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Chapter 8 and 9

BS Accountancy (University of Baguio)

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MA Chapter 1
1. Which of the following statements is true?
a. Management accounting information focuses on
external reporting.
b. The statement of financial position, income
statement and statement of cash flows are used for
financial accounting but not for management
accounting.
c. Financial accounting is broader in scope than
management accounting.
d. Modern cost accounting plays a significant role in
management decision making.
2. Which of the following statements is false?
a. Cost accounting measures and reports short-term,
long-term financial, and nonfinancial information.
b. Cost management provides information that helps
increase value for customers.
c. All strategies should be evaluated regarding the
resources and capabilities of the company.
d. A good cost accounting system is narrowly focused
on continuous reduction of costs.
3. Which of the following statements is correct?
a. The best-designed strategies are valuable whether or
not they are effectively implemented.
b. To take advantage of changing market opportunities,
the annual budget should be strictly enforced.
c. Linking rewards to performance is a major deterrent
to good management performance.
d. An important strategic decision is making the correct
investments in productive assets.
4. All of the following statements are true except
a. A budget is a tool used to plan and express strategy.
b. Financial accounting reports financial and
nonfinancial information that helps managers
implement company strategies.
c. Feedback links planning and control.
d. Control includes deciding what feedback to provide
that will help with future decision making.
5. All of the following statements are false except
a. Attention-directing activities should focus on cost-
reduction opportunities, and not on value-adding
opportunities.
b. For strategic decisions, scorekeeping is the most
prominent role played by management accounting.
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c. A budget may be used as a planning tool, but not as a
control tool.
d. Management accountants often are simultaneously
doing problem-solving, scorekeeping, and attention-
directing activities.
6. Management accounting
a. focuses on estimating future revenues, costs, and
other measures to forecast activities and their results.
b. provides information about the company as a whole.
c. provides information that has occurred in the past
and that is verifiable and reliable.
d. provides information that is generally available only
on a quarterly or annual basis.
7. Financial accounting
a. focuses on the future and includes activities such as
preparing next year’s operating budget.
b. must comply with PFRS ( Philippine Financial
Reporting Standards).
c. reports include detailed information on the various
operating segments of the business such as product
lines or departments.
d. is prepared for the use of department heads and
other employees.
8. The person MOST likely to use management
accounting information is a(n)
a. banker evaluating a credit application.
b. shareholder evaluating a stock investment.
c. governmental taxing authority.
d. assembly department supervisor.
9. Which of the following descriptions refers to
management accounting information?
a. It is verifiable and reliable.
b. It is driven by rules.
c. It is prepared for shareholders.
d. It provides reasonable and timely estimates.
10. Which of the following groups would be LEAST likely
to receive detailed management accounting reports?
a. Stockholders
b. Sales representatives
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c. Production supervisors 16. Strategy specifies

d. Managers a. how an organization matches its own capabilities

11. Management accounting information includes
a. tabulated results of customer satisfaction surveys
b.the cost of producing a product
c. the percentage of units produced that are defective
d. all of the above
with the opportunities in the marketplace
b. standard procedures to ensure quality products
c. incremental changes for improved performance
d. the demand created for products and services
17. Control includes
a. implementing planning decisions

12. Which of the following types of information are b. evaluating performance

used in management accounting? c. providing feedback to help with future decision
making
a. Financial information
d. all of the above
b. Nonfinancial information
18. Linking rewards to performance
c. Information focused on long term a. helps to motivate managers

d. All of the above b. allows companies to charge premium prices

c. should only be based on financial information

13. Management accounting includes
d. does all of the above
a. implementing strategies
19. Control measures should
b. developing budgets a. be set and not changed until the nest budget cycle.

c. preparing special studies and forecasts b. be flexible to allow for employees who are slackers.

c. be kept confidential from employees so that

d. all of the above
competitors do have an opportunity to gain a
competitive advantage
14. Financial accounting is concerned PRIMARILY with
d. be linked by feedback to planning
a. external reporting to investors, creditors, and
20. For control decisions, emphasis is placed on the
government authorities
_________ role(s) of management accounting.
b. cost planning and cost controls a. problem-solving

c. profitability and analysis b. score-keeping

c. attention-directing
d. providing information for strategic and tactical
decisions d. both (b) and (c)

21. ________ means reporting and interpreting

15. Financial accounting provides a historical
information that helps managers to focus on operating
perspective, whereas management accouting
problems, imperfections, inefficiencies, and
emphasizes
opportunities.
a. the future a. Scorekeeping

b. past transactions b. Attention directing

c. Problem solving
c. a current perspective
d. None of the above.
d. reports to shareholders

