Question 1

Which of the following is NOT one of the five steps in the lean thinking model discussed in the text?

Accepted Answer

Automating the business process is not one of the five steps in the lean thinking model. The other four steps are: identifying the business process that delivers value, organizing work arrangements around the flow of the business process, creating a pull system that responds to customer orders, and continuously improving the process.

Question 2

The lean thinking model focuses on reducing defects to as close to zero as possible.

Accepted Answer

Lean thinking primarily focuses on eliminating waste and improving efficiency, while Six Sigma is the methodology that focuses on reducing defects to near zero.

Question 3

The Sarbanes-Oxley Act of 2002 was intended to protect the interests of those who invest in publicly traded companies by ensuring that their original investments could be recovered in case of fraud.

Accepted Answer

The Sarbanes-Oxley Act of 2002 was designed to protect investors by improving the accuracy and reliability of corporate disclosures, not by ensuring recovery of original investments.

Question 4

Corporate social responsibility refers to the moral obligation of all corporations to make substantial monetary contributions to charitable causes.

Accepted Answer

Corporate social responsibility refers to a broader concept of corporations taking responsibility for their impact on society and the environment, and committing to ethical and sustainable business practices, rather than just making monetary contributions to charity.

Question 5

Six Sigma is a process improvement method that targets a system's constraint for process improvement.

Accepted Answer

Six Sigma focuses on reducing variation and defects in processes, while the Theory of Constraints targets a system's constraint for process improvement.

Question 6

Enterprise risk management involves replacing risky investments with investments in low-risk government securities.

Accepted Answer

Enterprise risk management involves identifying and assessing risks, and developing strategies to manage and mitigate those risks through a variety of methods, such as risk transfer, risk reduction, or risk acceptance. It does not necessarily involve replacing risky investments with low-risk government securities, although that may be one possible risk management strategy for certain types of investments or organizations.

Question 7

The Institute of Management Accountants' Statement of Ethical Professional Practice specifically states, among other things, that management accountants have a responsibility to keep information confidential except when disclosure is authorized or legally required.

Accepted Answer

The statement of ethical professional practice for management accountants includes a responsibility to maintain confidentiality of information except when authorized or required by law to disclose it.

Question 8

A value chain consists of the major subassemblies that add value to a product.

Accepted Answer

A value chain refers to the full range of activities and processes that businesses engage in to bring a product or service from conception to delivery, not just subassemblies.

Question 9

A strategy is a game plan that enables a company to attract customers by mimicking what successful competitors do.

Accepted Answer

A strategy is not just about imitating successful competitors. A strategy involves a unique approach and set of actions tailored to a company's goals, strengths, and resources, which may or may not include aspects similar to successful competitors.

Question 10

Customer value propositions tend to fall into three broad categories-theory of constraints, six sigma, and enterprise risk management.

Accepted Answer

This statement is false. Customer value propositions can fall into various categories, and the ones mentioned in the statement are not the only ones. Some other categories include design thinking, customer-centric, and lean methodology.

Question 11

Decentralization refers to:

Accepted Answer

Decentralization involves delegating decision-making authority throughout an organization, instead of concentrating it at the top. This allows for greater autonomy and flexibility at lower levels of the organization, and can lead to faster decision-making and increased innovation. A and B are incorrect because they refer to reporting, which is not necessarily related to decentralization. D is also incorrect because it is too general and does not provide a clear definition of decentralization.

Question 12

Efforts designed to increase the rate of output should generally be applied to non-constraint work stations.

Accepted Answer

Efforts to increase output should focus on constraint work stations, as they are the bottlenecks limiting overall system performance.

Question 13

Which of the following persons would occupy a line position in a department store?
I. Sales manager
II. Manager, furniture department
III. Manager, advertising department
IV. Manager, personnel department

Accepted Answer

A line position in a department store is usually involved in the actual selling of the products and services offered by the store. Thus, a sales manager and a manager of a specific department, such as furniture, would occupy a line position as they are directly responsible for the sales operations. Managers of advertising and personnel departments would occupy staff positions, as they support the sales operation but are not involved directly in the selling process. Therefore, only I and II would be considered line positions in a department store.

Question 14

The Statement of Ethical Professional Practice promulgated by the Institute of Management Accountants specifically states, among other things, that management accountants have a responsibility to inform responsible journalists of any wrongdoing they uncover in the organization.

Accepted Answer

The Statement of Ethical Professional Practice does not specifically mention responsible journalists as the audience to whom management accountants should report any wrongdoing. Instead, it states that management accountants have a responsibility to report any material violations of laws or regulations to those within the organization who can take appropriate action to address the violation. They may also disclose such information to external parties as permitted by law or when authorized by their organization's policies.

Question 15

Which of the following is NOT one of the three major customer value propositions discussed in the text?

Accepted Answer

The three major customer value propositions discussed in the text are customer intimacy, operational excellence, and product leadership. Zero defects is not one of the major customer value propositions mentioned in the text.

Question 16

Which of the following statements is TRUE concerning the CMA?

Accepted Answer

To earn the CMA, an examination must be passed. Option B is incorrect because experience is necessary to earn the CMA. Option C is also incorrect because compliance with the Institute of Management Accountants' Statement of Ethical Professional Practice is necessary to earn the CMA. Therefore, the correct option is A.

Question 17

Companies that choose an operational excellence strategy are in essence saying to their customers, "Choose us because we can deliver products and services faster, more conveniently, and at a lower price than our competitors."

Accepted Answer

An operational excellence strategy focuses on optimizing internal processes to deliver products and services faster, more conveniently, and at a lower cost than competitors. This strategy appeals to customers who value efficiency and affordability.

Question 18

The controller occupies:

Accepted Answer

The controller typically occupies a staff position, providing support and expertise to the line functions of an organization, particularly in financial matters.

Question 19

_________________ is an example of a staff position.

Accepted Answer

A staff position is one that provides support and assistance to other areas of a business, and typically does not have direct authority over employees. Human resource managers in a community college would fit this description. The other choices are all examples of line positions, which have direct responsibility for achieving the goals of the organization.

Question 20

The controller occupies a staff position in an organization.

Accepted Answer

The controller is typically a staff position in an organization, as they provide support and information to management and do not have direct authority over operational units.

Quiz 1: Managerial Accounting and the Business Environment