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Chapter 1 TRUE/FALSE 1. ANS: F 2.

ANS: F

Introduction to Managerial Accounting

Managerial Accounting is designed primarily for external users.

Both managerial and financial accounting are governed by GAAP.

3. Management accounting information is only used by manufacturing organizations. ANS: F

4. Management accounting information is important for both for-prof it and not-for-profit organizations. ANS: T

5. The managerial activity of monitoring a plan's implementation an d taking corrective action as needed is referred to as decision making. ANS: F The process of choosing among competing alternatives is decision

6. making. ANS: T 7. ANS: F

Financial accounting has its emphasis on the future.

8. Activity-based costing is a more detailed approach to determinin g the cost of goods and services. ANS: T 9. The value chain is the set of activities required to design, dev elop, produce, market, and deliver products and service to customers. ANS: T 10. ANS: F Time is not a crucial element in all phases of the value chain.

11. Positions that have direct responsibility for the basic objectiv es of an organization are referred to as staff positions. ANS: F

12. A cost accountant would normally occupy a staff position within an organization. ANS: T 13. Virtually all management accounting practices were developed to

assist managers in maximizing profits. ANS: T

14. The belief that each member of a group bears some responsibility for the well-being of other members is a common principle underlying all ethica l systems. ANS: T 15. tivity. ANS: F Excellent customer service is an example of a non-value added ac

16. The purpose of the Certificate in Public Accounting is to provid e minimal professional qualification for internal auditors. ANS: F

17. The four emphasized areas of the CMA examination reflect the nee ds of management accounting and highlights that management accounting has more o f an interdisciplinary flavor than other areas of accounting. ANS: T

MULTIPLE CHOICE 1. Financial Accounting a. has no mandatory rules b. is internally focused c. is concerned with the information about the firm as a whole d. has an emphasis on the future ANS: C

2. Which of the following is not an objective of Management account ing? a. To prepare external reports for investors, creditors, government agencie s, and other outside users b. To provide information for costing of services, products, and other obje cts of interest to management. c. To provide information for planning, controlling, evaluating and continu ous improvement. d. To provide information for decision making. ANS: A

3. Which of the following is an example of the management activity referred to as planning? a. Developing a strategy of disposing of hazardous waste. b. The decision to eliminate an unprofitable segment of an organization. c. The decision to outsource an organization's payroll processing. d. All of these ANS: a. b. c. A 4. Management accounting provides objective financial information must adhere to GAAP has no mandatory rules

d. ANS: a. b. c. d. ANS:

none of these statements are true C 5. Activity-based costing is a traditional costing method encourages process value analysis always results in a lower cost assigned to goods or services all of these B

6. Which of the following would not be an example of a value-added activity? a. timely delivery of products b. offering the customer a variety of products c. storage of finished products d. excellent customer service ANS: a. b. c. d. ANS: a. b. c. d. ANS: l? a. b. c. d. ANS: a. b. c. d. ANS: a. b. c. d. C 7. Which of the following would normally occupy a line position? vice-president of marketing controller treasurer purchasing manager A 8. Which of the following would normally occupy a staff position? assembly worker cost accounting manager factory manager all of these B 9. Which of the following would occupy a line position in a hospita

manager of the cafeteria hospital administrator chief of surgery none of these C 10. The controller of an organization participates in planning controlling decision making all of these D 11. The objective of profit maximization should be the only goal of an organization is an objective of Financial accounting but not Management accounting should be achieved through legal and ethical means should outweigh the goal of product quality

ANS: ation? a. b. c. d. ANS:

C 12. Which of the following areas is not emphasized on the CMA examin

external auditing and business law economics, finance, and management decision analysis and information systems financial accounting and reporting A

13. Accountants that have a Certificate in Public Accounting (CPA): a. are the only accountants permitted to serve as external auditors. b. must pass a national examination and be licensed by the state in which t hey practice. c. may be held responsible to provide assurance concerning the reliability of a firm's financial statements. d. all of these statements are true. ANS: a. b. c. on. d. ANS: D 14. Management accounting reports are prepared to meet the needs of decision makers within the firm. whenever stockholders request them. according to guidelines prepared by the Securities and Exchange Commissi according to financial accounting standards. A

15. 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 c redit decisions. c. to provide management with information useful for planning and control o f operations. d. to provide the Internal Revenue Service with information about taxable i ncome. ANS: a. b. c. d. ANS: markets a. b. c. d. ANS: C 16. Total quality management emphasizes zero defects. continual improvement. elimination of waste. all of these. D 17. Developing a company strategy for responding to anticipated new is an example of planning. controlling. decision making. all of these. A

18. Investigating production variances and adjusting the production process is an example of a. planning.

b. c. d. ANS: ude a. b. c. d. ANS:

controlling. decision making. all of these. B 19. The standards of ethical conduct for management accountants incl

competence and performance. integrity and respect for others. confidentiality, confidence, integrity, and observance. competence, confidentiality, integrity, and objectivity. D

20. Persons in the United States who provide assurance service are d esignated as a. Certified Public Accountants. b. Certified Financial Accountants. c. Chartered Accountants. d. Certified Management Accountants. ANS: A