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MODULE 1 BASIC CONCEPTS IN MANAGEMENT ACCOUNTING 1. The major functions of management is (are): A. strategic management and long-range planning. B. planning and decision making. C. identifying threats and opportunities for the firm. D. all of the above.
A. decision making B. planning
C. controlling D. all of the above
6. Paying rent, purchasing supplies, and purchasing inventory are which of the day-to-day work activities of the management team? A. decision making C. directing operational activities B. planning D. only A and B Bobadilla Bobadilla 7. Which of the following statements is true when comparing managerial accounting to financial accounting? A. Managerial accounting places more emphasis on precision than financial accounting. B. Both are highly dependent on timely information. C. Both rely on the same accounting information system. D. Managerial accounting is concerned with external decision makers. Bobadilla 8. Which of the following is true of managerial accounting rather than financial accounting? A. The outputs of this accounting system are the primary financial statements. B. The methods of this accounting system are established by an overseeing board. C. The accounting methods are standardized to allow comparisons among companies. D. The accounting system would be unique to each company. Bobadilla 9. Management accounting’s role in the control processes is to provide A. managers with information that can be used to determine customer satisfaction levels. B. investors and creditors information on the financial stability of the company. C. managers with relevant information to compare with expectations. D. input to managers on the best ways to achieve continuous improvement in the production process. Bobadilla
2. The process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization's goals is called A. managerial accounting C. management B. financial accounting D. promotional activities Bobadilla 3. The primary objective of management accounting is A. to provide stockholders and potential investors with useful information for decision making. B. to provide banks and other creditors with information useful in making credit decisions. C. to provide management with information useful for planning and control of operations. D. to provide supervising government agencies with information about the company’s management affairs. Bobadilla 4. Management accounting information A. uses historical cost as the basis for reports to managers who are making decisions about future courses of action. B. should be developed and provided only if its benefits exceed its costs. C. does not reflect the financial criteria of verifiability or consistency. D. should serve the basic needs of investors and creditors. Bobadilla 5. Which of the following is included in the day-to-day work of the management team?
C. completely accurate and precise. C.Which of the following statements are true regarding financial and managerial accounting? I. CPAs who are performing management advisory services may be considered to be in the practice of management consulting.Managerial accounting places considerable weight on: A. B. rather than just looking at the organization as a whole. CPAs provide management advisory services to go around the ethical constraints as mandated by the Accountancy Law. managers are more concerned with receiving information that is: A.The primary purpose of management advisory services is A. ensuring that all transactions are properly recorded. A CPA with MBA and DBM degrees is automatically qualified to render management advisory services.Which of the following statements is correct? A. B. D. Adequate training and experience in both the analytical approach and process in a particular undertaking are requisites for the CPA to be involved in a management advisory service engagement. Bobadilla 13. detailed segment reports about departments. Managerial accounting need not conform to GAAP. and precise. an MBA and other post graduate studies. Only II Bobadilla 11. Competence as a standard in the rendition of management advisory services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate degree. Bobadilla 15. C. products. D. Financial accounting reports focus on subunits of the organization. rather than to the past.Managerial accounting activity adds value to an organization by pursuing five major objectives. It utilizes more junior staff than senior members of the firm D.Which of the following statement is FALSE? A. III. IV. B. III. It relates to specific problems where expert help is required Bobadilla 17.Basic Concept 10. completely accurate. the financial history of the entity. It broader in scope and varied in nature C. Only II. generally accepted accounting principles. D. Both are geared to the future. II. 2 C.The following characterize management advisory services except A.Which of the following statements is incorrect? A. Both rely on the same underlying financial data. which include A. Both emphasize the segments of an organization. A. and provision of advice . B. preparation of recommendations. assisting managers in directing and controlling operational activities. Both are mandatory. flexible. Only II and III B. relevant. II. development of plans and programs. D. Bobadilla 14. C. B.For internal uses. Managerial accounting focuses on the needs of internal users. relevant. I. D. Included in the practice of consulting is the provision of confidential service in which the identity of the client is concealed. measuring the performance of activities within an organization. To conduct special studies. completely objective and verifiable. and customers. Businesses hire management consultants to help define specific problems and develop solutions. and immediately available. III and IV D. B. all of them Bobadilla 12. A certified public accountant can readily render management advisory services to the public. It involves decision for the future B. providing information for decision making and planning. and IV C. (RPCPA) 18. (RPCPA) 16. Managerial accounting is not required D. C.
