Deck 1: Managerial Accounting

Question 1

Which one of the following describes internal reports?

A)They are often audited by CAs.
B)They must be prepared according to GAAP.
C)They are aggregated.
D)They are detailed.

Answer 1

D

Question 2

Managerial accounting information

A)pertains to the entity as a whole and is highly aggregated.
B)must be prepared according to generally accepted accounting principles.
C)pertains to subunits of the entity and may be very detailed.
D)is prepared only once a year.

Answer 2

C

Question 3

How often are internal managerial reports communicated?

A)as frequently as needed
B)annually
C)during every audit by the company's ca
D)monthly

Answer 3

A

Question 4

Managerial accounting

A)information generally pertains to an entity as a whole and is very detailed.
B)applies only to manufacturing companies.
C)focuses primarily on reports for both internal and external users.
D)provides tools that help management make decisions and evaluate the effectiveness of those decisions.

Question 5

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

A)external reports
B)special purpose
C)user-specific
D)general-purpose

Question 6

Which of the following statements about internal reports is true?

A)Most internal reports are summarized rather than detailed.
B)Internal reports focus on general-purpose needs of users.
C)The content of internal reports extends beyond the double-entry accounting system.
D)Internal reports are often very general.

Question 7

Managerial accounting

A)is concerned with costing products.
B)is governed by generally accepted accounting principles.
C)pertains to the entity as a whole and is highly aggregated.
D)places emphasis on special-purpose information.

Question 8

Managerial accounting is also called

A)inside reporting.
B)cost accounting.
C)management accounting.
D)strategic management.

Question 9

Which of the following uses managerial accounting?

A)manufacturing and service entities, but not merchandising
B)profit-oriented businesses only
C)service, manufacturing, and merchandising entities
D)only manufacturing entities

Question 10

How often should management receive or prepare reports on its internal process activities?

A)on a fixed time basis
B)as often as is necessary
C)never more than monthly
D)weekly

Question 11

Managerial accounting information is generally prepared for

A)stockholders.
B)managers.
C)regulatory agencies.
D)investors.

Question 12

A company must inform readers of its annual report of

A)all changes in financial accounting policies.
B)results of any overseas activities.
C)all changes in internal accounting information.
D)changes to management's bonus system.

Question 13

Which one of the following tasks would not be performed by a management accountant?

A)being concerned with the impact of cost and volume on profits
B)strategic cost management
C)assisting in budget planning
D)preparing reports primarily for external users

Question 14

Which of the following is not part of managerial accounting?

A)determining whether planned goals are being met
B)reporting financial information to the shareholders
C)calculating product costs
D)controlling costs

Question 15

Which term describes managerial accounting reports?

A)GAAP reports
B)special purpose
C)general-purpose
D)regulatory reports

Question 16

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

Question 17

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.

Question 18

Reports scrutinized by managerial accountants

A)do not include those focused on business subunits.
B)do not include non-financial data relevant to business decision making.
C)are highly aggregated.
D)are special purpose for specific decisions.

Question 19

Which of the following is not an internal user?

A)corporate officers
B)staff employees
C)stockholders
D)department manager

Question 20

Which of the following reports would management find useful in decision making?

A)monthly reports on activities to the Board of Directors
B)quarterly reporting to the Toronto Stock Exchange
C)specific purpose statements on services delivered
D)audited financial information in the annual report to shareholders

Question 21

What broad functions do the management of an organization perform?

A)directing, manufacturing, and controlling
B)planning, directing, and controlling
C)planning, directing, and selling
D)planning, manufacturing and controlling

Question 22

Which one of the following does the planning function involve?

A)analyzing financial statements
B)setting goals and objectives for an entity
C)hiring the right people for a particular job
D)coordinating the accounting information system

Question 23

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

Question 24

Which of the following is true?

A)Generally Accepted Accounting Principles (GAAP)form the backbone of managerial accounting conventions, and local and/or regional standards and professional judgment allow for variations among practitioners.
B)Each province in Canada has its own code of ethics and rules and guidelines of professional conduct.
C)The Sarbanes-Oxley Act in the U.S.and similar legislation in Canada aims to guide ethical standards used in management accounting practices.
D)Chartered Professional Accountants of Canada plays an important role in promoting high standards of ethics in the accounting profession, excluding managerial accounting.

Question 25

Which function is achieved when a manager is determining whether planned goals are being met?

A)controlling
B)motivating
C)planning
D)directing

Question 26

The IMA's Statement of Ethical Professional Practice provides codes of conduct with regard to:

A)competence, confidentiality, assurance and credibility.
B)confidentiality, integrity, credibility and responsibility.
C)comprehension, competence, integriy and credibility.
D)competence, confidentiaility, integrity and credibility.

Question 27

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.

Question 28

Corporate social responsibility only considers:

A)profitability.
B)sustainable business practices with regards to the environment.
C)the triple bottom line including performance with regard to people, plant and profit.
D)sustainable business practices with regards to employees.

Question 29

What activities and responsibilities are not associated with management's functions?

