EM 212 MANAGERIAL ACCOUNTING

MIDTERM EXAMINATION
First Semester 2021-2022

I. Modified True or False. Answer True if the statement is Correct and False if the
statement is incorrect and indicate the correct answer. (2pts each) 40pts

1. A manager in business needs more knowledge today than ever before and will need even
more tomorrow.

2. Management Accountants at appropriate levels are involved actively in the process of

managing the entity.

3. Problem solving or quantification of the relative merits of possible courses of action as well
as recommendations as to the best procedure is the management accountant’s tasks.

4. Controlling involves quantifying and interpreting the effects on the organization of planned
transactions and other economic events.

5. Planning relates to both internal and external needs for information about past or future events
and circumstances. Management accountants make available to managers timely reports that provide
information and perspective necessary for them to make decisions in a goal-congruent manner.

6. Reporting is when management accountants interpret all forms of internal and external information
pertinent to the various segments of the organization and communicate the implications of the
information being reviewed, including its relevance and reliability.

7. Resource Management – This involves implementing a system of reporting that is aligned with
organizational responsibilities. This reporting system will contribute to the effective use of resources
and measurement of management performance.

8. Information Systems Development is a modern equipment and techniques should be employed to

facilitate the selection, accumulation, transmission, analysis, and safeguarding of information.
Management accountants therefore should be familiar with current technology relative to
information processing and the accounting techniques appropriate to controlling and using the
information.

9. Technological Implementation is the design and development of the overall management

information system.
10. Administration- includes development and maintenance of an effective and efficient management
accounting organization.

11. The systems of costing like standard costing and budgetary control are useful to management for
controlling the costs.

12. Financial information systems must be designed to enable management to closely monitor
business operations and accurately measure the performance of particular departments.

13. Responsibility accounting is based on the principle that department heads or managers
should be held accountable for their performance and the performance of the employees in
their department.

14. Revenue Center is responsible for both revenues and expenses, which result in profits and
losses. A typical profit center is a product line, for which a product manager is responsible.

15. Profit Center is solely responsible for generating sales. A typical revenue center is the
sales department.

16. Cost Center is responsible not only for profits, but also for the return on funds invested in
the group's operations. A typical investment center is a subsidiary entity, for which the
subsidiary's president is responsible.

17. Investment Center is solely responsible for the incurrence of certain costs.

18. A controller in accounting is the chief accounting officer and plays an important role in
heading the entire accounting department.

19. Management Audit is to measure performance against approved operating plans and standards,
and to report and interpret the results of operations to all levels of management.

20. Internal audits is to establish and maintain adequate internal control, continuing internal auditing
program and assuring proper insurance coverage of the firm’s assets.

II. IDENTIFICATION-20pts

1. A function of a controller wherein this is to establish, coordinate and maintain, through

authorized management an integrated plan for the control of operations. Such a plan
would provide to the extent required in the business, cost standards, expense budgets,
sales forecasts, profit planning and program for capital investment and financing, together
with the necessary procedure to effectuate the plan.

2. To measure and report on the validity of the objectives of the business and on the
effectiveness of its policies, organization structure and procedures in attaining those
objectives. This includes consulting with all segments of management responsible for
policy and action concerning any phase of the operation of the business as related to the
performance of this function.

3. To establish and maintain adequate internal control, continuing internal auditing

program and assuring proper insurance coverage of the firm’s assets.

4. To supervise all matters relating to taxes.

5. To submit reports required by government agencies such as BIR, SEC, SSS, etc.

6. To interpret and report on the effect of external influences such as economics, social or
political as they affect the operations of the business.

7. To establish, coordinate and maintain, through authorized management an integrated

plan for the control of operations. Such a plan would provide to the extent required in the
business, cost standards, expense budgets, sales forecasts, profit planning and program for
capital investment and financing, together with the necessary procedure to effectuate the
plan.

8. It is a systematic set of procedures for recording and reporting measurements of the

cost of manufacturing goods and performing services in the aggregate and in detail. It
includes methods for recognizing, classifying, allocating, aggregating and reporting such
costs and comparing them standard costs.

9. This demands a higher level of accuracy because the information is subject to

verification by auditors.

10. Involves the application of appropriate techniques and concepts to economic data so
as to assist management in establishing plans for reasonable economic objectives and in
the making of rational decisions with a view toward achieving these objectives.

III. ENUMERATION-30

1. What are the activities of a Management Accountant? (8)

2. What are two objectives for establishing responsibility centers. (2pts each)
3. Types of Responsibility Centers (4)
4. What are the functions of a Controller (7)
5. What are the functions of treasureship (7)

IV. ESSAY-25points

What are the specific differences between Management Accounting (MA) and
Financial Accounting (FA), as to objective, as to compliance with GAAP, as to nature
of reports, as to timeliness of report and as to requirement for compliance with law.