MANAGEMENT ACCOUNTING

1. An activity that provides financial and nonfinancial information to

managers and other internal decision makers of an organization is
called managerial accounting
TRUE
2. Planning is the process of monitoring planning decisions and
evaluating an organization's activities and employees.
FALSE
3. The purpose of using information provided by the accounting system
is quite different for investors and creditors than it is for managers of
the firm
TRUE
4. The emphasis of the focus of information generated through
managerial accounting is on segments of the organization rather than
the organization as a whole
TRUE
5. The information that management needs to plan and control
operations is provided by the accounting system, and is under the
rigid standards of GAAP
FALSE
6. The accounting system will provide managers with accurate and
precise information for planning and decision making much faster
than the information is provided to external users.
FALSE
7. The financial information provided to external users focuses on the
entity as a whole, whereas the financial information that is used by
managerial accountants focuses on segments of the entity.
TRUE
8. Manufacturers have only two classes of inventory; goods in process
and finished goods.
FALSE
9. The three basic elements of a manufactured product are direct
materials, direct labour, and factory overhead.
TRUE
10. The labour cost for janitors, supervisors, materials handlers,
engineers, and maintenance personnel would be considered a direct
labour cost
 FALSE
11. Indirect labour, indirect materials, factory heat and light, factory
property taxes, and amortization and insurance on production
equipment would be classified as factory overhead.
TRUE
12. The income statement for a manufacturer does not contain the line
item 'Cost of Goods Sold'
FALSE
13. Costs can be classified by their behaviour, which is a useful tool in
management accounting.
TRUE
14.  Cost can be classified as to traceability.
TRUE
15.  All costs are controllable.
TRUE
16. Opportunity costs are irrelevant to future decisions.
FALSE
17. Costs are capitalized if they produce benefits that are expected to
have value in the future
TRUE
18. Costs that are involved in the manufacture of a product are called
period costs.
FALSE
19. Product costs can be incurred in one accounting period and
recognized as a cost of a subsequent accounting period.
TRUE
20. The concept of customer orientation calls for rigid product design and
presentation of products the seller has already manufactured.
FALSE
21. An attitude of constantly seeking ways to improve customer service,
product quality, product features, the production process, and
employee interactions is called customer orientation.
FALSE
22. TQM (total quality management) focuses on the inspection of
products to achieve efficiency and quality
FALSE
23. A company that uses TQM rewards employees who find defects.
TRUE
24. Just-in-time (JIT) is an approach to managing inventories and
production operations so that units of materials and products are
obtained and provided only as they are needed.
TRUE
25. In the traditional approach to inventory management, products are
'pushed' through the manufacturing process by the insertion of raw
materials and the application of labour and overhead
TRUE
26. The theory of constraints is a management concept under which all
managers and employees at all stages of company operations strive
toward higher standards and a reduced number of defective units.
FALSE
27.  Continuous improvement is the added value a company brings to its
finished products.
FALSE
28. The sales price of a product less the total variable cost of the product
is called contribution margin.
TRUE