A)planning
B)accountability
C)controlling
D)directing

Question 30

In establishing a good internal reporting system, a company should

A)ensure that these reports agree to generally accepted accounting principles.
B)have the Board of Directors agree to the information provided.
C)establish clearly understood standards of performance.
D)All of the above are valid reasons.

Question 31

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.

Question 32

Which management function is a manager performing when objectives are being established?

A)regulating
B)planning
C)motivating
D)directing

Question 33

Which one of the following is true concerning the managerial function of controlling?

A)It includes performance evaluation by management.
B)It is concerned mainly with operating a manufacturing segment.
C)It is performed only by the controller of a company.
D)It includes hiring and training employees.

Question 34

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.

Question 35

Which of the following is true?

A)Dissatisfied employees cite a decline in ethical behaviour is a result of a change in corporate culture.
B)Unethical corporate behaviour occurs only in the United States because of its capitalistic environment.
C)Unethical behaviour rarely causes a decline in investor confidence.
D)Unethical actions are reasonable in an environment wherein unreasonable budgets and targets have been set.

Question 36

The production manager at ABC Inc.is responsible for formulating the budget for his department.He will be evaluated on his ability to control costs.After considerable thought, he arrives at his best estimate of costs, and then adds a further 10% to the projections.Chances are he has inflated the cost projections because

A)that is the way it has always been done.
B)conservative accounting practise requires that he not under report expenses.
C)by overestimating expenses, it will make it easier for him to come in under budget and receive a favourable evaluation.
D)none of the above.

Question 37

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

Question 38

How could management information assist in motivating its employees?

A)keeping track of quality improvements
B)showing the company's percent of market share
C)showing statistics on plant safety
D)All areas would benefit from providing internal management information.

Question 39

Which of the following represents two management functions?

A)regulating and directing
B)controlling and directing
C)controlling and auditing
D)auditing and planning

Question 40

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.

Question 41

Lean manufacturing

A)is being used less often by manufacturing firms.
B)is in contrast to traditional mass-production operations.
C)is apt to be used by firms that use large amounts of direct labour to produce their products.
D)sets out to minimize rather than eliminate waste.

Question 42

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.

Question 43

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

Question 44

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 CPA Canada handbook and GAAP.
D)if they are considered pertinent to its business activities.

Question 45

What is "balanced" in the balanced scorecard approach?

A)the number of products produced
B)the emphasis on financial and non-financial performance measurements
C)the amount of costs allocated to products
D)the number of defects found on each product

Question 46

For a manufacturing company, the activities in the value chain would not include

A)research and development.
B)purchase of raw materials.
C)customer relations.
D)performance evaluation.

Question 47

Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion?

A)theory of constraints
B)just-in-time inventory
C)activity-based costing
D)total-quality management

Question 48

In Canada, which of the following professional accounting organizations play an important role in promoting high standards of ethics in the accounting profession?

A)Chartered Professional Accountants of Canada (CPA Canada)
B)The Financial Planning Standards Council (FPSC)
C)The Canadian Institute of Financial Planning (CIFP)
D)all of the above

Question 49

One of the advantages of a just-in-time inventory system is that it reduces inventory quantities.Why is this considered to be a benefit?

A)Carrying inventory incurs storage costs, hence reducing inventory quantities reduces costs.
B)Carrying large inventory raises the risk that customers will want an item that you do not have.
C)Carrying large inventory reduces the risk that customers will want an item that you do not have.
D)none of the above

Question 50

A company acting ethically must adapt its internal reports to any changes required

A)instantly.
B)as it is appropriate for its business cycle.
C)as stipulated by the CPA Canada handbook and GAAP.
D)if they are considered pertinent to its business activities.

Question 51

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

Question 52

The value chain

A)is affected by technology through business-to-business on the Internet.
B)refers to all the activities associated with providing a product with the exception of research and development.
C)has not been enhanced by computerization and automation.
D)refers to all the activities associated with providing a service with the exception of sales and marketing.

Question 53

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.

Question 54

For what purpose is the theory of constraints used?

A)to reduce product defects
B)to balance performance measurement
C)to identify and manage constraints that bottleneck operations
D)to reduce inventory levels

Question 55

A recent survey of fraud by international accounting firm KPMG reported

A)reported a 13% decrease in instances of corporate fraud compared with five years earlier.
B)that employee fraud (such things as expense account abuse, payroll fraud, and theft of assets)represents 60% of all instances of fraud.
C)financial reporting fraud (the intentional misstatement of financial reports)was the least costly to companies.
D)business scandals with large investment losses and few employee layoffs.

Question 56

In Canada the three different professional accounting designations that merged into CPA Canada are

A)CPA, CA, CMA.
B)CMA, CGA, CPA.
C)CA, CMA, CGA.
D)MA, CPA, CA.

Question 57

Which of the following statements is true?

A)In recent decades, the Canadian economy in general has shifted toward an emphasis on providing services rather than goods.This trend has reduced the importance of managerial accounting.
B)In recent decades, the Canadian economy in general has shifted toward an emphasis on providing goods rather than services.This trend has reduced the importance of managerial accounting.
C)In recent decades, the Canadian economy in general has shifted toward an emphasis on providing services rather than goods.This trend has not reduced the importance of managerial accounting.
D)In recent decades, the Canadian economy in general has shifted toward an emphasis on providing goods rather than services.This trend has not reduced the importance of managerial accounting.