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22. Management accounting is considered successful b. Whether to report unfavorable department

when it information that may result in unfavorable
consequences for a friend.
a. helps creditors evaluate the company’s performance.
c. Whether to file a tax return this year.
b. helps managers improve their decisions
d. Both (a) and (b).
c. is accurate
29. If a financial manager/management accountant has
d. is relevant and reported annually.
a problem in identifying unethical behavior or resolving
23. The Institute of Management Accountants (IMA) an ethical concept, the first action (s)he should normally
take is to
a. is a professional organization of management
accountants a. Consult the board of directors.

b. is a professional organization of financial accountants b. Discuss the problem with his/her immediate superior.

c. issues standards for management accounting c. Notify the appropriate law enforcement.

d. issues standards financial accounting d. Resign from the company.

24. Line management includes 30. Katrina is a financial manager who has discovered
that her company is violating environmental
a. manufacturing managers
regulations. If her immediate superior is involved, her
b. human-resource managers appropriate action is to

c. information-technology managers a. Do nothing since she has a duty of loyalty to the

organization.
d. management-accounting managers
b. Consult the audit committee.
25. Staff management includes
c. Present the matter to the next higher managerial
a. Manufacturing managers.
level.
b. Human-resource managers.
d. Confront her immediate superior.
c. Purchasing managers.
31. If financial manager/management accountant
d. Distribution managers. discovers unethical conduct in his/her organization and
fails to act, (s)he will be in violation of which ethical
26. Responsibility of a CFO include all EXCEPT
standard(s)?
a. Providing financial reports to shareholders.
a. “Actively or passively subvert the attainment of the
b. Managing short-term and long-term financing. organization’s legitimate and ethical objectives.”

c. Investing in new equipment. b. “Communicate unfavorable as well as favorable

information.”
d. Preparing tax returns.
c. “Condone the commission of such acts by others
27. The Standards of Ethical Conduct for management within their organizations.”
accountants include concepts related to
d. All of the answers are correct.
a. Competence, performance, integrity, and reporting.
32. Corporate social responsibility is
b. Competence, confidentiality, integrity, and
objectivity. a. Effectively enforced through the controls envisioned
by classical economics.
c. Experience, integrity, reporting, and objectivity.
b. The obligation to shareholders to earn a profit.
d. None of the above as ethical issues do not affect
management accountants. c. The duty to embrace service to the public interest.

28. Ethical challenges for management accountants d. The obligation to serve long-term, organizational
include interests.

a. Whether to accept gifts from suppliers, knowing it is 33. A common argument against corporate involvement
an effort to indirectly influence decisions. in socially responsible behavior is that

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a. it encourages government intrusion in decision 37. Which ethical standard is most clearly violated if a
making. financial manager/management accountant knows of a
problem that could mislead users but does has
b. as a legal person, a corporation, is accountable for its
requested information
conduct.
a. Competence
c. it creates goodwill.
b. Legality
d. in a competitive market, such behavior incurs costs
that place the company at a disadvantage. c. Objectivity

34. Integrity is an ethical requirement for all financial d. Confidentiality

managers/management accountants. One aspect of
38. ___________ produces information that helps
integrity requires
workers, managers and executives in organizations
a. performance of professional duties in accordance make better decisions.
with applicable laws.
a. Governmental Accounting
b. avoidance of conflict of interest.
b. Management Accounting
c. refraining from improper use of inside information.
c. Auditing
d. maintenance of an appropriate level of professional
d. Financial Accounting
competence.
39. ___________ is the recognition and evaluation of
35. A financial manager/management accountant
business transactions and other economic events for
discovers a problem that could mislead users of the
appropriate accounting action.
firm’s financial data and has informed his/her
immediate superior. (S)he should report the a. Identification
circumstances to the audit committee and/or the board
b. Analysis
of directors only if
c. Communication
a. the immediate superior, who reports to the chief
executive officer, knows about the situation but refuses d. Evaluating
to correct it.
40. ___________is the quantification of business
b. the immediate superior assures the financial transactions or other economic events that have
manager/management accountant that the problem occurred or forecasts of those that may occur.
will be resolved.
a. Accumulation
c. the immediate superior reports the situation to
b. External reporting
his/her superior.
c. Measurement
d. the immediate superior, the firm’s chief executive
officer, knows about the situation but refuses to correct d. Internal reporting
it.
41. ___________ is a determination of the reasons for
36. In which situation a financial manager/management the reported activity and its relationship with other
accountant permitted to communicate confidential economic events and circumstances.
information to individuals or authorities outside the
a. Analysis
firm?
b. Measurement
a. There is an ethical conflict and the board refused to
take action. c. Evaluation
b. Such communication is legally prescribed. d. Accumulation
c. The financial manager/management accountant 42. ___________ includes strategic, tactical and
knowingly communicates the information indirectly operating aspects.
through a subordinate.
a. Controlling
d. An officer at financial manager/management
accountant’s bank has requested information on a b. Communication
transaction that could influence the firm’s stock price. c. Planning

