ACCOUNTING 202 STRATEGIC BUSINESS ANALYSIS

INTRODUCTION TO MANAGEMENT ADVISORY SERVICES

ASSIGNMENT

1. That kind of accounting concerned with providing information to management in making decisions
about the operations of the business
a. Responsibility accounting
b. Cost accounting
c. Management accounting
d. Correct answer no given

2. The following relates to the ethical standard of integrity for management accountants, except:
a. The management accountant should refrain from engaging in any conduct that would prejudice
carrying out duties ethically.
b. The management accountant should communicate favorable and unfavorable information, as
well as professional judgments and opinions.
c. The management accountant should communicate information fairly.
d. The management should refrain from either actively or passively subverting the attainment of
organization’s legitimate and ethical objectives.
e. The management accountant should regularly communicate with business associates to avoid
apparent conflicts of interest.

3. A type of managerial accounting which refers to the determination of the operating cost regardless
of cost behavior is
a. Differential accounting
b. Full cost accounting
c. Responsibility accounting
d. Profitability accounting

4. The following are characteristics of MAS, except:

a. It pinpoints actions to be taken to benefit the future.
b. It is detailed and concise to aid management make decisions.
c. It involves lesser need for junior assistance.
d. It involves problem solving that affects the client’s future operations.
e. It is practical.

5. Management accounting is an integral part of the management process. As such, it provides

essential information for the following objectives except
a. Maintaining the current level of resource utilization as well as internal and external
communication.
b. Measuring and evaluating performance.
c. Planning strategies and controlling current activities of the organization.
d. Enhancing objectivity in decision-making.

6. An organizational concept recognizing that all positions or functional divisions can be categorized
into two groups is:
a. Matching concept.
b. Line-staff concept.
c. Processes concept.
d. Resources concept.
e. Functional-teamwork concept.

7. Which type of authority do management accountants generally exercise?

a. Functional
b. Company
c. Line
d. Staff

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8. This basic function of a controller concerns itself with systematic determination of the effectiveness
and efficiency of an organization’s system against a benchmark standard:
a. Evaluation
b. Benchmarking
c. Financial reporting and interpretation
d. Economic appraisal
e. Protection of assets

9. In financial accounting, certain rules and regulations must be followed on how financial statements
must be presented to the reader. In managerial accounting, no such restrictions generally apply
because it is:
a. An entirely different field that need not observe the broad guidelines in financial accounting.
b. Designed to provide management with non-financial information for decision-making.
c. Designed to provide accounting and other financial data to assist management in making
business decisions.
d. A discipline that does not require preparation of other financial statements.
e. All of the above.

10. This refers to the manager in charge of the finance department in an organization:
a. Vice President of Finance.
b. Chief Executive Officer.
c. Treasurer/Chief Financial Officer.
d. Chief Accounting officer.
e. Chief Operations Officer.

11. The following characteristics refer to Financial Accounting except

a. Provides information to external users
b. Emphasizes on objective data
c. Has no externally imposed standards
d. Generates general purpose financial statements

12. The following are responsibilities of management accountants, except:

a. Assesses the accounting principles used and significant estimates made by management and
evaluate the overall financial statement presentation.
b. Application of internal audit procedures to assure the accuracy and reliability of information
derived from the accounting system and related sources.
c. Accumulating data and reporting reliable results.
d. Only two statements are correct,
e. All statements are correct.

13. Which of the following is a Controller’s responsibility?

a. Tax planning and accounting
b. Custodian of funds
c. In charge of credit and collection
d. Arranging short-term financing

14. Employee empowerment involves encouraging and authorizing workers to take initiatives to:
a. Improve operations.
b. Reduce costs.
c. Improve product quality.
d. Improve customer service.
e. All of these.

15. Controllership has attained special recognition in corporate management as business expands in
complexity and reach, and as the controller exerts influence for management to take organization’s
goals. Controllership and treasurership constitute corporate finance. These are among the
controller’s traditional functions:

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 1. Tax management.
2. Financial reporting and interpretation.
3. Credit management.
4. Sourcing and investing of funds.
5. Reporting to government regulatory agencies.
6. Risk management.
7. Economic appraisal.
8. Planning for control.
a. All eight items.
b. Items 1, 2, 5, 7, and 8 only.
c. Items 1, 2, 3, 4, 5, 7, and 8 only.
d. 2, 3, 5, and 7, and 8 only.