The major reporting standard for presenting managerial accounting information is A. managerial accounting is oriented more toward the planning and control aspects of management Bobadilla 27. pertains to subunits of the entity and may be very detailed.Which of the following statements correctly distinguishes financial and managerial accounting? A. less constrained by rules and regulations. the emphasis of former on record keeping and the latter on reporting C.Managerial accounting information: A. Designing systems to provide information for internal and external reports. Bobadilla 26. financial accounting is oriented toward the future C. Bobadilla D. the focus of the former on accounting matters and the latter in support to management in making the right decisions for staying on a competitive position B. C. financial accounting is primarily concerned with providing information for internal users D. B. relevance B. Managerial Decision Past Past Future Future Making External Performance Past Future Past Future 23. B.Which of the following activities is not usually performed by a management accountant? A. D. all of the above. B. more concerned with the future.Managerial accounting differs from financial accounting in that it is 3 A. the current tax law Bobadilla 22. To provide services or to fulfill some social needs. D. managerial accounting reports on the whole organization B. Bobadilla 19. is constrained by the requirements of generally accepted accounting principles. Bobadilla 24. meeting the requirements of generally accepted accounting principles.The distinction between traditional accounting and cost management is A. D. Gathering data from sources other than the accounting system. the data needs of stockholders and creditors. To improve the client’s use of its capabilities and resources to achieve the objectives of the organization. B. segments of a company rather than the company as a whole.With respect to the time dimension. generally accepted accounting principles C. how does managerial decision compare with external performance evaluation? Bobadilla A. Bobadilla 25. more concerned with segments of a company. C. B. C. C. C. the company as a whole rather than a segment of the organization. the focus of the former on cost cutting and the latter on product differentiation D.Managerial accounting is primarily concerned with: A. Deciding the best level of inventory to be maintained. is prepared only once a year. D.How does managerial decision making compare with external performance evaluation? Managerial Decision External Performance . B. the focus of the former on efficiency and the latter on quality. D. pertains to the entity as a whole and is highly aggregated. the cost principle D.Basic Concept and assistance in their implementation. To earn the best rate of return on resources entrusted to its care with safety of investment being taken into account and consistent with firm’s social and legal responsibilities. Assisting managers to interpret data in managerial accounting reports. C. Bobadilla 21. 20.
B. all of the above. be concerned with the impact of cost and volume on profits. both concentrate on historical data. supporting management planning C. Less frequent More frequent Bobadilla Bobadilla 36. B.Which statement is false? Managerial accounting information: A. D. development and implementation of the business strategy. B. D. The wishes of the managers receiving the report. involves planning for the future B.Management accounting is similar to financial accounting in that A. The frequency with which decisions are made that require the 4 . daily C. assist in budget planning.Managerial accounting provides data for all of the following major objectives except: A. Reporting standard is relevant to the decision to be made.Which of the following does not apply to the content of managerial reports? A. concerned with nonquantative information.Internal reports must be communicated A. C. B. compliance with SEC reporting requirements D.Basic Concept A. C. More frequent More frequent C. C.Which consideration influences the frequency of an internal report? A. more oriented toward the future. Bobadilla 29. D. annually B. helps managers make financing decisions D. Pertains to the entity as a whole and is highly aggregated. Making Detailed Detailed More aggregated More aggregated Evaluation Detailed More aggregated Detailed More aggregated Bobadilla 32. Bobadilla 33. both are governed by generally accepted accounting principles. B. as needed 28. both classify reported information in the same manner. B. D. prepare reports primarily for external users.In the contemporary business environment. determining the costs of products Bobadilla 34. Bobadilla 30. should be requested and used by management even if it is very costly to gather and analyze C. Pertain to subunits of the entity and may be very detailed. C. monthly D. C. Bobadilla 37. B. heavily involved with decision analysis and implementation of decisions. Bobadilla 31. financial reporting and cost analysis. need not comply with generally accepted accounting principles Bobadilla 35. common emphasis on standardization and standard costs. C.How frequent is management accounting report when compared to report to external users? Management Accounting External Report Report A. determine cost behavior. More frequent Less frequent B. planning and control of costs B.Managerial accounting differs from financial accounting in that financial accounting is A. cost management focus is on A. both deal with economic events.Management accountants would not A. D. May extend beyond double-entry accounting system. primarily concerned with external financial reporting. Less frequent Less frequent D. D.
