M1 Flashcards
1) Management accounting: A) focuses on estimating future revenues, costs, and other measures to forecast activities and their results B) provides information about the company as a whole FA C) reports information that has occurred in the past that is verifiable and reliable FA D) provides information that is generally available only on a quarterly or annual basis FA
A) focuses on estimating future revenues, costs, and other measures to forecast activities and their results
2) Managers use management accounting information to ________ strategy. A) choose B) communicate C) implement D) All of these answers are correct.
D) All of these answers are correct
- Financial accounting: A) focuses on the future and includes activities such as preparing next year’s operating budget MA B) must comply with GAAP (generally accepted accounting principles) C) reports include detailed information on the various operating segments of the business such as product lines or departments MA D) is prepared for the use of department heads and other employees MA
B) must comply with GAAP (generally accepted accounting principles)
- The person most likely to use ONLY financial accounting information is a: A) factory shift supervisor MA B) vice president of operations C) current shareholder D) department manager
C) current shareholder
5.Which of the following people is LEAST likely to use management accounting information? A) the controller B) a shareholder evaluating a stock investment C) the treasurer D) an assembly department supervisor
B) a shareholder evaluating a stock investment
- Financial accounting provides the primary source of information for: A) decision making in the finishing department B) improving customer service C) preparing the income statement for shareholders D) planning next year’s operating budget
C) preparing the income statement for shareholders
- 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.
D) It provides reasonable and timely estimates.
- Which of the following statements refers to management accounting information? A) There are no regulations governing the reports. B) The reports are generally delayed and historical. C) The audience tends to be stockholders, creditors, and tax authorities. D) It primarily measures and records business transactions.
A) There are no regulations governing the reports
- Which of the following groups would be LEAST likely to receive detailed management accounting reports? A) stockholders B) sales representatives C) production supervisors D) managers
A) stockholders
10) Management accounting information includes: A) tabulated results of customer satisfaction surveys B) the cost of producing a product C) the percentage of units produced that are defective D) All of these answers are correct.
D) All of these answers are correct.
11) Cost accounting: A) provides information on the efficiency of factory labor B) provides information on the cost of servicing commercial customers C) provides information on the performance of an operating division D) All of these answers are correct.
D) All of these answers are correct.
- Which of the following types of information are used in management accounting? A) financial information B) nonfinancial information C) information focused on the long term D) All of these answers are correct.
D) All of these answers are correct.
- Modern cost accounting plays a role in: A) planning new products B) evaluating operational processes C) controlling costs D) All of these answers are correct.
D) All of these answers are correct.
- Cost accounting provides all of the following EXCEPT: A) information for management accounting and financial accounting B) pricing information from marketing studies C) financial information regarding the cost of acquiring resources D) nonfinancial information regarding the cost of operational efficiencies
B) pricing information from marketing studies
- Management accounting includes all of the following EXCEPT A) implementing strategies B) developing budgets C) preparing special studies and forecasts D) preparing the statement of cash flows
D) preparing the statement of cash flows
- Financial accounting is concerned primarily with: A) external reporting to investors, creditors, and government authorities B) cost planning and cost controls C) profitability analysis D) providing information for strategic and tactical decisions
A) external reporting to investors, creditors, and government authorities
- Financial accounting provides a historical perspective, whereas management accounting emphasizes: A) the future B) past transactions C) a current perspective D) reports to shareholders
A) the future
- Management accounting is considered most likely to be successful when it: A) helps creditors evaluate the company’s performance B) helps investors improve their decisions C) is timely D) is relevant and reported annually
C) is timely
- Control measures should: A) be set and not changed until the next budget cycle B) be flexible to allow for employees who are slackers C) be kept confidential from employees so that competitors don’t have an opportunity to gain a competitive advantage D) be linked by feedback to planning
D) be linked by feedback to planning
- Planning includes all of the following EXCEPT A) identifying the problem and uncertainties. B) obtaining information. C) providing feedback to help with future decision making. D) making predictions about the future.