16. Which of the following statements is most correct?

a. The primary users of financial accounting information are the external users while the primary
user of management accounting information is the government.
b. There are no restrictive guidelines for management accounting to follow, while adherence to
GAAP is required for financial accounting.
c. The focal point of analysis for management accounting is holistic while that of financial
accounting is segmentized.
d. Only two statements are correct.
e. All of the above statements above are correct.

17. As business increase in complexity, the function of controllership has attained top level recognition
in the corporate area. Many areas related to finance and accounting have been identified with
controllership. One area that becomes controversial when included under the controller and
viewed that such inclusion violates basic internal control is
a. Credit and collection.
b. Internal auditing.
c. Long-range financial planning.
d. Taxation and reporting to government agencies.

18. The following encompass standards that management accountant should follow, except:
a. Objectivity
b. Confidentiality
c. Integrity
d. Competence
e. Timeliness

19. Which of the following is not a Controller’s function?

a. In charge of planning and control
b. Protection of assets such as adequate insurance coverage. Etc.
c. Interpreting and reporting on effects of external factors on the business
d. Arranging short-term financing

20. The management accountant’s function is a

a. Team-based function.
b. Management function.
c. Staff function.
d. Decision making function.
e. Technical function.

21. Which of the following is a Controller’s responsibility?

a. Tax planning and accounting
b. Custodian of funds
c. In charge of credit and collection
d. Arranging short-term financing

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22. Managers are often engaged in decision making. There are numerous logical steps to reach a
decision. The step least likely to be used by a manager for decision making would be:
a. Obtaining information.
b. Establishment of strategic vision.
c. Identifying alternative courses of action.
d. Selecting alternatives.
e. None of these.

23. The primary purpose of management advisory services is

a. To conduct special studies, preparation of recommendation, development plans and programs,
and provision of advise and assistance in their implementation.
b. To provide service or to fulfill some social need.
c. To improve the client’s use of its capabilities & resources to achieve the objectives of the
organization.
d. To earn the best rate of return on resources entrusted to its care with safety of investment
being taken into account and consistent with the firm’s social and legal responsibilities.

24. Much of managerial accounting information is based on:

a. Cost minimization.
b. Profit maximization.
c. The generation of external information.
d. Effectiveness but not efficiency.
e. A cost-benefit theme.

25. Which of the following acts is not performed by an independent CPA engaged to install an
accounting system?
a. Formulation of the chart of accounts
b. Design of business and accounting forms
c. Supervision of application of system and procedures recommended
d. Preparation of an accounting manual.

26. Only a _________ is permitted by law to serve as an external auditor.

a. Certified Management Accountant
b. Certified Financial Analyst
c. Certified External Auditor
d. Certified Public Accountant
e. Certified Financial Manager

27. Which of the following is not a characteristic of management services?

a. A wider variety of assignments are encountered in MAS than in audit.
b. MAS engagements are recurring.
c. MAS pinpoint actions to be taken, the benefits of which will be received in the future.
d. In MAS engagements, the nature of work involved requires a lesser need for junior assistance.

28. Planning is a function that involves:

a. Hiring the right people for a particular job.
b. Analyzing financial statements.
c. Coordinating the accounting information system.
d. Setting goals and objectives for an entity.
e. Controlling the resources of the company.

29. Which of the following types of management services is normally related to accounting and finance?
a. Management audit.
b. Marketing forecasts.
c. Costs determination of alternatives in collective bargaining agreements.
d. Job evaluation and salary administration.

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30. The following statements about management accountants are true, except:
a. Management accountants more and more are considered “business partners”.
b. Management accountants often are part of cross-functional teams.
c. An increasing number of organizations are segregating management accountants in separate
management accounting departments.
d. In a number of companies, management accountants make significant business decisions and
resolve operating problems.
e. The role of management accountants has changed considerably over the past decade.

31. A certified public accountant’s scope of management services is broad and covers all of the
following except
a. Change management engagements.
b. Computerization engagements.
c. Audit engagements.
d. Re-engineering jobs.

32. Managerial accounting does not encompass:

a. Calculating product cost.
b. Determining cost behavior.
c. Profit planning.
d. CVP analysis.
e. Calculating earnings per share.