and strategic. C. D. Provide objective measures of past operations and subjective estimates about future decisions. B. It depends on the type of manager receiving the report. emphasize the company as a whole C. nonprogrammed.Internal reports are generally A. All of the above. Be prepared in accordance with generally accepted accounting 5 38. B. C.Which statement about the extent of detail in a management accounting report is true? A. aggregated B.Which of the following characteristics is inherent to management accounting? A. It depends on the level of the manager receiving the report. Compliance to generally accepted accounting principles C. Internal reports may show all amounts at market values. All of the above. D. programmed. financial planning D. macro-report Bobadilla 42. Bobadilla 40.In order to be useful to managers. It may depend on the frequency of the report. may require more customized reports than external financial statements Bobadilla . pertains to subunits of the entity and may be very detailed.The role of the managerial accountant in today’s corporate world includes all of the following except: A. Always reports on the entire entity. Repetitive. C. External users of financial report Bobadilla 48. classified financial statements B. general-purpose C. Repetitive. Must follow generally accepted accounting principles. nonprogrammed. Contribution approach income statement D. D. are historical in nature B. Reporting of historical information B.Which of the following is most associated with managerial accounting? A. Management decision processes fall into three categories that consist of A. Internal reports may discuss prospective events. Nonrepetitive. B. C. pertains to the entity as a whole and is highly aggregated. D. C. special purpose D. Most internal reports are summarized rather than detailed. B. detailed C.Management accountants help develop and maintain reporting systems that are aligned with organizational structures and that provide useful information on an organization’s performance. emphasize accuracy over timeliness D. bookkeeping Bobadilla 44.Managerial accounting information A. Bobadilla 39. C. The content of internal reports may extend beyond the doubleentry accounting system. and nonstrategic. is prepared only once a year. and strategic. Is prepared for users outside the organization.The informational needs of internal users/management: A.Which of the following statements about internal reports is not true? A. interpreting financial information C. is constrained by the requirements of generally accepted accounting principles. B. regulated D. financial modeling B.Basic Concept information in the report. and strategic. Bobadilla D. Nonrepetitive. Bobadilla 43. Bobadilla 46.Managerial accounting reports can be described as: A. nonprogrammed. May rely on estimates and forecasts. The cost of preparing the report. unreliable Bobadilla 41. Bobadilla 45. management accounting reports should possess all of the following characteristics except: A. B. 47. D.
