Context of Management Accounting (10%)

Question 1

Name two disadvantages of Business Process Outsourcing.

Answer 1

1. Loss of control
2. Confidentiality risk

Question 2

Who would prepare a cash budget?

Answer 2

Management accountant

Question 3

Who would prepare the cash flow statement?

Answer 3

Financial accountant

Question 4

Who would prepare the Statement of Profit or Loss.

Answer 4

Management accounant

Question 5

Which side of accounting (financial/management) do the following comments sit under:

1. Uses historical data
2. Is carried out at the discretion of management
3. Uses non-financial information
4. Aids planning within the organisation

Answer 5

Financial Accounting

• Uses historical data.

Management Accounting

• Is carried out at the discretion of management.
• Uses non-financial information.
• Aids planning within the organisation.

Question 6

What are financial accountants primarily responsible for?

Answer 6

• Preparation of the statutory accounts.
• Statement of Profit or Loss.
• Statement of Financial Position.
• Cash Flow Statement

Question 7

Is the following statement true or false?

Information used by strategic management tends to be summarised.

Answer 7

True

Question 8

Is the following statement true or false?

Information used by strategic management tends to be forward looking.

Answer 8

True

Question 9

Is the following statement true or false?

Information used by operational management tends to contain estimates.

Answer 9

False

Question 10

Is the following statement true or false?

Information used by operational management tends to be required infrequently.

Answer 10

False

Question 11

Is the following statement true or false?

Information used by strategic management tends to be from external sources.

Answer 11

False

Question 12

Is the following statement true or false?

A role of management accounting as, defined by CIMA includes deriving performance measures and benchmarks for monitoring and controlling?

Answer 12

True

Question 13

Is the following statement true or false?

A role of management accounting as, defined by CIMA includes measuring and reporting financial and non-financial performance measurements to management and other stakeholders.

Answer 13

True

Question 14

Is the following statement true or false?

A role of management accounting as, defined by CIMA includes checking the accuracy of the financial statements produced by the organisation.

Answer 14

False

Question 15

Is the following statement true or false?

A role of management accounting as, defined by CIMA includes formulating strategic and operational plans in line with the coprorate objectives of the organisation.

Answer 15

True

Question 16

Is the following statement true or false?

Management accountants are concerned with planning, control and decision making.

Answer 16

True

Question 17

Is the following statement true or false?

Financial accountants are concerned with planning, control and decision making.

Answer 17

False

Question 18

Is the following statement true or false?

Preparing an annual budget for a cost centre relates to control by CIMA’s definition of management accounting.

Answer 18

False

Question 19

Is the following statement true or false?

Producing an investment appraisal calculation for a proposed new project relates to control by CIMA’s definition of management accounting.

Answer 19

False

Question 20

Is the following statement true or false?

Comparing the actual and expected results for a period and calculating the variances relates to control by CIMA’s definition of management accounting.

Answer 20

True

Question 21

Is the following statement true or false?

Advising management of the most profitable use of scarce resources relates to control by CIMA’s definition of management accounting.

Answer 21

False

Question 22

Is the following statement true or false?

Producing a monthly report of financial and non-financial performance measures for management relates to control by CIMA’s definition of management accounting.

Answer 22

True

Question 23

Is the following statement true or false?

Strategic information is mainly used by middle management in an organisation.

Answer 23

False

Question 24

Is the following statement true or false?

Productivity measurements are examples of tactical information.

Answer 24

True

Question 25

Is the following statement true or false?

Operational information is required frequently by its main users.

Answer 25

False

Question 26

Is the following statement true or false?

Two characteristics of good information are cost beneficial and regular.

Answer 26

True

Question 27

Is the following one of the five fundamentals principles of the CIMA’s code of ethics?

Integrity

Answer 27

True

Question 28

Is the following one of the five fundamentals principles of the CIMA’s code of ethics.

Responsibility

Answer 28

False

Question 29

Is the following one of the five fundamentals principles of the CIMA’s code of ethics.

Professional competence and due care

Answer 29

True

Question 30

Is the following one of the five fundamentals principles of the CIMA’s code of ethics.

Confidentiality

Answer 30

True

Question 31

Is the following one of the five fundamentals principles of the CIMA’s code of ethics.

Professional behaviour

Answer 31

True

Question 32

Is the following one of the five fundamentals principles of the CIMA’s code of ethics.

Objectivity

Answer 32

True

Question 33

Is the following statement a benefit of locating management accounting within the individual business unit.

Cost Saving

Answer 33

False

Question 34

Is the following statement a benefit of locating management accounting within the individual business unit.

Adoption of best practice

Answer 34

False

Question 35

Is the following statement a benefit of locating management accounting within the individual business unit.

Closer to the business needs

Answer 35

True

Question 36

Is the following statement a benefit of locating management accounting within the individual business unit.

Consistency of approach across the organisation

Answer 36

True

Question 37

Is the following statement a benefit of locating management accounting within the shared services centres (SSCs) or Business Process Outsourcing (BPO).

Cost Saving

Answer 37

True

Question 38

Is the following statement a benefit of locating management accounting within the shared services centres (SSCs) or Business Process Outsourcing (BPO).

