Traditional management accounting information:

The basic difference between management and financial accounting is that:

The contingency theory accepts that different types of organisation require different types of accounting information for effective functioning.

Accounting information systems should be installed in an organisation when:

Planning is the process of:

Planning and control decisions are similar in that both:

Which of the following characteristics of information is desired by management?

Which of the following is essential for management before it decides whether the business is succeeding or failing?

Which of the following is part of the planning process?

Which of the following is not true of the control process? The control process:

The primary difference between planning and control decisions is that:

Decisions that require managers to evaluate the accomplishments of their organisation and to make changes if the organisation is not meeting its goals are usually referred to as: Planning decisions Control decisions

Which of the following is not an external user of financial information?

The proper sequence for the planning and controlling process is: