Exam1 ch 1 multiple choice

Question 1

The major reporting standard for management accounting is

a. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management.
b. the Sarbanes-Oxley Act of 2002.
c. relevance to decisions.
d. generally accepted accounting principles.

Answer 1

a

Question 2

41. Managerial accounting is also called
    a. inside reporting.
    b. cost accounting.
    c. management accounting.
    d. strategic management

Answer 2

c

Question 3

Which description identifies financial statements that are prepared for external users?

a. External reports
b. Special-purpose
c. User-specific
d. General-purpose

Answer 3

d

Question 4

53. How often should management receive or prepare reports on its external business process activities?
    a. As they correspond to external financial reporting
    b. Never more than monthly
    c. According to the company’s business cycle
    d. As often as is necessary

Answer 4

d

Question 5

58. Which one of the following involves coordinating a company’s activities to produce a smooth-running operation?
    a. Auditing
    b. Controlling
    c. Planning
    d. Directing

Answer 5

b

Question 6

63. The organization chart of a company shows:
    a. the interrelationships of activities within a company.
    b. the delegation of authority within a company.
    c. the delegation of responsibility within a company.
    d. all of the above.

Answer 6

d

Question 7

64. Which function is achieved when a manager is determining whether planned goals are being met?
    a. Controlling
    b. Motivating
    c. Planning
    d. Directing

Answer 7

a

Question 8

66. Directing includes
    a. providing a framework for management to have criteria to terminate employees when needed.
    b. running a department under quality control standards universally accepted.
    c. coordinating a company’s diverse activities and human resources to produce a smooth-running operation.
    d. developing a performance ranking system to give certain high performers good raises.

Answer 8

c

Question 9

67. Which of the following is true?
    a. Managerial accountants are the employees who are principally responsible for ethical behaviour.
    b. Investment losses have been precipitated by lax ethical standards.
    c. Corporate fraud was found to have decreased between the years 1998 and 2003.
    d. Expense account abuse has been cited as one of the rarest forms of unethical employee behaviour.

Answer 9

b

Question 10

68. Choose the incorrect answer.
    a. While generally not encouraged, lapses in ethical behaviour are irrelevant to a company’s operating income.
    b. Proper incentives need to be implemented to foster an ethical business environment.
    c. Manufacturing companies need to establish effective and realistic production goals for their processes.
    d. As a result of the Sarbanes-Oxley Act, companies now pay more attention to the composition of the board of directors.

Answer 10

a

Question 11

69. Which is the best definition of fraud?
    a. Unknowingly misrepresenting the facts
    b. Using business supplies for personal use
    c. The intentional misstatement of facts
    d. Misappropriating funds for personal financial gain

Answer 11

c

Question 12

72. In Canada, which of the following professional accounting organizations play an important role in promoting high standards of ethics in the accounting profession?
    a. The Society of Management Accountants of Canada
    b. The Canadian Institute of Chartered Accountants
    c. The Certified General Accountants Association of Canada
    d. All of the above

Answer 12

d

Question 13

73. The Ontario Securities Commission introduced regulations governing the composition and duties of audit committees, as well as their members’ behaviour. The new rules:
    a. are as robust as parallel rules required by the U.S. Sarbanes-Oxley Act.
    b. were adopted by all provincial and territorial securities regulators, except for British Columbia’s.
    c. were introduced in conjunction with the Canadian Securities Administrators.
    d. all of the above.

Answer 13

d

Question 14

74. A company acting ethically must adapt its external reports to any changes required:
    a. Instantly.
    b. As it is appropriate for its business cycle.
    c. As stipulated by the CICA.
    d. If they are considered pertinent to its business activities

Answer 14

c

Question 15

77. Which one of the following is not a main component of the value chain sequence?
    a. ERP
    b. Sales and marketing
    c. Production
    d. Customer relations

Answer 15

a

Question 16

78. What is one primary benefit of an enterprise resource planning (ERP) system?
    a. It reduces inventory levels.
    b. It permits companies to be more streamlined in production.
    c. It replaces research and development in a company.
    d. It requires an increased emphasis on product quality.

