MANAGEMENT ACCOUNTING

Question 1

1. Managerial accounting is very similar to financial accounting in this aspect.
   a. Users of reports
   b. Type of data provided to users
   c. Emphasis between past and future
   d. Reliance on the accounting database

Answer 1

d. Reliance on the accounting database

Question 2

2. Management accounting
   a. Provides information about the company as a whole
   b. Reports information that has occurred in the past that is verifiable and reliable
   c. Provides information that is generally available only on a quarterly or annual basis
   d. Focuses on estimating future revenues, costs, and other measures to forecast activities and their results

Answer 2

d. Focuses on estimating future revenues, costs, and other measures to forecast activities and their results

Question 3

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

Answer 3

b. Stockholders

Question 4

4. Which financial executive is primarily responsible for both management and financial accounting?
   a. Treasurer (CFO)
   b. Controller
   c. Chief Financial Officer
   d. Chief Operating Officer (COO)

Answer 4

b. Controller

Question 5

5. Which of the following is most likely the function of a controller rather than a treasurer?
   a. Investor relations
   b. Banking and custody
   c. Credit and collections
   d. Government reporting

Answer 5

d. Government reporting

Question 6

6. The person (s) directly responsible for attaining of organizational objectives is (are) the:
   a. Controller
   b. Chief financial officer
   c. Line management
   d. Staff management

Answer 6

c. Line management

Question 7

7. As teamwork has become more prominent in the last few years, differences between staff and line management:
   a. Have increased
   b. Have diminished
   c. Have become more important relative to promotions
   d. Have only been evident in employee reward system

Answer 7

b. Have diminished

Question 8

8. Management accounting plays three key roles in a business organization: (1) Scorekeeping, (2) Attention-Directing
   (3) Problem-Solving. Problem-solving is best illustrated in which of the following situations?
   a. A daily sales report {scorekeeping}
   b. Tracking the type of product returned {attention-directing}
   c. Making a recommendation regarding the lease or purchase of a fleet of vehicles
    d. None of the choices illustrates problem-solving or any important role in management accounting

Answer 8

NOTE: SCOREKEEPING entails accumulating data and reporting results describing how the organization is
doing. ATTENTION-DIRECTING involves reporting and interpreting information that helps managers focus on
operational inefficiencies and opportunities. PROBLEM-SOLVING involves identifying available alternatives and often recommends the best course of action

Question 9

9. For control decisions, emphasis is placed on the ___ role(s) of management accounting.
   a. Scorekeeping
   b. Attention-Directing
   c. Problem-Solving
   d. Both Scorekeeping and Attention-Directing

Answer 9

d. Both Scorekeeping and Attention-Directing

Question 10

10. For strategic decisions, emphasis is placed on the ___ role(s) of management accounting.
    a. Scorekeeping
    b. Attention-Directing
    c. Problem-Solving
    d. Both Scorekeeping and Attention-Directing

Answer 10

c. Problem-Solving

Question 11

11. The IMA Standards of Ethical Professional Practice for management accountants comprises of (A) competence, (B) confidentiality, (C) integrity and (D) credibility. “Integrity” requires management accountant to:
    a. Maintain an appropriate level of professional expertise by continually developing knowledge and skills
    and perform duties in accordance with relevant laws, regulations, and technical standards {competence}
    b. Keep information confidential unless disclosure is authorized or legally required {confidentiality}
    c. Mitigate actual conflicts of interest and refrain from engaging in any conduct that would prejudice carrying out duties ethically
    d. Communicate information fairly and objectively and disclose all relevant information expected to influence an intended user’s understanding of the reports, analysis and recommendations {credibility}

Question 12

12. Which of the following actions should a management accountant take first in confronting a potential ethical conflict
    concerning your direct supervisor?
    a. Confront the supervisor directly.
    b. Discuss the situation with your supervisor’s direct supervisor.
    c. Inform the Board of Directors of the existence of a potential conflict.
    d. Review your organization’s procedures concerning resolution of such a conflict.