Adoption of best practice

Answer 38

True

Question 39

Is the following statement a benefit of locating management accounting within the shared services centres (SSCs) or Business Process Outsourcing (BPO).

Consistency of approach across the organisation

Answer 39

True

Question 40

Is the following statement a benefit of locating management accounting within the shared services centres (SSCs) or Business Process Outsourcing (BPO).

Closer to business needs

Answer 40

False

Question 41

Is the following statement a main purpose of management accounting.

Planning

Answer 41

True

Question 42

Is the following statement a main purpose of management accounting.

Reporting

Answer 42

False

Question 43

Is the following statement a main purpose of management accounting.

Decision Making

Answer 43

True

Question 44

Is the following statement a main purpose of management accounting.

Controlling

Answer 44

True

Question 45

Companies can select different ways to set up their finance functions.

What are the 3 main ways?

Answer 45

Dedicated Business Partners Shared Services Centre Business Processing Outsourcing

Question 46

Is the following statement true or false:

Within the dedicated business partners finance setup, the finance staff are an integral part of the business they support.

Answer 46

True

Question 47

Is the following statement true or false:

Within the dedicated business partners finance setup, the finance functions are undertaken by a third party.

Answer 47

False

Question 48

Is the following statement true or false:

Within the dedicated business partners finance setup, the whole finance function operates as one centre which provides for the finance needs of the company.

Answer 48

False

Question 49

Is the following statement true or false:

Within the shared services centre finance setup, the whole finance function operates as one centre which provides for the finance needs of the company.

Answer 49

True

Question 50

Is the following statement true or false:

Within the shared services centre finance setup, the finance functions are undertaken by a third party.

Answer 50

False

Question 51

Is the following statement true or false:

Within the shared services centre finance setup, the finance staff are an integral part of the business they support.

Answer 51

False

Question 52

Is the following statement true or false:

Within the business process outsourcing finance setup, the whole finance function operates as one centre which provides for the finance needs of the company.

Answer 52

False

Question 53

Is the following statement true or false:

Within the business process outsourcing finance setup, the finance functions are undertaken by a third party.

Answer 53

True

Question 54

Is the following statement true or false:

Within the business process outsourcing finance setup, the finance staff are an integral part of the business they support.

Answer 54

False

Question 55

The management accountant of Fruity Inc has produced a monthly report for managers. Some of the managers have complained that the reports are unhelpful as they miss out some key figures and that they are not always familiar with the terminology used in the report.

Which characteristic of good information is missing in this report?

Answer 55

Complete and understandable

Question 56

Is the following statement true or false:

Strategic level management would carry out making day-to-day decisions about the running of a department.

Answer 56

False

Question 57

Is the following statement true or false:

Strategic level management would carry out defining the objectives of the company.

Answer 57

True

Question 58

Is the following statement true or false:

Strategic level management would decide in which markets to operate in.

Answer 58

True

Question 59

Is the following statement true or false:

Strategic level management would decide about how to operate within the market.

Answer 59

True

Question 60

Is the following statement about CIMA true or false:

CIMA are committed to upholding the highest ethical and professional standards.

Answer 60

True

Question 61

Is the following statement about CIMA true or false:

CIMA can provide students and members with guidance on how to handle situations where their ethics may be compromised.

Answer 61

True

Question 62

Is the following statement about CIMA true or false:

CIMA focuses on organisations in the private sector.

Answer 62

False

Question 63

Is the following statement about CIMA true or false:

CIMA is the world’s largest and leading professional body of management accountants. Members and students are located in over 160 countries.

Answer 63

True

Question 64

There are 4 global management accounting principles that are here to help you explain the role of management accounting in today’s organisations.

Is the following statement true or false

The 4 principles are:

• Trust
• Influence
• Objectivity
• Reliability

Answer 64

False

Question 65

There are 4 global management accounting principles that are here to help you explain the role of management accounting in today’s organisations.

Is the following statement true or false:

The 4 principles are:

• Integrity
• Influence
• Value
• Reliability

Answer 65

False

Question 66

There are 4 global management accounting principles that are here to help you explain the role of management accounting in today’s organisations.

Is the following statement true or false:

The 4 principles are:

• Honesty
• Communication
• Value
• Relevance

Answer 66

False

Question 67

There are 4 global management accounting principles that are here to help you explain the role of management accounting in today’s organisations.

Is the following statement true or false:

The 4 principles are:

• Trust
• Influence
• Value
• Relevance

Answer 67

True

Question 68

All certified management accountants must comply with CIMA’s code of ethics. A management accountant who puts themselves forward for a role which they do not have the correct knowledge and experience to undertake would be breaching a fundamental principle.

Is the following statement true or false:

The fundamental principle being breached here is integrity.

Answer 68

False

Question 69

All certified management accountants must comply with CIMA’s code of ethics. A management accountant who puts themselves forward for a role which they do not have the correct knowledge and experience to undertake would be breaching a fundamental principle.

Is the following statement true or false:

The fundamental principle being breached here is objectivity.