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d. Evaluating 49. Which of the following groups would be LEAST likely

to receive detailed management accounting reports?
43. ___________ judges implications of historical and
expected events and helps to choose the optimum a. management accountants
course of action.
b. scientists and engineers
a. Controlling
c. stockholders
b. Communication
d. managers
c. Planning
50.________________indicate whether the organization
d. Evaluating is creating long-term value and profitability.

44. Which of the following is a basic feature of a a. Strategic information

financial accounting system?
b. ROI
a. Internal audience
c. Net income
b. Historical data
d. Critical success factors
c. Subjective information
51. ________________ is when a firm compares itself
d. Disaggregate information with the best practice of competitors or other
comparable organizations.
45. Which of the following is NOT a basic feature of
financial accounting system? a. Process improvement

a. objective information b. Benchmarking

b. reports on past performance c. Employee empowerment

c. future oriented reports d. Total quality philosophy

d. highly aggregated data 52. Which of the following is NOT a function of a

management accounting system?
46. Which of the following is a basic feature of
managerial accounting system? a. operating control

a. external audience b. product and customer costing

b. reports are current and future oriented c. management control

c. objective data only d. financial reporting

d. reports on the entire organization 53. Which of the following functions provides feedback
information about the efficiency of tasks performed?
47. Which of the following is NOT a basic feature of
managerial accounting system? a. operating control

a. financial measures only b. product and customer costing

b. subjective information c. management control

c. internal audience d. financial reporting

d. informs local decision and actions 54. Which of the following functions provides
information on the performance of managers and
48. Which of the following is a basic feature of
operating units?
managerial accounting system?
a. operating control
a. The scope tends to be highly aggregate.
b. product and customer costing
b. There are no regulations governing the reports.
c. management control
c. The reports are generally delayed and historical.
d. financial reporting
d. The audience tends to be stockholders, creditors, and
tax authorities. 55. Which of the following is NOT a role of management
accounting information in operating control?

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a. to provide feedback information about quality 60. Certified Management Accountants are required to
adhere to the following ethical standards, EXCEPT
b. to provide feedback information about timeliness
a. competence
c. to provide feedback information about the efficiency
of tasks performed b. ingenuity

d. to provide performance measures for decentralized c. integrity

organizational units
d. objectivity
56. Which of the following is NOT a role of management
61. A study of organization that are among the best in
accounting information in product and customer
the world at performing a particular task
costing?
a. Business process
a. to measure the cost of resources used to provide a
service b. Benchmarking

b. to assess the profitability of the organization’s services c. Control

by linking resources generated
d. Feedback
c. to provide feedback information about the quality,
62. An activity that consumes resources or takes time
timeliness, and efficiency of tasks performed
out that does not add value for which costumers are
d. to assess customer profitability for a particular willing to pay
segment
a. Non-value added activity
57. An organization develops a code of ethics because
b. Value-added activity
a. it is required by law.
c. Process reengineering
b. the Chief Executive Officer demands it.
d. Total quality management
c. it wishes to reduce ethical conflicts by avoiding
63. Accounting and other reports that help managers
ambiguity or misunderstandings
monitor performance and focus on problems and/or
d. it wishes to punish those who ethical standards are opportunities that might otherwise go unnoticed
different from its own.
a. Feedback
58. If an individual faces a conflict between the
b. Performance report
organization’s stated and practiced values experts
recommend that c. Financial accounting

a. the individual resign immediately and call the media. d. Managerial accounting

b. the individual call the media.

c. delay action and work with the respected leaders in

the organization

d. delay action and hope the problem goes away.

59. The elements of an ethical control system include

the following EXCEPT

a. a reward system for turning in those who violate the

ethical code.

b. a statement of the organization’s value and code of

ethics.

c. an ongoing internal audit of the ethical control

system

d. a statement of the employee’s ethical

responsibilities.

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