Answer 16

b

Question 17

86. Which statement is correct?
    a. All three of Canada’s professional accounting designations require completion of a university degree in accounting.
    b. All three of Canada’s professional accounting designations require completion of some post-secondary education.
    c. The educational requirements of the three professional accounting designations focus on broadly-based accounting and financial management concepts.
    d. Each of the three professional accounting bodies publishes its own magazine to promote the interests of its membership

Answer 17

c

Question 18

88. What term describes all activities associated with providing a product or service?
    a. The manufacturing chain
    b. The product chain
    c. The supply chain
    d. The value chain

Answer 18

d

Question 19

89. How do most companies manage their value chain?
    a. By using activity-based costing
    b. By creating enterprise resource planning systems
    c. Using an action plan
    d. Using total quality management systems

Answer 19

b

Question 20

99. Which one of the following is an activity not associated with TQM?
    a. Tightening the bolts on a chassis so that the frame will not drop out
    b. Redesigning the gas tank after learning fuel efficiency standards are not being met
    c. Verifying the 10 check points associated with producing the highest quality loaf of bread
    d. Ensuring that the mattress just manufactured meets the standard of comfort of a random factory line worker

Answer 20

a

Question 21

103. Which component of a company’s value chain would benefit most from internal management information?
     a. Complaints from its customers over services offered
     b. Bonuses paid to managers of the company
     c. The company’s efforts to develop new services
     d. All such components would benefit from internal management information

Answer 21

d

Question 22

104. Managerial accounting has become more important in service industries due to:
     a. The decline of the manufacturing sector has freed up many accountants.
     b. Service delivery is extremely complex and requires proper monitoring.
     c. The economy has become more service-oriented recently.
     d. The increase in complexity in computer systems requires accounting specialists.

Answer 22

b

Question 23

.

Brief Exercise 111
The following statement is the mission of one of Canada’s professional accounting bodies, per their website. Which accounting body makes this statement?

“[We] drive value creation by developing professionals and resources to lead the advancement and integration of strategy, accounting and management.”

Answer 23

Certified management accountants

Question 24

Brief Exercise 112
The following statement is the mission of one of Canada’s professional accounting bodies, per their website. Which accounting body makes this statement?

“[This professional accounting body] is committed to its role as a protector of the public interest. This is a vital element in our efforts to enhance public confidence in our designation and in the accounting profession.”

Answer 24

Solution Brief Exercise 112

Certified General Accountants

Question 25

Brief Exercise 113

What are the four perspectives used in a balanced scorecard?

Answer 25

Brief Exercise 113

What are the four perspectives used in a balanced scorecard?

Question 26

Exercise 117

List the activities performed by the Controller of an organization.

Answer 26

Solution Exercise 117
Internal and external accounting and financial reporting, reporting income tax information and employee payroll remittances, cost accounting, budgeting, internal auditing, systems management, management of staff members

Question 27

Exercise 118

How do the roles of financial Vice-President, Controller and Treasurer differ?

Answer 27

Solution Exercise 118
The financial VP reports to the president of the company, and supervises both the Controller and Treasurer. The treasurer supervises the financing function, has custody of physical assets, and manages the company’s cash and investments. The controller supervises the inputs and outputs of the accounting information system

Question 28

Exercise 120
Your manager asks you to help him prepare the budget for your division. He estimates that total expenses will equal $100,000, but he reports $120,000. He argues that it will make it easier to keep costs within budget, and that everyone does it. What is the ethical issue in this case?

Answer 28

Solution Exercise 120
The manager is knowingly reporting false information that could mislead the users of that information. Not everyone may know that the budget numbers have some “slack” built into them.

Question 29

129. Exercising good judgment in performing the managerial functions and choosing among alternative courses of action is called ______________.

Answer 29

decision-making