Question 1

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

Consulting with an attorney can help the accountant understand the legal implications of the ethical conflict, which can guide their decision-making process.

Question 2

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

All management accountants, regardless of whether they are responsible for financial or nonfinancial reports, are expected to remain objective and use the doctrine of fairness when preparing reports and analyses. This ensures that the information presented is accurate, reliable, and free from bias, allowing management to make informed decisions based on the data.

Question 3

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

Accepted Answer

Management accountants are encouraged to resolve ethical conflicts by following their organization's established policies, which may include discussing the issue with higher levels of management or using an anonymous reporting system, rather than resigning as a first step.

Question 4

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

Accepted Answer

The quote of the current price of the company's stock is not essential for a manager to run a business effectively as it is primarily relevant to external stakeholders such as investors or shareholders. The other options (A, B, and C) are crucial pieces of information necessary for a manager to make informed decisions and run a business effectively.

Question 5

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 confidentiality standard does not protect accountants who knowingly cover up illegal acts committed by their company. If they fail to disclose such information to the appropriate outside authorities, they can be held liable as an accessory to the crime. This is because the confidentiality standard is not absolute and must be balanced with other ethical responsibilities, such as preventing harm to the public or upholding the law.

Question 6

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 are expected to communicate information fairly and objectively to avoid any potential biases and provide accurate financial reporting to stakeholders.

Question 7

Accumulating, interpreting, and reporting financial information is important for

Accepted Answer

Accumulating, interpreting, and reporting financial information is important for virtually all types of organizations, including service-related firms, manufacturing firms, for-profit organizations, and not-for-profit organizations, as it helps in making informed decisions about financial performance, cash flow, and profitability.

Question 8

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 bound by a code of ethics that requires them to maintain professional competence, confidentiality, integrity, and objectivity in all circumstances, not just during business hours or on company premises. This includes avoiding any activities that could compromise their ability to perform their duties ethically and professionally, regardless of the time or location.

Question 9

The unit of measurement used in management accounting is

Accepted Answer

The unit of measurement used in management accounting can vary depending on the situation and what is most useful. It may be historical dollars, current replacement cost, or other units. The important factor is that the unit of measurement accurately reflects the relevant information for making management decisions. Choosing the unit of measurement used by competing companies may not be relevant or useful in all situations.

Question 10

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 working in purchasing must avoid any conflicts of interest or the appearance of a conflict of interest. Acceptance of gifts from vendors may influence their decision-making process and create an appearance of bias, which is not in line with the ethical standards of their profession.

Question 11

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 about a future merger to a relative is a breach of confidentiality and therefore unethical behavior. The management accountant is supposed to keep such information confidential, even from family members.

Question 12

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

Accepted Answer

Financial accounting reports are required to adhere to generally accepted accounting principles (GAAP) and are aimed at providing objective information to external stakeholders, such as investors and creditors. On the other hand, management accounting reports are created for internal use and are subjective in nature, as they are tailored to the needs of specific managers and departments within an organization. Both use historical costs as a basis for measurement and do not necessarily depend on the double-entry system of accounting.

Question 13

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

Accepted Answer

It is important for management accountants to stay informed and up-to-date on laws, regulations, and technical standards in order to ensure compliance and provide accurate financial information.

Question 14

The management process includes all of the following stages except

Accepted Answer

The management process typically includes four stages: planning, communicating, evaluating, and recording. Therefore, the only stage not included in this list is recording, making option D the correct answer.

Question 15

Which of the following is a characteristic of management accounting?

Accepted Answer

Management accounting is primarily used by internal users, such as managers within an organization, to make informed business decisions. It is not required to follow generally accepted accounting principles and can use non-financial data in addition to historical costs to analyze past and present performance.

Question 16

Management accounting

Accepted Answer

Management accounting can use both physical and monetary measures for measurement and analysis. It deals with internal reporting and decision-making within the business entity. It is not limited to the double-entry recording system. Periodic reporting may be a part of management accounting, but it is not the primary focus.

Question 17

Management accounting and financial accounting are similar in which of the following respects?

Accepted Answer

Both management accounting and financial accounting provide relevant and useful information to management. Financial accounting provides information to external stakeholders such as investors and creditors, while management accounting provides information to internal stakeholders such as managers and executives to aid in decision-making. While they may use different methods and terminology, their ultimate goal is to inform decision-making and improve organizational performance.

Question 18

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 who alter reports to meet targeted levels of performance are acting unethically. Their job is to provide accurate and reliable information, even if it is not aligned with the desired goals of the business. Altering reports can mislead stakeholders and compromise the integrity of the accounting profession.

Question 19

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

It is actually within the ethical standards of management accountants to continually update their knowledge and skills in order to provide the best possible service to their organization. This is outlined in the Institute of Management Accountants' Statement of Ethical Professional Practice.

Question 20

Management accounting reports can

Accepted Answer

Management accounting reports can use a flexible format that suits the specific needs of the organization, include financial and nonfinancial data to provide a comprehensive view of the business, and can be prepared for any time period, whether it's a day, week, month, or year. Therefore, all of these options are valid choices.

Quiz 1: The Changing Business Environment - a Managers Perspective