Professional Documents
Culture Documents
Basic Concepts
Basic Concepts
Basic Concepts
MODULE 1
BASIC CONCEPTS IN MANAGEMENT ACCOUNTING
1. The major functions of management is (are):
A. strategic management and long-range planning.
B. planning and decision making.
C. identifying threats and opportunities for the firm.
D. all of the above.
7. Which of the following statements is true when comparing managerial accounting to financial
accounting?
A. Managerial accounting places more emphasis on precision than financial accounting.
B. Both are highly dependent on timely information.
C. Both rely on the same accounting information system.
D. Managerial accounting is concerned with external decision makers.
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8. Which of the following is true of managerial accounting rather than financial accounting?
A. The outputs of this accounting system are the primary financial statements.
B. The methods of this accounting system are established by an overseeing board.
C. The accounting methods are standardized to allow comparisons among companies.
D. The accounting system would be unique to each company.
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10. Which of the following statements are true regarding financial and managerial accounting?
I. Both are mandatory.
II. Both rely on the same underlying financial data.
III. Both emphasize the segments of an organization, rather than just looking at the
organization as a whole.
IV. Both are geared to the future, rather than to the past.
A. I, II, III, and IV
C. Only II and III
B. Only II, III and IV
D. Only II
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11. Managerial accounting activity adds value to an organization by pursuing five major objectives,
which include
A. providing information for decision making and planning.
B. measuring the performance of activities within an organization.
C. assisting managers in directing and controlling operational activities.
D. all of them
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6. Paying rent, purchasing supplies, and purchasing inventory are which of the day-to-day work
activities of the management team?
A. decision making
C. directing operational activities
B. planning
D. only A and B
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14. For internal uses, managers are more concerned with receiving information that is:
A. completely objective and verifiable.
B. completely accurate and precise.
C. relevant, flexible, and immediately available.
D. relevant, completely accurate, and precise.
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21. The major reporting standard for presenting managerial accounting information is
A. relevance
B. generally accepted accounting principles
C. the cost principle
D. the current tax law
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22. With respect to the time dimension,
performance evaluation?
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Managerial Decision Making
External Performance
B.
Past
Future
C.
Future
Past
D.
Future
Future
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31. How frequent is management accounting report when compared to report to external users?
Management Accounting Report
External Report
A.
More frequent
Less frequent
B.
More frequent
More frequent
C.
Less frequent
Less frequent
D.
Less frequent
More frequent
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26. Which of the following statements correctly distinguishes financial and managerial
accounting?
A. managerial accounting reports on the whole organization
B. financial accounting is oriented toward the future
C. financial accounting is primarily concerned with providing information for internal users
D. managerial accounting is oriented more toward the planning and control aspects of
management
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32. Managerial accounting differs from financial accounting in that financial accounting is
A. more oriented toward the future.
B. primarily concerned with external financial reporting.
C. concerned with nonquantative information.
D. heavily involved with decision analysis and implementation of decisions.
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27. How does managerial decision making compare with external performance evaluation?
Managerial Decision Making
External Performance Evaluation
A.
Detailed
Detailed
B.
Detailed
More aggregated
C.
More aggregated
Detailed
D.
More aggregated
More aggregated
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33. Managerial accounting provides data for all of the following major objectives except:
A. planning and control of costs
B. supporting management planning
C. compliance with SEC reporting requirements
D. determining the costs of products
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34. Which statement is false? Managerial accounting information:
A. involves planning for the future
B. should be requested and used by management even if it is very costly to gather and
analyze
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C. annually
D. as needed
36. Which of the following does not apply to the content of managerial reports?
A. Reporting standard is relevant to the decision to be made.
B. May extend beyond double-entry accounting system.
C. Pertain to subunits of the entity and may be very detailed.
D. Pertains to the entity as a whole and is highly aggregated.
B. special purpose
D. macro-report
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42. The informational needs of internal users/management:
A. are historical in nature
B. emphasize the company as a whole
C. emphasize accuracy over timeliness
D. may require more customized reports than external financial statements
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43. The role of the managerial accountant in todays corporate world includes all of the following
except:
A. interpreting financial information
C. financial modeling
B. financial planning
D. bookkeeping
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38. Which of the following statements about internal reports is not true?