Management 1. confidentiality Bobadilla 57. Bobadilla D. must be the same accounting data for reporting to shareholders. objectivity B.Under which ethical standard of conduct does the managerial accountant have the responsibility to refuse any gift. 4 1. C. but may use different data for tax purposes. 2. 5 3. 2. integrity B. 1. Bobadilla 49. 6 52. 4 only D. Contribution approach income statement 4.Which of the following is an incorrect statement? A. D. Prospective financial statements Which of the foregoing are related to management accounting and financial accounting. D. 2. objectivity Bobadilla 56. 3 only B. confidentiality D. D. competence C. the accounting data used: A. may be different accounting data for both tax purposes and reporting to shareholders. C. must be the same accounting data for tax purposes. 1. External report 2. integrity B. Managerial accounting does not need to conform to generally accepted accounting principles. Historical information 3. confidentiality D. There is no overlap between financial and managerial accounting. B. 4. 3 3 Accounting Financial Accounting 3. 4. competence D. objectivity Bobadilla 54. 1 and 3 only Bobadilla 53. integrity C. 5 2. Bobadilla C. 2. B. Financial accounting must conform to generally accepted accounting principles.Under which ethical standard of conduct does the managerial accountant have the responsibility to refrain from either actively or passively subverting the attainment of an organization's legitimate and ethical objectives? A. objectivity A. 3. C. objectivity Bobadilla 55. respectively? Bobadilla A. favor. but may use different data for reporting to shareholders. integrity 4. 5 1. B. Be provided at any time management needs information. Generally accepted accounting principles 5.For managerial reports. integrity B.The following are inherent to either management accounting or financial accounting: 1. competence C. Be prepared to report information for any unit of the business to support decision making. competence 2.Under which ethical standard of conduct does the managerial .Under which ethical standard of conduct does the managerial accountant have the responsibility to prepare complete and clear reports and recommendations after appropriate analyses of relevant and reliable information? A. 51. must be the same accounting data for both tax purposes and reporting to shareholders. 5 50.Basic Concept principles. or hospitality that would influence or appear to influence his or her decision? A. confidentiality 3. confidentiality D. 4 1.Under which ethical standard of conduct does the managerial accountant have the responsibility to communicate information fairly and objectively? A. competence C.Which of the following is an ethical standard of conduct for managerial accountants? 1. Managerial accounting sometimes relies on past information. All of them C.
Timing of the reports. Neither costs nor benefits. the chief information officer. B. controller. C. B. external reporting to government. comments. C. B.Which of the following is true of managerial accounting rather than financial accounting? . purchasing manager. is prepared following prescribed rules B. the planning and controlling aspects of the management process.Which of the following does not describe managerial accounting? A. various outside parties. gather information about the consequence of each alternative.The cost management function is usually under 7 63. D. C. internal and external reporting that may be used in making nonroutine decisions and in developing plans and policies.Basic Concept accountant have the responsibility information that could reasonably intended user's understanding of recommendations presented? A. cost-benefit relationship.If a distinction is made between cost accounting and managerial accounting. is prepared for stockholders D. objectivity C.For managerial decision purposes. has few externally imposed standards Bobadilla 67.Management accounting A. list alternative courses of action. D. and stockholders. Cost of the reports. C. is prepared following Generally Accepted Accounting Principles Bobadilla 65. internally focused C. externally focused B. provides information to external users C.The first step in managerial decision making is to A. but some other criteria. is prepared using whatever methods the company finds beneficial C.In a broad sense. valuation of inventory. whenever stockholders request them C. C. treasurer. competence D. B. B. managerial accounting is more oriented toward A. generates general purpose financial statements and reports D. the volume of information should be evaluated on the basis of A. Relevance of the reports. financial reporting to third parties.Management accounting and financial accounting differ in that management accounting information A. Bobadilla 60. emphasis on the future D. A benefit. Meet the manager’s needs. internal reporting for use in management planning and control. Bobadilla 58. Bobadilla 62. D. reports are always objective B. Bobadilla 59. Bobadilla 64. but not benefit. detailed information Bobadilla 66. identify a problem. internal reporting for use in planning and controlling routing operations. B. analysis of variances including spoilage. to disclose fully all relevant be expected to influence an the reports. A cost. C. D.Management accounting reports are prepared A. D. B. according to guidelines prepared by the SEC D. D. and external reporting to the extent its product-costing function satisfies external reporting requirements. but not cost. cost accounting can be defined within the accounting system as A. specify the standard or expected outcome. and confidentiality integrity Bobadilla A.What is the primary criterion for the preparation of managerial accounting reports? A. by CPAs Bobadilla 68. to meet the needs of decision makers within the firm B. Bobadilla 61.
