CONTROL NO.

: ________ Date: ________

HRDM108 – MANAGERIAL ACCOUNTING

PRELIM quiz 1

Instructions: CHOOSE THE BEST ANSWER. Encircle the letter of your choice.
ERASURES/ALTERATIONS means wrong.

1. Managerial accounting

A. is limited to cost data

B. places emphasis on special-purpose information
C. is governed by generally accepted accounting principles
D. pertains to the entity as a whole and is highly aggregated
E. none of the above

2. What management function involves comparison of actual results and desired results?

A. Planning
B. Designing
C. Organizing
D. Controlling
E. None of the above

3. A member of the top management team who is responsible for providing timely and
relevant data to support planning and control activities and for preparing financial
statements for external users

A. Treasurer
B. Controller
C. Chief financial officer
D. Management Accountant
E. None of the above

4. All of the following are ways that managers use managerial information except

A. to evaluate the performance of a company’s operations

B. to determine the cost of manufacturing a product
C. to evaluate the company’s stock performance
D. to support long-term planning decisions
E. none of the above
5. If a financial manager/management accountant has a problem in identifying unethical
behavior or resolving an ethical conflict, the first action (s)he should normally take is
to

A. Resign from the company.

B. Consult the board of directors.
C. Consult the board of directors.
D. Discuss the problem with his/her immediate supervisor.
E. All of the above.

6. Controllers are generally not concerned with

A. Investor relations
B. Protection of assets
C. Preparation of tax returns
D. Reporting of financial statements to government
E. None of the above

7. Which of the following persons would occupy a line position in a department store?

I. Sales manager, appliances department

II. Sales Manager, furniture department

III. Clerk, warehouse department

IV. Assistant, HR department

A. Only I and II
B. Only I, II, III
C. I, II, III, IV
D. Only I

8. The Standards of Ethical Conduct for Practitioners of Management Accounting and

Financial Management states that significant ethical issues should be discussed first
with an immediate superior unless the superior is involved. If satisfactory resolution
cannot be achieved when the problem is initially presented, then the issues should be

A. Submitted to the CEO of the firm

B. Submitted to the outside legal counsel
C. Submitted to the next higher managerial level
D. Submitted to the audit committee, executive committee, board of directors, or
owners
9. The process of instituting procedures and the obtaining feedback to ensure that all parts
of the organization are functioning effectively and moving toward overall company
goals

A. Planning
B. Directing
C. Organizing
D. Controlling

10. The Standards of Ethical Conduct for Management Accountants are set by

A. Association of Managements Accountants

B. Association of American Accountants
C. Institute of Management Accountants
D. Institute of Auditors

11. What term is used to describe the process of developing the organization’s objectives
and goals?

A. Planning
B. Controlling
C. Supervising
D. Decision making

12. A position on the organization chart that is directly related to achieving the basic
objective of an organization is called ______________________________.

A. controller
B. a line position
C. a staff position
D. chief financial officer

13. Management function that involves overseeing day to day activities

A. Planning
B. Controlling
C. Directing and motivating
D. Rationalizing and decision-making

14. Managerial accounting differs from financial accounting in that it is

A. more concerned with segments of a company.

B. less constrained by rules and regulations.
C. more concerned with the future.
D. all of the above.
E. none of the above.
15. 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. Planning strategies and controlling current activities of the organization.
C. Enhancing objectivity in decision-making.
D. Measuring and evaluating performance.
E. None of the above.

16. Statement 1: Persons occupying staff positions provide support and assistance to other
parts of the organization.

Statement 2: Decision making is a distinct management activity that should be

separated from planning, directing and motivating, and controlling activities.

(1 Point)
A. Only Statement 1 is correct.
B. Only Statement 2 is correct.
C. Both Statements are correct.
D. Both Statements are wrong.

17. Ms. X is a financial manager who has discovered that her company is violating
environmental regulations. If her immediate superior is involved, her appropriate
action is to

A. do nothing since she has a duty of loyalty to the organization.

B. present the matter to the next higher managerial level.
C. confront her immediate superior.
D. consult the audit committee.
E. none of the above.

18. Statement 1: Managerial accounting places less emphasis on precision and more
emphasis on flexibility and relevance of data than does financial accounting

Statement 2: Managerial accounting is not governed by Generally Accepted

Accounting Principles (GAAP).

(1 Point)
A. Only Statement 1 is correct.
B. Only Statement 2 is correct.
C. Both Statements are correct.
D. Both Statements are wrong.
19. The management control process contains the following four sequential steps,
including

I. Implementing a program of corrective actions

II. Comparing actual performance with standards

III. Establishing standards of performance

IV. Measuring actual performance

What is the correct order of this process?

A. III, IV, II, I

B. III, IV, I, II
C. IV, II, II, I
D. IV, III, II, I

20. Statement 1: Informal relationships and channels of communication often develop

that do not appear on the organization chart.

Statement 2: The controller occupies a staff position in an organization.

(1 Point)
A. Only Statement 1 is correct.
B. Only Statement 2 is correct.
C. Both Statements are correct.
D. Both Statements are wrong.

21. Which of the following is most likely a line position?

A. CFO of a merchandising company

B. VP for Research of a conglomerate firm
C. Store owner of a retail convenience outlet
D. HR Manager for an educational institution
E. None of the above

22. Which of the following is not part of the organizing function of management?

A. Subordinating
B. Motivating
C. Correcting
D. Staffing
23. Statement 1: When carrying out planning activities, managers rely on feedback to
ensure that the plan is carried out and is appropriately modified as circumstances
change.

