MAS basic considerations

Question 1

The fields of cost accounting and financial management are among the MAS areas that are normally related to the accounting and finance functions. Financial management cases may involve the following except
A. Establishment of capital budgeting procedures

B. Study of the cost of capital and cost of debt

C. Establishment of operating and cash budgets

D. Variance analysis

Answer 1

D. Variance analysis

Question 2

The following characterize management advisory services except
A. Involve decision for the future
B. Broader in scope and varied in nature
C. Utilize more junior staff than senior member of the firm
D. Relate to specific problems expert help is required.

Answer 2

C. Utilize more junior staff than senior member of the firm

Question 3

Which of the following types of management services does not directly relate to accounting and finance functions?
A. Cost analysis of major investment decisions
B. Long-range planning
C. Design, installation or review of budgetary system
D. Valuation of capital stock of companies for purposes of mergers or sales

Answer 3

B. Long-range planning

Question 4

Which of the following statements is True?
A. Adequate training and experience in both the analytical approach and process in the particular undertaking are requisites for the CPA to be involved in a management service engagement.

B. A CPA with MBA and Ph.D. degrees is automatically qualified to render management services.

C. Competence as a standard n the rendition of management services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate degree, an MBA and other post graduate studies

D. A certified public accountant by virtue of having the necessary academic preparation and by hurdling the licensure examinations required to have a CPA license can readily render management services to the public.

Answer 4

A. Adequate training and experience in both the analytical approach and process in the particular undertaking are requisites for the CPA to be involved in a management service engagement.

Question 5

Which of the following is not a qualification of a CPA in a MAS practice?
A. Professional and technical competence.
B. Analytical experience in problem solving.
C. Auditor of the client.
D. Professional independence, objectivity and integrity

Answer 5

C. Auditor of the client.

Question 6

CPAs are in a more advantageous position than members of other professions to render MAS because
A. CPAs are highly educated
B. Only CPAs may render MAS
C. The CPA is already familiar with the client and his business, ad enjoys his client’s confidence.
D. A CPA is a person with recognized standing

Answer 6

C. The CPA is already familiar with the client and his business, ad enjoys his client’s confidence.

Question 7

The most important factor in selecting an engagement team is to assign consultants:
A.
With prior experience in the client’s industry

B.
With a combination of skills and experience in various business functional areas as well as in different industries.

C.
Who are likely to employ different approaches to problem solving such as highly imaginative thinking, or unusual skill in the interpretation and use of financial and statistical data.

D.
With the appropriate skills and experience and types of thinking to deal with the client’s problems.

Answer 7

D. With the appropriate skills and experience and types of thinking to deal with the client’s problems.

Question 8

Due professional care in the performance of a management advisory service engagement implies the following except
A.
Diligence and appropriate attention in carrying out the assignment

B.
Systematic critical review of the work done and judgment exercised

C.
Infallibility

D.
All of the above.

Answer 8

C.
Infallibility

Question 9

Which of the following is not an area related to the performance of management services by independent accounting firms?
A.
Performing management functions and making decisions

B.
Introducing new ideas, concepts and methods to management

C.
Improving existing policies, methods and procedures

D.
Performing special studies, preparing recommendations, and formulating plans and programs.

Answer 9

A. Performing management functions and making decisions

Question 10

How should a management consultant undertake to secure a consulting engagement when a prospective client has inquired about the services he offers?
A.
The consultant should present the value of his services as forcefully as he can because the potential client will benefit from the use of these services

B.
The consultant should call to the prospective client, listen to an explanation of the problem, and then agree to do as the prospective client wishes provided the work lies within the field of the consultant’s competence.

C.
The consultant should diagnose the existing problem by personal investigation, help the prospective client define it clearly, consider various methods of solutions, recommend the approach which will best meet the requirement of the situation and make sure that the prospective client understands what the consultant purposes to do, how long it will take, how much it will cost and what probable benefits will result.

D.
The consultant should recommend the technique or procedure which will solve the prospective client’s problem and should refer him to other clients who have used the same technique or procedure successfully in the past.

Answer 10

C.
The consultant should diagnose the existing problem by personal investigation, help the prospective client define it clearly, consider various methods of solutions, recommend the approach which will best meet the requirement of the situation and make sure that the prospective client understands what the consultant purposes to do, how long it will take, how much it will cost and what probable benefits will resul