A. The content of internal reports may extend beyond the double-entry accounting system.
B. Internal reports may show all amounts at market values.
C. Internal reports may discuss prospective events.
D. Most internal reports are summarized rather than detailed.
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45. Which statement about the extent of detail in a management accounting report is true?
A. It may depend on the frequency of the report.
B. It depends on the type of manager receiving the report.
C. It depends on the level of the manager receiving the report.
D. All of the above.
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39. Management accountants help develop and maintain reporting systems that are aligned with
organizational structures and that provide useful information on an organizations
performance. Management decision processes fall into three categories that consist of
A. Nonrepetitive, nonprogrammed, and nonstrategic.
B. Repetitive, nonprogrammed, and strategic.
C. Repetitive, programmed, and strategic.
D. Nonrepetitive, nonprogrammed, and strategic.
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C. regulated
D. unreliable
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48. In order to be useful to managers, management accounting reports should possess all of the
following characteristics except:
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A. Provide objective measures of past operations and subjective estimates about future
decisions.
B. Be prepared in accordance with generally accepted accounting principles.
C. Be provided at any time management needs information.
D. Be prepared to report information for any unit of the business to support decision
making.
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4. objectivity
A. All of them
B. 1, 3, 4 only
C. 1, 2, 3 only
D. 1 and 3 only
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53. Under which ethical standard of conduct does the managerial accountant have the
responsibility to prepare complete and clear reports and recommendations after appropriate
analyses of relevant and reliable information?
A. competence
C. integrity
B. confidentiality
D. objectivity
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49. The following are inherent to either management accounting or financial accounting:
1. External report
2. Historical information
3. Contribution approach income statement
4. Generally accepted accounting principles
5. Prospective financial statements
Which of the foregoing are related to management accounting and financial accounting,
respectively?
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A.
B.
C.
D.
Management Accounting
1, 2, 5
3, 5
2, 3
3
Financial Accounting
3, 4
1, 2, 4
1, 4, 5
1, 2, 4, 5
54. Under which ethical standard of conduct does the managerial accountant have the
responsibility to communicate information fairly and objectively?
A. competence
C. integrity
B. confidentiality
D. objectivity
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55. Under which ethical standard of conduct does the managerial accountant have the
responsibility to refuse any gift, favor, or hospitality that would influence or appear to influence
his or her decision?
A. competence
C. integrity
B. confidentiality
D. objectivity
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56. Under which ethical standard of conduct does the managerial accountant have the
responsibility to refrain from either actively or passively subverting the attainment of an
organization's legitimate and ethical objectives?
A. integrity
C. objectivity
B. competence
D. confidentiality
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57. Under which ethical standard of conduct does the managerial accountant have the
responsibility to disclose fully all relevant information that could reasonably be expected to
influence an intended user's understanding of the reports, comments, and recommendations
presented?
A. objectivity
C. confidentiality
B. competence
D. integrity
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52. Which of the following is an ethical standard of conduct for managerial accountants?
1. competence
2. confidentiality
3. integrity
58. For managerial decision purposes, the volume of information should be evaluated on the
basis of
A. cost-benefit relationship.
B. A cost, but not benefit.
C. A benefit, but not cost.
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A. internally focused
B. emphasis on the future
59. What is the primary criterion for the preparation of managerial accounting reports?
A. Relevance of the reports.
C. Timing of the reports.
B. Meet the managers needs.
D. Cost of the reports.
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60. The first step in managerial decision making is to
A. specify the standard or expected outcome.
B. gather information about the consequence of each alternative.
C. identify a problem.
D. list alternative courses of action.
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61. In a broad sense, cost accounting can be defined within the accounting system as
A. internal and external reporting that may be used in making nonroutine decisions and in
developing plans and policies.
B. external reporting to government, various outside parties, and stockholders.
C. internal reporting for use in management planning and control, and external reporting to
the extent its product-costing function satisfies external reporting requirements.
D. internal reporting for use in planning and controlling routing operations.
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62. The cost management function is usually under
A. the chief information officer.
C. purchasing manager.
B. treasurer.
D. controller.
C. externally focused
D. detailed information
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68. Which of the following is true of managerial accounting rather than financial accounting?