Answer 69

False

Question 70

All certified management accountants must comply with CIMA’s code of ethics. A management accountant who puts themselves forward for a role which they do not have the correct knowledge and experience to undertake would be breaching a fundamental principle.

Is the following statement true or false:

The fundamental principle being breached here is professional competence and due care.

Answer 70

True

Question 71

All certified management accountants must comply with CIMA’s code of ethics. A management accountant who puts themselves forward for a role which they do not have the correct knowledge and experience to undertake would be breaching a fundamental principle.

Is the following statement true or false:

The fundamental principle being breached here is confidentiality.

Answer 71

False

Question 72

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision on how much inventory of clothing to carry in each fitness centre would be made at the strategic level.

Answer 72

False

Question 73

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision on how much inventory of clothing to carry in each fitness centre would be made at the operational level.

Answer 73

True

Question 74

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision on how much inventory of clothing to carry in each fitness centre would be made at the tactical level.

Answer 74

False

Question 75

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision to move into the fitness clothing industry would be made at the strategic level.

Answer 75

True

Question 76

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision to move into the fitness clothing industry would be made at the operational level.

Answer 76

False

Question 77

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision to move into the fitness clothing industry would be made at the tactical level.

Answer 77

False

Question 78

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision on the range of clothing to sell and the pricing of the range would be made at the operational level.

Answer 78

False

Question 79

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision on the range of clothing to sell and the pricing of the range would be made at the tactical level.

Answer 79

True

Question 80

RST operates in the health and fitness industry running a successful chain of fitness centres throughout their home country. A decision has been made to branch out into the fitness industry. A range of clothing will be manufactured for RST which will be sold in their fitness centres.

Is the following statement true or false:

The decision on the range of clothing to sell and the pricing of the range would be made at the strategic level.

Answer 80

False

Question 81

Is the following statement regarding management accounting true or false:

Management accounting tends to focus on the needs of external stakeholders.

Answer 81

False

Question 82

Is the following statement regarding management accounting true or false:

Management account information can be presented in any format

Answer 82

True

Question 83

Is the following statement regarding management accounting true or false:

The main purpose of management accounting is to produce the statutory financial statements for the entity.

Answer 83

False

Question 84

Is the following statement regarding management accounting true or false:

Management accounting is carried out at the discretion of management.

Answer 84

True

Question 85

Is the following statement regarding management accounting true or false:

One of the key deliverables of management accounting is the cash flow statement.

Answer 85

False

Question 86

Is the following statement regarding financial accounting true or false:

One of the key deliverables of financial accounting is the cash flow statement.

Answer 86

True

Question 87

Is the following statement regarding financial accounting true or false:

Financial accounting tends to focus on the needs of external stakeholders.

Answer 87

True

Question 88

Is the following statement regarding financial accounting true or false:

Financial accounting information can be presented in any format.

Answer 88

False

Question 89

Is the following statement regarding financial accounting true or false:

Financial accounting is carried out at the discretion of management.

Answer 89

False

Question 90

Is the following statement regarding financial accounting true or false:

The main purpose of financial accounting is to produce the statutory financial statements for the entity.

Answer 90

True

Question 91

CIMA’s code of ethics is made up of five fundamental principles.

Is the following statement true or false:

Professional competence and due care are one of the five fundamental principles.

Answer 91

True

Question 92

CIMA’s code of ethics is made up of five fundamental principles.

Is the following statement true or false:

Professional behaviour are one of the five fundamental principles.

Answer 92

True

Question 93

CIMA’s code of ethics is made up of five fundamental principles.

Is the following statement true or false:

Objectivity are one of the five fundamental principles.

Answer 93

True

Question 94

CIMA’s code of ethics is made up of five fundamental principles.

Is the following statement true or false:

Integrity are one of the five fundamental principles.

Answer 94

True

Question 95

CIMA’s code of ethics is made up of five fundamental principles.

Is the following statement true or false:

Confidentiality are one of the five fundamental principles.

Answer 95

True

Question 96

CIMA’s code of ethics is made up of five fundamental principles.

Is the following statement true or false:

Privacy are one of the five fundamental principles.

Answer 96

False

Question 97

CIMA’s code of ethics is made up of five fundamental principles.

Is the following statement true or false:

Commitment are one of the five fundamental principles.

Answer 97

False

Question 98

Is the following statement true or false:

Financial accountants historically used to be mainly concerned with enhancing performance.

Answer 98

False

Question 99

Is the following statement true or false:

Management accountants historically used to be mainly concerned with enhancing performance.

Answer 99

False

Question 100

Is the following statement true or false:

Management accountants are now more concerned about enhancing performance.

Answer 100

True

Question 101

Is the following statement true or false:

Management accountants are now seen as value-adding business partners.

Answer 101

True

Question 102

Is the following statement true or false:

Financial accountants are now seen as value-adding business partners.

Answer 102

False

Question 103

Is the following statement true or false:

The main purpose of management accountants is to provide information to managers for the purposes of planning, control and decision making.

Answer 103

True

Question 104

Is the following statement true or false:

The main purpose of financial accountants is to provide information to managers for the purposes of planning, control and decision making.

Answer 104

False