Question 1

An internal accounting system should:

Accepted Answer

A) provide information to enable costs to be minimized 
B) provide financial accounting data for external reporting purposes 
C) provide management accounting information for decision-making 
D) provide data for tax purposes 
E) all of the above 
A) provide information to enable costs to be minimized 
B) provide financial accounting data for external reporting purposes 
C) provide management accounting information for decision-making 
D) provide data for tax purposes 
E) all of the above E

Question 2

Identify all the correct statements:

Accepted Answer

A) Managers naturally seek to maximize shareholders' wealth 
B) Managers act in their own interests, and so there is no way to align their interests with those of the owners 
C) To motivate managers in non-profit firms, no employee incentives are needed 
D) To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that increases the firm's profits 
E) none of the above 
A) Managers naturally seek to maximize shareholders' wealth 
B) Managers act in their own interests, and so there is no way to align their interests with those of the owners 
C) To motivate managers in non-profit firms, no employee incentives are needed 
D) To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that increases the firm's profits 
E) none of the above D

Question 3

Economic Darwinism:

Accepted Answer

A) explains why firms persist in inefficient behavior 
B) explains why some inefficient accounting practices persist 
C) explains why marmots eat bears 
D) explains why bears eat marmots 
E) none of the above 
A) explains why firms persist in inefficient behavior 
B) explains why some inefficient accounting practices persist 
C) explains why marmots eat bears 
D) explains why bears eat marmots 
E) none of the above B

Question 4

Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each. On this information alone, should Micro accept the offer?

Accepted Answer

A) No, because it will lose $1 per unit 
B) No, because it will lose $2 per unit 
C) No, because it will exceed capacity 
D) Yes, because it makes $1 per unit in the short run 
E) Unable to determine 
A) No, because it will lose $1 per unit 
B) No, because it will lose $2 per unit 
C) No, because it will exceed capacity 
D) Yes, because it makes $1 per unit in the short run 
E) Unable to determine

Question 5

Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each. Assuming the same story, but Coyote's offer is for 1,500 units (all or nothing), should the offer be accepted?

Accepted Answer

A) No, because it will lose $1 per unit 
B) No, because the opportunity costs outweigh the gains 
C) No, (indifferent or worse) because the opportunity costs equal the gains 
D) Yes, because it makes $1 per unit in the short run 
E) Unable to determine 
A) No, because it will lose $1 per unit 
B) No, because the opportunity costs outweigh the gains 
C) No, (indifferent or worse) because the opportunity costs equal the gains 
D) Yes, because it makes $1 per unit in the short run 
E) Unable to determine

Question 6

Performance measures:

Accepted Answer

A) are critical in designing a reward system 
B) are unimportant in designing a reward system 
C) always influence people to achieve them 
D) are always worded vaguely 
E) are not needed to provide incentives because employees always want to do the right thing 
A) are critical in designing a reward system 
B) are unimportant in designing a reward system 
C) always influence people to achieve them 
D) are always worded vaguely 
E) are not needed to provide incentives because employees always want to do the right thing

Question 7

Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each. What other factors should be taken into consideration?

Accepted Answer

A) The impact on the normal selling price of $6 
B) Will an additional shift be needed to complete the order? 
C) Are future orders from Coyote likely? 
D) Does the special price comply with the Robinson-Patman Act? 
E) All of the above 
A) The impact on the normal selling price of $6 
B) Will an additional shift be needed to complete the order? 
C) Are future orders from Coyote likely? 
D) Does the special price comply with the Robinson-Patman Act? 
E) All of the above

Question 8

The controller of a small private college is complaining about the amount of work she must do at the beginning of each month. The president of the university requires the controller to submit a monthly report by the fifth day of the following month. The monthly report contains pages of financial data from operations. The controller was heard saying, "Why does the president need all this information? He probably doesn't read half of the report. He's an English professor and probably doesn't know the difference between a cost and a revenue."
Required:
a. What is the probable role of the monthly report?
b. What is the controller's responsibility with respect to a president who doesn't know much accounting?

Accepted Answer

a. There are two possible roles for the

Question 9

Management accountants:

Accepted Answer

A) are internal consultants 
B) are mainly score-keepers 
C) focus on calculating product costs 
D) are 'corporate cops' 
E) mostly a) and d) 
A) are internal consultants 
B) are mainly score-keepers 
C) focus on calculating product costs 
D) are 'corporate cops' 
E) mostly a) and d)

Question 10

Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each. What is the "cost" per unit in the context of evaluating the offer from Coyote Corp.?

Accepted Answer

A) $2 
B) $3 
C) $4 
D) $5 
E) $6 
A) $2 
B) $3 
C) $4 
D) $5 
E) $6

Question 11

Internal control systems:

Accepted Answer

A) are the responsibility of the external auditor 
B) include anti-fraud measures 
C) are designed to allow financial misrepresentation 
D) require that one person perform all aspects of a task 
E) all of the above 
A) are the responsibility of the external auditor 
B) include anti-fraud measures 
C) are designed to allow financial misrepresentation 
D) require that one person perform all aspects of a task 
E) all of the above

Question 12

The firm's information system:

Accepted Answer

A) is always a single integrated system 
B) includes only financial information 
C) may include other information such as customer satisfaction surveys, in addition to financial information 
D) is less important as a firm grows in size 
E) none of the above 
A) is always a single integrated system 
B) includes only financial information 
C) may include other information such as customer satisfaction surveys, in addition to financial information 
D) is less important as a firm grows in size 
E) none of the above

An internal accounting system should:

Identify all the correct statements:

Economic Darwinism:

Performance measures:

Management accountants:

Internal control systems:

The firm's information system:

The Nature of Costs

Opportunity Cost of Capital and Capital Budgeting

Organizational Architecture

Responsibility Accounting and Transfer Pricing

Budgeting

Cost Allocation: Theory

Cost Allocation: Practices

Absorption Cost System

Criticisms of Absorption Cost Systems: Incentives to Overproduce

Criticisms of Absorption Cost Systems: Inaccurate Product Costs

Standard Costs: Direct Labor and Materials

Overhead and Marketing Variances

Management Accounting in a Changing Environment

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Exam 1: Introduction

An internal accounting system should:

Identify all the correct statements:

Economic Darwinism:

Performance measures:

Management accountants:

Internal control systems:

The firm's information system:

The Nature of Costs

Opportunity Cost of Capital and Capital Budgeting

Organizational Architecture

Responsibility Accounting and Transfer Pricing

Budgeting

Cost Allocation: Theory

Cost Allocation: Practices

Absorption Cost System

Criticisms of Absorption Cost Systems: Incentives to Overproduce

Criticisms of Absorption Cost Systems: Inaccurate Product Costs

Standard Costs: Direct Labor and Materials

Overhead and Marketing Variances

Management Accounting in a Changing Environment

Filters