A. The outputs of this accounting system are the primary financial statements
B. The methods of this accounting system are established by an overseeing board.
C. The accounting methods are standardized to allow comparisons among companies
D. The accounting system would be unique to each company
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63. If a distinction is made between cost accounting and managerial accounting, managerial
accounting is more oriented toward
A. valuation of inventory.
B. analysis of variances including spoilage.
C. financial reporting to third parties.
D. the planning and controlling aspects of the management process.
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64. Management accounting and financial accounting differ in that management accounting
information
A. is prepared following prescribed rules
B. is prepared using whatever methods the company finds beneficial
C. is prepared for stockholders
D. is prepared following Generally Accepted Accounting Principles
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65. Which of the following does not describe managerial accounting?
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72. In determining whether planned goals are being met, a manager is performing the function
of
A. planning
C. motivating
B. controlling
D. follow-up
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B. Decision making
D. Planning
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80. The setting of objectives and the identification of methods to achieve those objectives is
called
A. planning
C. decision making
B. controlling
D. performance evaluation
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81. Which of the following best describes what performance evaluation should be designed to do?
A. Modify goal and objectives each month C. Compare actual results to plan
B. Establish sales goals and targets
D. Establish blame
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82. In the planning and control process, what is the proper sequence of events?
A. Set goals, set objectives, develop plans, implement plans, evaluate performance
B. Establish a master budget, set standard costs, develop variance analysis
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C. Develop engineered costs, develop pricing targets, calculate contribution margins
D. Identify variable costs, identify fixed costs, project the sales mix, determine breakeven
C. elimination of waste
D. all of the above
C. vice-president of finance
D. plant foreman
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79. Which of the following functions is most directly related to management by objective?
A. Reporting
C. Control
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96. Items that prevent the organization from attaining a higher level of achievement within its value
chain are called the
A. theory of constraints
C. strategic costs management
B. value chain
D. cost management systems
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89. Developing a company strategy for responding to anticipated new markets is an example of:
A. decision making
C. planning
B. controlling
D. motivating
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90. Strategic cost management has emerged from a blending of:
A. cost driver analysis
C. value chain analysis
B. strategic position analysis
D. all of the above
91. Strategic cost management includes all of the following tools except:
A. standard cost variance analysis
C. activity based management
B. value chain analysis
D. all of the above
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97. The overall recognition of the importance of cost relationships among the activities in the value
chain and the process of managing those cost relationships among the activities in the value
chain is called
A. the theory of constraints
C. activity-based management of activities
B. the value chain
D. strategic cost management
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98. The set of processes that transform raw materials into finished products is known as a
A. value chain
C. lowest cost strategy
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B. differentiation strategy
D. flexible manufacturing system
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99. The period that begins with the arrival of materials and ends with the shipment of a
completed goods refers to
A. performance period.
C. manufacturing cell.
B. computer-integrated manufacturing.
D. cycle time.
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92. Strategic planning is different from operational planning in that operational planning:
A. involves large sums of money
B. would be involved in determining production levels for next quarter
C. involves only long range goals
D. operational and strategic planning are the same
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93. Which of the following might be a performance measure for the financial perspective of a
balanced scorecard?
A. percentage of on-time deliveries by the organization
B. percentage of product defects
C. return on assets
D. percentage of market share held by the organization
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101.A form of strategy that a management may adopt in order to attempt in creating a perception
of uniqueness that will permit a higher selling price.
A. Value chain.
C. Lead time.
B. Lowest cost.
D. Differentiation.
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94. The initiative to reduce non-value added activity is meeting which balanced scorecard
objective?
A. internal operations perspective
C. financial perspective
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B. customer perspective
D. learning and growth perspective
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B. feedback.
103.The benefits lost or forfeited as a result of selecting one alternative over another are called
A. Differential costs
C. Opportunity costs
B. Sunk costs
D. Indirect costs
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104.Obtaining feedback is generally identified most directly with which of the functions of
management?
A. Planning
C. Controlling
B. Directing and motivating
D. Decision making
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D. benchmarking.