the timeliness of information D. a manager is performing the function of A. not focusing on the activities that actually drive the costs. analyzing financial statements. is concerned mainly with a operating a manufacturing segment.The setting of objectives and the identification of methods to achieve those objectives is called 8 Bobadilla 72.The managerial function of controlling A.Systems implemented to reduce defects in finished products with the goal of achieving zero defects are A. zero defects B. C. motivating B. Decision-making Bobadilla 74. B.Managerial accounting creates value by: A.In determining whether planned goals are being met. Control B. includes performance evaluation by management. Planning D. Bobadilla 70.Which of the following is not a separate management function? A.Which of the following emerging themes in cost accounting deals with managers striving to create and environment which will enable workers to manufacture perfect (zero defect) products? A.Which of the following functions is most directly related to management by objective? A. total quality management systems. The methods of this accounting system are established by an overseeing board. A. being too GAAP oriented.Total quality management emphasizes . C. Bobadilla 79. both a and b 76. follow-up Bobadilla 73. Controlling B. D. the quantity of information C. only looking at historical data. all of the above Bobadilla production Bobadilla 75. Bobadilla 71. D. planning C. customer orientation C.Automation of the manufacturing process increases A. advance in information technology 77. C. D. is performed only by the controller of a company. B. value chain systems. activity-based costing systems. Motivating C. enterprise resource planning systems. D. The outputs of this accounting system are the primary financial statements B. is only applicable when the company sustains a loss. continual improvement C. elimination of waste D. global competition D. all of the above Bobadilla 78. C.Traditional managerial accounting systems are often criticized for: A. controlling D. The accounting system would be unique to each company Bobadilla 69. The accounting methods are standardized to allow comparisons among companies D.Planning is a function that involves A. the number of employees B. Reporting C. coordinating the accounting information system. by eliminating all pricing and costing errors C. setting goals and objectives for an entity. not emphasizing cost control. Planning Bobadilla 80. hiring the right people for a particular job. B. C. total quality management Bobadilla B.Basic Concept A. Decision making D. B. by focusing managers attention on the relationship between financial and non-financial factors D. by forcing managers to analyze historical figures and interpret the results B.
D. evaluate performance B. Compare actual results to plan B. value chain analysis D. Bobadilla 81. Establish blame Bobadilla 82. implement plans. D. develop pricing targets. determine breakeven 83.Strategic cost management has emerged from a blending of: A. financial reports. B. vice-president of production C. all of the above Bobadilla 91.Strategic cost management includes all of the following tools except: A. cost driver analysis C. Identify variable costs. investor relations. identify fixed costs.Developing a company strategy for responding to anticipated new markets is an example of: A. what is the proper sequence of events? A.The treasurer function is usually not concerned with A.All A. planning B. performance Bobadilla evaluation A. develop variance analysis Bobadilla C. set standard costs. set objectives. activity based management B. C.Which of the following duties is usually assigned to the controller? A. Establish sales goals and targets D. plant foreman Bobadilla 84. of the following would be considered staff functions EXCEPT: the vice-president of finance the vice-president of corporate planning the vice-president of research and development the vice president of marketing Bobadilla accountants generally exercise which type of 87.Which of the following best describes what performance evaluation should be designed to do? A. short-term financing. controlling D.Management authority? . Company. operational and strategic planning are the same Bobadilla 9 86. value chain analysis B.Basic Concept A. would be involved in determining production levels for next quarter C. strategic position analysis D. B. vice-president of marketing D. all of the above Bobadilla 92. directing the granting of credit to clients B. Establish a master budget. project the sales mix. controlling C. B. motivating Bobadilla 90. CFO Bobadilla 85. Controller B. develop plans. Set goals. investing the organization’s funds C. involves only long range goals D. Internal auditor C.Which management position is responsible for raising capital? A. calculate contribution margins D. Line. D.Which of the following is a staff position? A.In the planning and control process.Strategic planning is different from operational planning in that operational planning: A. C. Staff. involves large sums of money B. Functional. Develop engineered costs. planning B. credit extension and collection of bad debts. decision making D. Bobadilla 88. C. standard cost variance analysis C. Modify goal and objectives each month C. decision making C. independently evaluating the firm’s financial statements Bobadilla 89. Treasurer D. vice-president of finance B. tax planning D.