Question 58

Which of the following is a reason for the reorganization of the three accounting bodies in Canada into one, CPA Canada?

A)There was conflict within the standard setting process between the three accounting bodies.
B)Extensive competition between the three organizations was causing friction.
C)The reorganization was mandated by the Canadian government.
D)A larger unified profession would mean a more prominent and cohesive Canadian presence internationally.

Question 59

Which of the following is an accounting question a service company may face?

A)whether to purchase new equipment
B)how much to charge for various services
C)how efficient and productive individual staff members are
D)all of the above

Question 60

Choose the correct statement.

A)CGA stands for Certified Generic Accountant.
B)CMA stands for Certified Managing Accountant.
C)CA stands for Chartered Accountant.
D)CPA stands for Certified Professional Accountant.

Question 61

Which one of the following characteristics would likely be associated with a just-in-time inventory method?

A)ending inventory of work in process that would allow several production runs
B)a backlog of inventory orders not yet shipped
C)minimal finished goods inventory on hand
D)an understanding with customers that they may come to the showroom and select from inventory on hand

Question 62

How have many companies significantly lowered inventory levels and costs?

A)They use activity-based costing.
B)They utilize an enterprise resource planning system.
C)They have a just-in-time method.
D)They focus on a total-quality management system.

Question 63

What is ERP?

A)efficient resource procurement
B)earnings reporting policies
C)enterprise resource planning
D)effective resource procurement

Question 64

Many companies now manufacture products that are untouched by human hands.What do they use to achieve this?

A)activity-based costing
B)computer-integrated manufacturing
C)enterprise resource planning systems
D)total-quality management systems

Question 65

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

Question 66

In order to obtain more accurate product costs, how do many companies allocate overhead?

A)They use activity-based costing.
B)They use enterprise resource planning systems.
C)They use just-in-time methods.
D)They use total-quality management systems.

Question 67

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.

Question 68

For what reason is a product cost primarily tracked?

A)to keep up with current cost trends to bring products to market
B)to effectively allocate the cost of products to measure profitability
C)to determine what amounts are necessary for allocating overhead
D)to keep management's bonuses increasing every year

Question 69

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.

Question 70

Some companies implement systems to reduce defects in finished products with the goal of achieving zero defects.What are these systems called?

A)activity-based costing systems
B)enterprise resource planning systems
C)value chain systems
D)total-quality management systems

Question 71

The five steps in the lean thinking model, in order are:

A)1.Define value, 2.Identify the pull factors, 3.Identify the value stream, 4.Make the value stream flow, 5.Revise until perfection is achieved.
B)1.Define value, 2.Identify the value stream, 3.Make the value stream flow, 4.Implement a pull system, 5.Strive for perfection.
C)1.Identify unproductive activities that need to be reduced, 2.Identify push factors causing those unproductive activities, 3.Develop operations so that the work flows smoothly, 4.Strive for perfection, 5.Evaluate the value that has been added.
D)1.Identify push factors, 2.Develop strategies to turn those factors into pull factors, 3.Assess the value added by steps one and two, 4.Strive for perfection, 5.Repeat the process on a regular basis.

Question 72

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.

Question 73

Which one of the following is an example of activity-based costing?

A)monitoring the salaries of managers that do untimely quality control checks
B)keeping close track of shrinkage associated with thefts off the showroom floor
C)insuring that management is closely working with the local union on keeping labour costs in line
D)allocating the set up cost associated with getting a machine ready for a production run

Question 74

Step one in the lean thinking model requires

A)target costing, that is determining the acceptable cost the customer is willing to pay.
B)an assessment of the potential value that can be added to the firm by adopting the lean manufacturing concept.
C)identifying processes that do not add value to the manufacturing process.
D)identifying push factors that can be converted to pull factors.

Question 75

What is value chain management best defined as?

A)a large chain that keeps the machines from falling on the production floor
B)management decisions that affect how quickly the production run occurs
C)the incremental value of costs associated with hiring a new production floor leader
D)all activities associated with providing a product or service

Question 76

A balanced scorecard is

A)a performance-measurement approach that uses both financial and non-financial measures to evaluate a company's operations in an integrated way.
B)a tool used to measure the benefits and costs of implementing a new strategy.
C)used only by small organizations that cannot afford more expensive methods of evaluating their operations.
D)focuses on non-financial measures in order to balance the many other financial reports companies use to evaluate their operations.

Question 77

The theory of constraints is

A)a theory that the benefit of making a change in a production process should be weighed against the cost of making that change.
B)that even the best suggestions for improvement are likely to be rejected due to opposition from those who have to implement the changes.
C)a specific approach used to identify and manage constraints in order to achieve the company's goals.
D)not applicable to service operations.

Question 78

Bottlenecks are

A)the point at which the finished product leaves the factory.
B)constraints that limit the company's potential profitability.
C)the point at which a company's plan is put into action.
D)are factors that consume a great deal of managers' attention, but have little impact on the company as a whole.