Statement 2: When carrying out their controlling activities, managers select a course
of action and specify how the action is implemented.

(1 Point)
A. Only Statement 1 is correct.
B. Only Statement 2 is correct.
C. Both Statements are correct.
D. Both Statements are wrong.

24. Montgomery Company has a variable selling cost. If sales volume increases, how will
the total variable cost and the variable cost per unit behave?

Total Variable Cost Variable Cost Per Unit

A. Increase Increase
B. Increase Remain constant
C. Increase Decrease
D. Remain constant Decrease
E. Decrease Increase

25. Which of the following choices denotes the typical cost behavior of advertising and
sales commissions?

Advertising Sales Commissions

A. Variable Variable
B. Variable Fixed
C. Fixed Variable
D. Fixed Fixed
E. Semivariable Variable

26. A company observed a decrease in the cost per unit. All other things being equal,
which of the following is probably true?

A. The company is studying a fixed cost, and total volume has increased.
B. The company is studying a fixed cost, and total volume has decreased.
C. The company is studying a variable cost, and total volume has increased.
D. The company is studying a variable cost, and total volume has decreased.
E. The company is studying a fixed cost, and total volume has remained constant.

27. What type of cost exhibits the behavior that follows?

 Manufacturing Volume (Units) Cost Per Unit

50,000 P1.95
70,000 1.95

A. Fixed cost.
B. Step-fixed cost.
C. Variable cost.
D. Semi-variable cost.
E. Discretionary fixed cost.

28. Which of the following is true?

A. step variable cost is also known as fixed cost.

B. unexpired costs are costs that are shown in the income statement.
C. variable costs vary continually and directly in relation to level of production.
D. expired costs are costs that are presented in the balance sheet / statement of
financial position.
E. none of the above.

29. Examine the following statements regarding cost behavior:

Statement 1: Variable cost is constant on a per unit basis.

Statement 2: Fixed cost is constant on a total amount basis.

Statement 3: Mixed costs remain constant in any level or range of activity.

Statement 4: Mixed costs relationship with the specific level of activity is

indeterminable.

Which of the above statements are false?

A. Statements 1 and 2
B. Statements 2 and 4
C. Statements 1 and 3
D. Statements 3 and 4

30. Costs that can be traced conveniently traced to the cost object are called

A. Variable costs
B. Indirect costs
C. Direct costs
D. Fixed costs
E. None of the above
31. Statement 1: Costs that are inventoriable are presented as asset.
 Statement 2: Costs that are expensed as incurred are also known as period costs.

A. Only Statement 1 is correct

B. Only Statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect

32. The range of activity within which the cost behavior patterns are valid is known as the
relevant range. Levels of activity outside the assumed range would show what type of
behavior pattern in terms of cost?

A. usual
B. normal
C. different
D. maximum

33. In computing for variable cost per unit in high-low method, the denominator is

A. Change in costs
B. Change in activity
C. Change in costs divided change in activity
D. Change in activity multiplied by change in costs

34. As to classification on financial statements, unexpired costs are presented where?

A. Statement of Cash Flows

B. Statement of Profit and Loss
C. Statement of Financial Position
D. Statement of Comprehensive Income

35. Costs that cannot be traced conveniently traced to the cost object are called

A. Variable costs
B. Indirect costs
C. Direct costs
D. Fixed costs

36. A staff position _____________________________________________.

A. is supportive in nature, providing service and assistance to other parts of the

organization.
B. relates directly to the carrying out of the basic objectives of the organization.
C. is superior in authority to a line position.
D. all of the above.
E. none of the above.
37. Decision-making is required in which of the following management function(s)?

A. Planning
B. Planning and organizing
C. Planning and controlling
D. Planning, organizing, and controlling

38. For internal uses, managers are more concerned with receiving information that is
________________________________.

A. completely accurate and precise.

B. completely objective and verifiable.
C. relevant, completely accurate, and precise.
D. relevant, flexible, and immediately available.

39. If the level of activity increases,

A. variable cost per unit and total cost increase

B. fixed cost per unit and total variable cost Increase.
C. variable cost per unit and total fixed costs increase.
D. total cost will increase and fixed cost per unit will decrease.

40. Management accounting

A. Is governed by GAAP.
B. Is discretionary rather than mandatory.
C. Is concerned only with monetary information.
D. Is focused on business as a whole rather than segments and units of the business.

41. Management accounting information is deemed most successful if it

A. Is accurate
B. Is easily understood by the user
C. Helps managers improve their decisions
D. Helps creditors evaluate the company’s ability to pay its debts

42. Management has three basic functions. Two of these are organizing and controlling.

What is the other one?

A. Planning
B. Directing
C. Motivating
D. Decision-making
43. Management should implement a different and/or more expensive accounting system
only when

A. management thinks it appropriate.

B. the benefits of the system exceed the cost.
C. the cost of the system exceeds the benefits.
D. the board of the directors dictates a change.
E. none of the above.

44. Managerial accounting _______________________.

A. focuses on the organization as a whole, rather than on the organization's segments.

B. is required by regulatory bodies such as the SEC.
C. has its primary emphasis on the future.
D. all responses are correct.
E. none of the above.

45. Managerial accounting differs from financial accounting in that financial accounting
is

A. more oriented toward the future.

B. concerned with non-quantitative information.
C. primarily concerned with external financial reporting.
D. heavily involved with decision analysis and implementation of decisions

BONUS POINT. 5 POINTS.

A. Yes, please.
B. No, thank you.

GOOD LUCK & GOD BLESS