C) providing feedback to help with future decision making.
21.A detailed financial plan for the future is known as a: A) budget. B) performance report. C) organization chart. D) segment.
A) budget.
- A performance report is: A) a detailed report comparing budgeted data to actual data for a specific time period. B) a formal statement of plans for the upcoming period. C) required to be filed monthly by the Securities and Exchange Commission. D) not used in decentralized organizations.
A) a detailed report comparing budgeted data to actual data for a specific time period.
- Samantha Galloway is a managerial accountant in the accounting department of Mustang Industries, Inc. Samantha has just discovered evidence that some of the corporation’s marketing managers have been wrongfully inflating their expense reports in order to obtain higher reimbursements from the firm. According to the Institute of Management Accountants’ Standards of Ethical Conduct, what should Samantha do upon discovering this evidence? A) notify the controller. B) notify the marketing managers involved. C) notify the president of the corporation. D) ignore the evidence because she is not part of the Marketing Department.
A) notify the controller.
- Some raw materials cannot be easily associated with the finished product and cannot be traced because their physical association with the finished products is too small in terms of cost. These are considered: a. Raw Materials b. Direct Materials c. Indirect Materials d. Supplies
Indirect Materials
- Prime cost and conversion cost share what common element of total cost? A) Direct materials. B) Direct labor. C) Variable overhead. D) Fixed overhead.
B) Direct labor.
- Manufacturing Cost typically consist of: A. Direct Materials, Direct Labor, and Manufacturing Overhead B. Direct Materials, Direct Labor, and Selling Cost C. Production Cost and Marketing Cost D. Direct Materials, Direct Labor, and Marketing Expenses
Direct Materials, Direct Labor, and Manufacturing Overhead
- It is also called Inventoriable Cost which include each of the manufacturing cost and they are the costs that are necessary and integral part of producing the finished product A. Period Cost B. Product Cost C. Selling Cost D. Marketing Cost
Product Cost
- It is the cost that are identifiable with specific time period rather than salable product and are deducted outright from revenues under accrual basis of Accounting: A. Period Cost B. Product Cost C. Materials used in Production D. Indirect Labor
Period Cost
- It is part of Accounting which involves measuring, recording and reporting of Product Costs in the company. A. Cost Accounting B. Management Accounting C. Financial Accounting D. Basic Accounting
Cost Accounting
- Prime cost consists of: A) direct labor and manufacturing overhead. B) direct materials and manufacturing overhead. C) direct materials and direct labor. D) direct materials, direct labor and manufacturing overhead.
C) direct materials and direct labor.
- Depreciation on a personal computer used in the marketing department of a manufacturing firm would be classified as: A) a product cost that is fixed with respect to the company’s output. B) a period cost that is fixed with respect to the company’s output. C) a product cost that is variable with respect to the company’s output. D) a period cost that is variable with respect to the company’s output.
B) a period cost that is fixed with respect to the company’s output.
- Ross Corporation shipped finished goods to a customer on credit, but the sale was not recorded and the costs of the finished goods were incorrectly included on the period’s balance sheet as part of the finished goods inventory. Which one of the following statements is correct concerning the effects of this error? A) Accounts receivable was not affected, inventory was overstated, sales were understated, and cost of goods sold was understated. B) Accounts receivable was understated, inventory was not affected, sales were understated, and cost of goods sold was understated. C) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was overstated. D) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was understated.
D) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was understated.
- A cost incurred in the past that is not relevant to any current decision is classified as a(n): A) period cost. B) opportunity cost. C) sunk cost. D) differential cost.
C) sunk cost.
