T. Financial Accounting deals with information that is primarily reported to individuals outside the organization.

T. Management accounting has no externally imposed standards while financial accounting has to follow the GAAP.
F. Financial Accounting refers to the reports designed to meet the needs of internal users particularly the managers.
T. The type of information that management accounting produces is a combination of both monetary and non-
monetary information.
F. Staff function is the authority to give command or orders to subordinates. On the other hand, line function is to
advise but not to command others.
T. A Treasurer usually exercises line functions within an organization.
F. Management accountants have responsibility for ethical behavior in four broad areas which are competence,
confidentiality, fairness and objectivity
T. In order to be competent, management accountants must maintain an appropriate level of professional
competence.
T The confidentiality responsibility of management accountants involves the act not to disclose confidential
information acquired in the course of their work unless legally obligated to do so.
T Mitigate conflicts of interest and advice others of potential conflicts is under the Integrity responsibility of a
management accountant
T The Objectivity responsibility of a management accountant involves communicating information fairly and
objectively.

Financial accounting focuses primarily on reporting:

a. To parties outside an organization
b. To parties within an organization
c. To an organization’s board of directors
d. To financial institutions

It involves setting immediate and long-term objectives and deciding which alternative is best suited to attain the set of
objectives.
a. Planning
b. Controlling
c. Organizing
d. Decision-making
It is a cost that remain constant on a per-unit basis but varies in total with changes in activity. Example of this cost
include direct material and direct labor.
a. Fixed Cost
b. Variable Cost
c. Sunk Cost
 d. Relevant Cost
Mixed cost is
a. Cost that remains constant in total but varies on a per-unit basis with changes in activity.
b. Income or benefit given up when one alternative is selected over another
c. Future cost that will differ under alternative courses of action
d. Combination of variable and fixed cost
It is a procedure in which a subordinate and a supervisor agree on goals and the methods in achieving them and
develop a plan in accordance with that agreement.
a. Management by exception
b. Management by rule
c. Management by objectives
d. Management by decision
When it comes to the whole organization, a controller usually exercises _____ functions since its primary function is
to give advice. But when it comes to its own department, a controller exercises _____ functions among its own staff.
a. line; staff
b. staff; line
c. advising; controlling
d. controlling; advising
Which of the following would likely be considered an internal user of accounting information rather than an external
user?
a. Stockholders
b. Consumer groups
c. Lenders
d. Middle-level managers
Which of the following functions is best described as choosing among available alternatives?
a. Decision making
b. Planning
c. Directing operational activities
d. Controlling
Which of the following is not an ethical standard of managerial accounting?
a. Competence
b. Confidentiality
c. Efficiency
d. Objectivity
It is the practice of the established science of control, which is the process by which management assures itself that
the company’s resources are obtained and utilized according to plans that are in line with the company’s set
objectives.
a. Treasury
b. Controllership
 c. Management
d. Economy analyst
Problem
Los Angeles wants to conduct an analysis on the behavior of the maintenance cost of its factory equipment in relation
to number of units produced using equipment. Historical cost and production data were gathered for the past 10
months.

Month Maintenance Cost Units Produced

March P27 500 4 500
April 22 500 2 000
May 50 000 7 000
June 35 000 7 000
July 40 000 6 000
August 32 500 4 000
September 45 000 8 000
October 1 250 250
November 25 000 350
December 30 000 300

Compute for the variable maintenance cost per unit.

Answer: P3.75
Compute the total variable maintenance cost at the highest and lowest level of activity
Answer: Highest activity = (8 000 x 3.75) = P30 000
Lowest activity = (2 000 x 3.75) = P7 500
Determine the fixed cost at each level of activity
Answer: Using the highest activity 45 000 – 30 000 = P15 000
Using the lowest activity 22 500 – 7 500 = P15 000
Develop an equation to determine the total cost at any level of activity.
Answer: y = 3.75x + 15 000