33. Which of the following is not classifiable as a management advisory service by CPAs?
a. Annual financial planning and budgeting.
b. Public relations work.
c. Information systems.
d. Lease-or-buy analysis.

34. Cost and management accounting:

a. Require an entirely separate group of accounts than financial accounting uses.
b. Focus solely on determining how much it costs to manufacture a product or provide a service.
c. Provide product/service cost information as well as information for internal decision making.
d. Are required for business recordkeeping as are financial and tax accounting.
e. Two or more of these.

35. Which of the following does not relate to management services by CPAs?
a. Design and/or installation of accounting systems.
b. Financial analysis for project feasibility studies.
c. Cost analysis of major investment decisions.
d. None of the above.

36. The professional certification developed by the IMA is the:

a. CIA.
b. CMA.
c. CPA.
d. CFA.
e. CFM.

37. A management advisory services engagement involves the following activities in what order?
I. Post-engagement follow-up.
II. Implementing the recommendation.
III. Conducting the engagement.
IV. Negotiating the engagement.
V. Preparing for and starting the engagement.
VI. Evaluating the engagement.
VII. Preparing and presenting report and recommendations.

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 a. VII, VI, V, IV, III, II and I.
b. III, IV, V, VI, VII, I and II.
c. IV, III, V, VI, II, VII, and I.
d. IV, V, III, VII, II, VI, and I.

38. The CMA designation is issued to accountants after they have:

a. Graduated from a four-year program with their bachelor’s degree in accounting.
b. Passed the national CMA examinations.
c. Spent ten years in an managerial accounting related job.
d. Completed a college education, met certain work requirements, and passed the CMA
examination.
e. Adhered to the code of ethics for management accountants.

39. Which of the following statements is True?

a. Adequate training and experience in both the analytical approach and process in the particular
undertaking are requisites for the CPA to be involved in a management service engagement.
b. A CPA with MBA and PhD degrees is automatically qualified to render management services.
c. Competence as a standard in the rendition of management services by a CPA may be equated to
having excellent scholarly preparation to include the usual baccalaureate degree, an MBA, and
other post graduate studies.
d. A certified public accountant by virtue of having the necessary academic preparation and by
hurdling the licensure examinations required to have a CPA license can readily render
management services to the public.

40. Modern management accounting can be characterized by its:

a. Standardization.
b. Complexity.
c. Flexibility.
d. Precision.
e. Uniqueness.

41. Which of the following is not a qualification of a CPA in MAS practice?

a. Familiarity with the client’s financial accounting and internal control systems
b. Analytical experience in problem solving
c. Professional independence, objectivity and integrity
d. Auditor of the client

42. The position of the top accounting officer in an organization is occupied by the:
a. Controller.
b. Chief executive officer.
c. Comptroller.
d. Chief financial officer.
e. Either A or C.

43. The Revised Accountancy Law incorporates the Code of Professional Ethics for CPAs. The provision
of management advisory services is among the areas of public accounting. It is, however, not
exclusive to CPAs. Considering these premises, which of the following statements is applicable?
a. Management advisory services as a field of practice is considered as an integral part of public
accounting thus, the Code of Professional Ethics for CPAs covers management advisory services.
b. CPAs in the practice of audit and management consulting services may advertise and charge
contingent fees.
c. The practice of management advisory services should not be extended to existing audit clients
since this will adversely affect the CPA’s independence.
d. CPAs in the practice of management advisory services are not bound by the Board of
Accountancy but are bound by the said law in the practice of audit.

44. Which of the following statements is not acceptable?

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 a. A CPA represents three major players in the industry in rationalizing the industry’s incentive
before the government public hearing.
b. A CPA shares with a new client substantial information regarding another client belonging to the
same industry.
c. A CPA provides consulting services to an existing audit client.
d. A CPA offers and provides consulting services to two major competing clients.

45. Which of the following acts is not performed by an independent CPA engaged to design the
accounting system?
a. Formulation of the chart of accounts.
b. Design of business and accounting forms.
c. Supervision of implementation of system and procedures recommended
d. Preparation of an accounting manual.

46. A CPA should reject management advisory services engagement if

a. It would require him to make management decisions for an audit client.
b. The proposed engagement is not accounting related.
c. His recommendations are to be subjected to a review by the client.
d. He audits the financial statements of a subsidiary of the prospective client.