- Lathe operators at KF Manufacturing are hourly employees who are paid time and a half for hours worked in excess of 40 hours per week. Lester is a lathe operator who worked 45 hours during the current week and had no idle time. The correct accounting for the amounts paid to Lester would be: A) charge only the overtime premium earned to the overhead account. B) charge the hourly wage earned plus the overtime premium earned to the overhead account. C) charge only the overtime premium earned to the direct labor cost for the project Lester was working on when the overtime was incurred. D) charge the hourly wage earned plus the overtime premium earned to the direct labor cost for the project Lester was working on when the overtime was incurred.
A) charge only the overtime premium earned to the overhead account.
- Compared to financial accounting, managerial accounting places more emphasis on: A) the flexibility of information. B) the precision of information. C) the timeliness of information. D) both A and C above.
D) both A and C above.
- Which of the following is not an objective of managerial accounting? A. Providing information for decision making and planning. B. Assisting in directing and controlling operations. C. Maximizing profits and minimizing costs. D. Measuring the performance of managers and subunits.
Maximizing profits and minimizing costs.
- Which of the following business models considers financial, customer, internal operating, and other measures in the evaluation of performance? A. Deterministic simulation. B. Balanced scorecard. C. Payoff matrix. D. Decision tree.
Balanced scorecard.
- Which of the following statements represents a similarity between financial and managerial accounting? A. Both are useful in providing information for external users. B. Both are governed by GAAP. C. Both draw upon data from an organization’s accounting system. D. Both rely heavily on published financial statements.
Both draw upon data from an organization’s accounting system.
- Which of the following employees at American Airlines would not be considered as holding a line position? A. Pilot. B. Chief financial officer (CFO). C. Flight attendant. D. Ticket agent. E. Baggage handler.
Chief financial officer (CFO).
- Which of the following employees would be considered as holding a line position? A. The controller of Exxon Corporation. B. The vice-president for government relations of Microsoft. C. The manager of food and beverage services at Disney’s Magic Kingdom. D. A secretary employed by Hewlett-Packard. E. None of the above.
The manager of food and beverage services at Disney’s Magic Kingdom.
- Which of the following employees at Starbucks would likely be considered as holding a staff position? A. The company’s chief operating officer (COO). B. The manager of a store located in Kansas City, Missouri. C. The company’s lead, in-house attorney. D. The company’s chief financial officer (CFO). E. Both the company’s lead, in-house attorney and the chief financial officer.
Both the company’s lead, in-house attorney and the chief financial officer.
- The chief managerial and financial accountant of an organization is the: A. chief executive officer (CEO). B. treasurer. C. vice-president of accounting. D. internal auditor. E. chief financial officer (CFO).
chief financial officer (CFO).
- Which of the following typically does not relate to the role of a controller? A. A controller supervises the accounting department. B. A controller safeguards an organization’s assets. C. A controller oversees the preparation of reports required by governmental authorities. D. A controller normally assumes a narrow role within the organization, often preventing the individual’s rise to top management ranks. E. Choices “B” and “D” above.
Choices “B” and “D” above.
- A controller is normally involved with: A. preparing financial statements. B. managing investments. C. raising capital. D. safeguarding assets. E. managing the firm’s credit policy.
preparing financial statements.
- Which of the following is not a function of the treasurer? A. Safeguarding assets. B. Managing investments. C. Preparing financial statements. D. Being responsible for an entity’s credit policy. E. Raising capital.
Preparing financial statements.
- Managerial accountants: A. often work on cross-functional teams. B. are located throughout an organization. C. are found throughout an organization and work on cross-functional teams. D. are found primarily at lower levels of the organizational hierarchy. E. are found primarily at higher levels of the organizational hierarchy.
are found throughout an organization and work on cross-functional teams.
- The two dimensions of managerial accounting are: A. a decision-facilitating dimension and a decision-influencing dimension. B. a decision-facilitating dimension and a financial-influencing dimension. C. a decision-influencing dimension and a cost-minimizing dimension. D. a cost-minimizing dimension and a profit-maximizing dimension. E. a decision-influencing dimension and a profit-maximizing dimension.
a decision-facilitating dimension and a decision-influencing dimension.
