EXERCISE 1-Management Accounting

Listed below are a number of terms that relate to organizations, the work of management, and the role
of managerial accounting:
Budgets Planning Decentralization
Controller Precision
Chief Financial Officer Feedback
Line Directing and motivating
Management Accounting Staff
Performance Report Precision
Financial Accounting Nonmonetary data

1 Management Accounting is concerned with providing information for the use of those who are
inside the organization, whereas Financial Accounting is concerned with providing information for the
use of those who are outside the organization.
2. Planning consists of identifying alternatives, selecting from among the alternatives the one that is
best for the organization, and specifying what actions will be taken to implement the chosen alternative.
3. When Directing and motivating managers oversee day-to-day activities and keep the organization
functioning smoothly.
4. The accounting and other reports coming to management that are used in controlling the
organization are called Feedback.
5. The delegation of decision-making authority throughout an organization by allowing managers at
various operating levels to make key decisions relating to their area of responsibility is called
Decentralization.
6. A position on the organization chart that is directly related to achieving the basic objectives of an
organization is called a Line position.
7. A Staff position provides service or assistance to other parts of the organization and does not directly
achieve the basic objective of the organization.
8. The manager in charge of the accounting department is generally known as the Controller
9. The plans of management are expressed formally in Budgets
10. A detailed report to management comparing budgeted data to actual data for a specific time period
is called Performance Report
11. The Chief Financial Officer is the member of the top management team who is responsible for
providing timely and relevant data to support planning and control activities and for preparing
statements for external users.
12. Management accounting places less emphasis on Precision and more emphasis on Nonmonetary
data than financial accounting.

EXERCISE2Multiple Choice
D 1. Which of the following information are used in management accounting?
a. Financial information
b. Non-financial information
c. information focused on the long term
d. All of the above

D 2. Management accounting includes

a. implementing strategies
b. developing budgets
c. preparing special studies and forecasts
d. all of the above

A 3. Financial accounting provided a historic perspective, whereas management accounting emphasizes

a. the future
b. past transactions
c. a current perspective
d. reports to shareholders

A 4. Which of the following groups would be leastlikely to receive detailed management accounting
reports?
 a. Stockholders
b. Sales representatives
c. Production supervisors
d. Managers

D 5. Which of the following descriptors 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.

B 6. Staff managers includes

a. manufacturing managers
b. human-resource managers
c. purchasing managers
d. distribution managers

A 7. Line management includes

a. manufacturing managers
b. human-resource managers
c. information-technology managers
d. management-accounting managers

C 8. Responsibility of a CFO include all except

a. providing financial reports to shareholders.
b. managing short-term and long term financing
c. investing in new equipment
d. preparing tax returns

B 9. Management accounting is considered successful when it

a. helps creditors evaluate the company’s performance
b. helps managers improve their decisions
c. is accurate
d. is relevant and reported annually

D 10. Control includes

a. implementing planning decisions
b. evaluating performance
c. providing feedback to help with future decision making
d. all of the above

D 11. The person most likely to use management accounting information is a(an)
a. banker evaluating aa credit application
b. shareholder evaluating a stock investment
c. government taxing authority
d. assembly department supervisor

B 12. Financial accounting

a. focuses on the future and includes activities such as preparing next year’s budgets.
b. must comply with PFRS
c. reports include 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.

B 13. The Standards of Ethical Conduct for management accountants include concepts related to
a. competence, performance, integrity and reporting
b. competence, confidentiality, integrity, objectivity
 c. experience, integrity, reporting and objectivity
d. none of above as ethical issues do not affect management accountants
C 14. Which ethical standard is most clearly violated if a financial manager/management accountant
knows of a problem that could mislead users but does nothing about it?
a. Competence
b. Lagality
c. Objectivity
d. Confidentiality

C 15. Corporate social responsibility is

a. effectively enforced through the controls envisioned by classical economics.
b. the obligation to shareholders to earn a profit
c. the duty to embrace service to the public interest
d. the obligation to serve long-term, organizational interests

EXERCISE3
Which of the following are normally considered outside of the realm of authority of the controller?

a. Control of cash
b. Safekeeping of cash
c. Purchasing
d. Credit and collection
e. Market research
f. Personnel
g. Information system
h. Taxes
i. Statistics
j. Budgeting
k. EDP
l. Property Control
m. Security

Answers for exercise 3:

BCDFM