customer complaints C. internal operations perspective C. strategic costs management B. A form of strategy that a management may adopt in order to attempt in creating a perception of uniqueness that will permit a higher selling price.The period that begins with the arrival of materials and ends with the shipment of a completed goods refers to A. A staff position: . D. activity-based management of activities B. C. Differential costs C.Items that prevent the organization from attaining a higher level of achievement within its value chain are called the A. computer-integrated manufacturing. Sunk costs D. Indirect costs Bobadilla 104. Controlling B. return on assets D. cycle time. number of engineering changes D. B. Bobadilla 101. percentage of on-time deliveries by the organization B. value chain B. Conventional and just-in-time manufacturers differ in that the conventional manufacturer is likely to A. The benefits lost or forfeited as a result of selecting one alternative over another are called A. A. Obtaining feedback is generally identified most directly with which of the functions of management? A. C.Which of the following might be a performance measure for the financial perspective of a balanced scorecard? A. percentage of market share held by the organization Bobadilla 94. flexible manufacturing system 99. Opportunity costs B. percentage of product defects C. lowest cost strategy Bobadilla D. market share B. a high degree of quality control. Differentiation. have a longer production cycle than its JIT competitors. D. the theory of constraints C. inventory turnover Bobadilla 96. Bobadilla 102. planning activity B. value chain D. customer perspective D. C. financial perspective Bobadilla B. learning and growth perspective 95. performance period. B.The overall recognition of the importance of cost relationships among the activities in the value chain and the process of managing those cost relationships among the activities in the value chain is called A. theory of constraints C.The initiative to reduce non-value added activity is meeting which balanced scorecard objective? A. operating activity D. Bobadilla 100. have a flexible manufacturing system. none of the above Bobadilla 103. need less storage space than its JIT competitors.Basic Concept 93. Lead time. differentiation strategy C. Value chain. controlling activity C. D. the value chain D. Planning C.The set of processes that transform raw materials into finished products is known as a 10 A. B. strategic cost management Bobadilla 98. Decision making Bobadilla 105. cost management systems Bobadilla 97. Lowest cost.The balanced scorecard internal operations perspective includes A. Deciding whether to sell a product or process it further is an example of a(n): A. Directing and motivating D. manufacturing cell.
designing the highest quality product in a given segmented market. B. reproduce another company’s product design and manufacturing processes to eliminate competitive advantage. providing service and assistance to other parts of the organization. Bobadilla 107. benchmarking. 11 . Bobadilla “Racing with no finish” refers to developing the best selling product. C. C. product review. B. Bobadilla 110. D. since the accounting department must be independent. D. C. The process of comparing. research and development. Bobadilla B. A. services and activities to those of other companies in order to identify strengths and weaknesses. D. feedback. Benchmarking allows managers to: A. determine the processes that have high value-to-cost relationships. A company’s value chain reflects the organizational levels of authority and responsibility. B. The controller occupies: a line position. D. D. stages of production from raw materials to finished goods. is superior in authority to a line position. linked set of activities that increase the value of products or services. investigating. C. determine who in the industry performs similar processes most effectively. D. is supportive in nature. Bobadilla 106. C. 108. none of these. Bobadilla 109. relates directly to the carrying out of the basic objectives of the organization. neither a line nor a staff position. C. benchmarking and continuous improvement. compare certain internal processes.Basic Concept A. and evaluating the company’s processes or products against the best level of performance is known as A. A. sales distribution network for the company’s products and services. a staff position. A. B. B. both a line and a staff position. attestation.
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