- Much of managerial accounting information is based on: A. a cost-benefit theme. B. profit maximization. C. cost minimization. D. the generation of external information. E. effectiveness but not efficiency.
a cost-benefit theme.
- Which of the following is not normally considered to be an element of e-business? A. E-budgeting. B. Supply-chain management. C. E-commerce. D. Balanced scorecards. E. Choices “B” and “D” above.
Balanced scorecards.
- Managerial accounting has changed in recent years because of: A. the growth of e-business. B. increased global competition. C. the emergence of new industries. D. an increased focus on the customer. E. all of the above factors.
all of the above factors.
- Managerial accounting has changed in recent years because of: A. a growing service economy in the United States. B. the growing popularity of cross-functional teams. C. computer-integrated manufacturing (CIM). D. time-based competition. E. all of the above factors.
all of the above factors.
- Which of the following statement(s) about just-in-time (JIT) inventory management is (are) true? The emphasis of JIT is on “pull” manufacturing. Raw materials are purchased just in time to be used in production. JIT is an inventory technique that focuses on reduction of both inventory and related inventory costs. A. I only. B. II only. C. III only. D. II and III. E. I, II, and III.
I, II, and III.
53.Management accounting Is
a. governed by generally accepted accounting principles
Draws from disciplines other than accounting
Is geared primarily to the past rather than the future
Places more emphasis on precision of data compared with financial accounting
Draws from disciplines other than accounting
- Management accounting is an integral part of the management process. As such, it provides essential information for the following objectives except A. Maintaining the current level of resources utilization as well as internal and external communication. B. Measuring and evaluating performances. C.Planning strategies and controlling current activities of the organization. D.Enhancing objectivity in decision making.
Enhancing objectivity in decision making.
- The chief management accountant called “controller” traditionally performs these functions except A. The establishment and implementation of the financial planning process B.Financial and management reporting and interpretation C. Protection of company resources and economic evaluation D.Relate to specific problems where expert help is required
Relate to specific problems where expert help is required
56.The chief management accountant called “controller” traditionally performs these functions except A.The establishment and implementation of the financial planning process B.Financial and management reporting and interpretation C.Protection of company resources and economic conditions D.Preparation of proposals for product promotions
Preparation of proposals for product promotions
57.Which of the following is a controller’s responsibility? A.Tax planning and accounting B.Custodian of funds C.In-charge of credit and collection D.Arranging short-term loans and financing
Tax planning and accounting
- Management accountants help design, develop, install and maintain reporting systems which are aligned with the structures of the organization. These systems provide information that it useful for decision making. Management decision processes fall into three categories. A. Repetitive, non programmed and strategic B. Repetitive, programmed and strategic C.Repetitive, programmed and non strategic D. Non repetitive, non programmed and strategic
Repetitive, non programmed and strategic
59.In this element of internal control, the object is to gauge the efficiency of the various levels of people in the organization as well as the quality and quantity of results A. Records and reports B. Standards and performance C. Internal audit D.Policies and procedure
Standards and performance
- As business increases in complexity, the function of controllership has attained top level recognition in the corporate arena. Many areas related to finance and accounting have been identified with controllership. One area that violates basic internal control when assigned to controllership function is A.Credit collection B.Internal auditing C.Low-range financial planning D.Taxation and reporting to government agencies
Credit collection
- Ohio Corporation recently implemented a just-in-time (JIT) production system along with a series of continuous improvement programs. If the firm is now considering adopting a total quality management (TQM) program, it would likely find that TQM: A. is consistent with both JIT and continuous improvement. B. is consistent with JIT but inconsistent with continuous improvement. C. is consistent with continuous improvement but inconsistent with JIT. D. is inconsistent with both JIT and continuous improvement. E. is an antiquated management technique.
is consistent with both JIT and continuous improvement.
