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MSQ-13 - Overview of The MS Practice by The CPA
MSQ-13 - Overview of The MS Practice by The CPA
1. That kind of accounting concerned with providing information to management in making decisions
about the operations of the business
a. Responsibility accounting c. Management accounting
b. Cost accounting d. Correct answer no given
2. Management accounting
a. Is governed by generally accepted accounting principles.
b. Draws from disciplines other than accounting.
c. Is geared primarily to the past rather than the future.
d. Places more emphasis on precision of data compared with financial accounting which does snot.
3. A type of managerial accounting which refers to the determination of the operating cost regardless of
cost behavior is
a. Differential accounting c. Responsibility accounting
b. Full cost accounting d. Profitability accounting
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.
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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.
12. To distinguish between management accounting and financial accounting, the following statements
are correct, except
a. Management accounting, in view of its various integrated recipients should have a separate data
recording and retrieval system from financial accounting.
b. Financial accounting is bound by GAAP, and management accounting need not be in conformity
with GAAP.
c. Financial accounting can be regarded as the process while management accounting can be
regarded as the product of the process.
d. Management accounting output must be released on time so as not to erode its usefulness;
Financial accounting output can still be useful even when delayed.
14. You were newly appointed as controller of CZX Corporation. Among the jobs your department
would do include the following:
a. Cash receipts, cash disbursements, general accounting, taxation, financial accounting analysis,
and internal auditing.
b. Financial reporting, strategic planning, managerial accounting, taxation, financial statement
analysis, and internal accounting.
c. Financial accounting, managerial accounting, cost accounting, inventory accounting, payroll
accounting, tax accounting and sales forecasting.
d. Tax accounting, managerial accounting, internal auditing, general accounting.
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:
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. c. Items 1, 2, 3, 4, 5, 7, and 8 only.
b. Items 1, 2, 5, 7, and 8 only. d. 2, 3, 5, and 7, and 8 only.
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16. The chief management accountant called “controller” traditionally performs these functions except:
a. The establishment and implementation of the financial planning process.
b. Financial and management reporting and interpretation.
c. Protection of company resources and economic evaluation.
d. Preparation of proposals for product promotions.
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.
22. Which of the following is not a controllership function, as distinguished from a treasury function?
a. Reporting and interpreting c. Protection of assets
b. Credit and collection d. Government reporting
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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.
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.
30. Which of the following types of management services is not directly related to accounting and
finance functions?
a. Cost analysis of major investment decision.
b. Long range planning.
c. Design, installation and review of budgetary system.
d. Valuation of capital stock of companies for purposes of merger or sales.
31. A certified public accountant’s scope of management services is broad and covers all of the
following except
a. Change management engagements. c. Audit engagements.
b. Computerization engagements. d. Re-engineering jobs.
32. Which of the following is not classifiable as a management advisory service by CPAs?
a. Systems design. c. Make or buy analysis.
b. Project feasibility study. d. Assistance in budgeting. (?)
33. Which of the following is not classifiable as a management advisory service by CPAs?
a. Annual financial planning and budgeting. c. Information systems.
b. Public relations work. d. Lease-or-buy analysis.
34. Management services of certified public accountant cover all of the following except
a. Project feasibility studies. c. Organizational development and planning.
b. Systems design, development and implementation. d. Audit, tax and legal services.
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35. Which of the following does not relate to management services by CPAs?
a. Design and/or installation of accounting systems. c.Cost analysis of major investment decisions.
b. Financial analysis for project feasibility studies. d. None of the above.
36. Which of the following is not an area related to the performance of management services by
independent accounting firms?
a. Introducing new ideas, concepts and methods to management.
b. Improving existing policies, methods and procedures
c. Performing special studies, preparing recommendations, and formulating plans and programs
d. Performing management functions and making decisions
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.
a. VII, VI, V, IV, III, II and I. c. IV, III, V, VI, II, VII, and I.
b. III, IV, V, VI, VII, I and II. d. IV, V, III, VII, II, VI, and I.
38. The following statements refer to competence of CPA’s in management advisory services except
a. In concept it refers to the technical qualification of the practitioner and his ability to supervise
and evaluate the quality of work of his staff assigned to the engagement so as to be responsible
for the successful completion of the project.
b. It is acquired by education, self study, attendance to professional development courses, actual
experience in MS work and research.
c. It is the ability to identify client’s needs, use analytical approach and process, apply technical
knowledge, communicate recommendations and assist in implementation.
d. It must be retained in the rendition of MAS work and it can be impaired if the CPA performs
decision-making for the client or acts as employee of the client.
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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
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.
46. Mr. Rey Carlos, a CPA firm’s partner-in-charge of quality assurance and review is arguing with Mr.
Reuben Fortuna, the consulting partner regarding the question of independence as Mr. Fortuna is
presently rendering consulting services to T. Ang and Nga Co., an audit client of the firm. Related
to this issue of independence, all of the following statements are not valid except
a. Independence is never sacrificed for as long as the auditor/consultant is correct in his decisions
for the client.
b. A CPA who renders both audit and consulting services to a client by virtue of his
competence/expertise and extensive knowledge of the client’s business is in the best position to
render decisions for the client and should do so.
c. The client is the ultimate decision maker and the auditor and/or consultant should not make
decisions for the client.
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d. It is us up to professional judgment and discretion of the auditor/ consultant to render decisions
for the client for as long as his professional fees are commensurate to the benefit that the client
will derive from the engagement.
47. 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.
48. Which of the following will not impair the independence of a CPA in the rendition of Management
Services?
a. The CPA performs decision-making services for his client.
b. The CPA performs services wherein he is in effect, acting as an employee of the client.
c. The CPA loses his objectivity and acts in a manner as if he is advocating for the interest of his
client.
d. The CPA does not extend his services beyond the presentation of recommendations or giving of
advice.
50. After preliminary audit arrangements have been made, an engagement confirmation letter should be
sent to the client. This letter usually should not include
a. An estimate of the time to be spent on the audit work by audit staff and management.
b. A reference to the auditor’s responsibility for the detection of errors and irregularities.
c. A statement that management advisory services would be available upon request.
d. A statement that management letter will be issued outlining comments and suggestions as to any
procedures requiring the client’s attention.
ANSWER KEY
1. C 11. C 21. A 31. C 41. D
2. B 12. A 22. B 32. D 42. C
3. B 13. A 23. C 33. B 43. A
4. B 14. D 24. C 34. D 44. A
5. A 15. B 25. C 35. D 45. B
6. B 16. D 26. C 36. D 46. C
7. D 17. B 27. B 37. D 47. C
8. C 18. D 28. D 38. D 48. D
9. C 19. D 29. C 39. A 49. A
10. C 20. D 30. B 40. A 50. C
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