- Cost management systems tend to focus on an organization’s: A. machines. B. employees. C. activities. D. customers. E. rules and regulations.
activities
- The value chain of a manufacturer would tend to include activities related to: A. manufacturing. B. research and development. C. product design. D. marketing. E. all of the above.
all of the above.
- Which of the following choices correctly depicts activities that would be included in a manufacturer’s value chain?
Research and Development
Marketing
Distribution
All yes
- Which of the preceding activities would likely not be considered part of The Gap clothing company’s value chain? Designing a new product line. Locating and then negotiating terms with a clothing manufacturer. Marketing an existing product line. Distributing goods from regional warehouses to local stores. All of the above activities would be an element in the company’s value chain.
All of the above activities would be an element in the company’s value chain.
- The activities performed by a manufacturing organization could be categorized as pre-production (such as research and development and product design), production-related, and post-production (such as marketing and customer service). Which activities should the firm focus on if management understands the value chain concept and desires to meet organizational goals? A. Pre-production activities. B. Production-related activities. C. Post-production activities. D. Pre-production, production-related, and post-production activities. E. Pre-production and production-related activities.
Pre-production, production-related, and post-production activities.
- In order for a company to achieve a sustainable competitive advantage, it must perform value chain activities: A. at the same quality level as competitors, at the same cost. B. at the same quality level as competitors, but at a lower cost. C. at a higher quality level than competitors, at a higher cost. D. at a higher quality level than competitors, but at no greater cost. E. at either the same quality level as competitors, but at a lower cost, or at a higher quality level than competitors, but at no greater cost.
at a higher quality level than competitors, but at no greater cost.
- The process of managing the various activities in the value chain, along with the associated costs, is commonly known as: A. activity-based costing. B. strategic cost management. C. total quality management. D. computer-integrated costing. E. sound management practices (SMP).
strategic cost management.
- A company has a bottleneck operation that slows production. Which of the following tools or approaches could the firm use to determine the most cost-effective ways to eliminate this problem? A. Linear programming. B. Theory of constraints. C. Decision-tree diagrams. D. Payoff matrices. E. Strategic path analysis (SPA).
Theory of constraints.
- Which of the following can be linked to the relatively recent wave of corporate scandals? A. Greedy corporate executives. B. Managers who make over-reaching business deals. C. Lack of oversight by companies’ audit boards and boards of directors. D. Shoddy work by external auditors. E. All of the above.
All of the above.
- Which of the following acts strives to improve corporate governance and the quality of corporate accounting/reporting? A. Robinson-Patman. B. Taft-Hartley. C. Sarbanes-Oxley. D. Bush-Cheney. E. Franks-Ashcroft.
Sarbanes-Oxley
- Which of the following is not an ethical standard of managerial accounting? A. Competence. B. Confidentiality. C. Efficiency. D. Integrity. E. Credibility.
Efficiency.
- Which of the following is not an element of competency? A. To develop appropriate knowledge about a particular subject. B. To perform duties in accordance with relevant laws. C. To perform duties in accordance with relevant technical standards. D. To refrain from engaging in an activity that would discredit the accounting profession. E. To prepare clear reports after an analysis of relevant and reliable information.
To refrain from engaging in an activity that would discredit the accounting profession.
- Assume that a managerial accountant regularly communicates with business associates to avoid conflicts of interest and advises relevant parties of potential conflicts. In so doing, the accountant will have applied the ethical standard of: A. objectivity. B. confidentiality. C. integrity. D. credibility. E. unified behavior.
integrity.
- Which of the following statements about the ethical climate of business is false?
Greedy corporate executives are, in part, to blame for the relatively recent rash of corporate scandals.
Unethical business behavior can have a negative impact on our economy.
The Sarbanes-Oxley Act strives to improve the overall quality of corporate reporting.
The Robinson-Patman Act strives to improve the overall quality of corporate reporting.
Corporate scandals have served as the accounting profession’s wake-up call to pay increased attention to ethical issues in the conduct of business.
The Robinson-Patman Act strives to improve the overall quality of corporate reporting.
