Deck 1: The Role of Accounting Information in Ethical Management Decision Making

Question 1

A vision statement helps employees understand how to deal with various stakeholder groups.

Answer 1

True

Question 2

Higher-quality decisions result from higher-quality information, reports, and decision-making processes.

Answer 2

True

Question 3

Organizational core competencies are the tactics that managers use to take advantage of the vision.

Answer 3

False

Question 4

Few management decisions can be made with absolute certainty.

Question 5

When learning cost accounting, it is sufficient to learn the mechanics of applying cost accounting methods.

Question 6

Incremental cash flows are the same as unavoidable cash flows.

Question 7

Because we can never completely remove biases and uncertainty from decision-making, higher-quality decision processes are often imprecise.

Question 8

Cost accounting information, such as the valuation of ending inventory, is shown on external financial statements.

Question 9

Uncertainties cause decision makers to ignore weaknesses in a preferred course of action.

Question 10

Uncertainties and biases do not affect external financial reports, because they are based on objective standards.

Question 11

Because accounting information is highly objective and quantitative in nature, it is not subject to uncertainties or management bias.

Question 12

Accounting information is used to monitor operations by comparing actual results to planned results.

Question 13

Most managers follow a standard template and format when writing a vision statement.

Question 14

Uncertainty and bias reduce decision quality.

Question 15

A vision statement is one way to clarify an organization's basic purpose and ideology.

Question 16

Incremental cash flows are relevant for decision-making.

Question 17

Accounting information cannot be used to motivate employee behavior.

Question 18

Open-ended problems are not often seen in business.

Question 19

Cost accounting information is used for both external reporting and internal decision making.

Question 20

Accounting information is the only thing managers need to make financial decisions.

Question 21

Organizational strategies:

A) Are reconsidered on a daily basis
B) Should never be reconsidered once they are determined
C) Are reconsidered quarterly
D) Are reconsidered periodically in response to changes in the organization or environment

Question 22

Ethical behaviour is an individual obligation, but not an organizational obligation.

Question 23

An organizational vision is sometimes broken down into:
I) Mission statement
II) Core values statement
III) Code of conduct

A) I only
B) I and II only
C) I, II, and III
D) II and III only

Question 24

Jane is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Jane sends her clients reminders for those dates, and shops for special gifts at the client's request. She plans to do all of the work herself rather than hiring and managing additional employees. Jane's core competencies are most likely to include:

A) An annual budget
B) The ability to deduct business expenses on her tax return
C) The first year's actual results
D) Her knowledge of potential gifts and the local shops

Question 25

Organizational core competencies can include:

A) A mission statement
B) Patents, copyrights, and special legal protections
C) A code of conduct
D) An operating plan

Question 26

Which of the following is a type of external report produced by an organization?

A) Cash flow plan
B) Analysis of potential acquisition
C) News release
D) Bonus computations

Question 27

Relevant information for decisions can focus both on learning from the past and anticipating the future.

Question 28

Which of the following is least likely to be an external report?

A) Credit report
B) Supplier's inventory report
C) Tax return
D) Analysis of supplier quality

Question 29

The cost of your old automobile is relevant in the decision to purchase a new automobile.

Question 30

Which of the following statements regarding organizational vision is false?

A) Organizational vision means the same as core competencies
B) Organizational vision is one tool for expressing an organization's main purpose
C) Organizational vision should be communicated to all employees
D) Managers sometimes divide the organizational vision into one or more written statements

Question 31

Accounting information:
I) Can be used to guide organizational vision
II) Is a core competency for most companies
III) Can be used to motivate performance

A) I only
B) I and II only
C) I, II, and III
D) I and III only

Question 32

Ethical behaviour is required of every employee within an organization.

Question 33

How are organizational strategies related to core competencies?

A) Competencies are the tactics managers use to take advantage of strategies
B) Competencies and strategies are an integral part of organizational vision
C) Strategies help managers exploit competencies
D) Strategies and competencies are actually two ways of expressing the same idea

Question 34

Which of the following is an element of an operating plan?

A) Developing an organizational mission
B) Preparing financial statements
C) Defining core values
D) Budgeting employee costs

Question 35

Jane is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Jane sends her clients reminders for those dates, and shops for special gifts at the client's request. She plans to do all of the work herself rather than hiring and managing additional employees. Which of the following statements is true for Jane's business regarding measuring and monitoring performance?

A) Jane does not need a system to measure and monitor performance because her company is a sole proprietorship
B) Jane needs audited financial statements every year
C) Jane can track cash flows on a monthly basis
D) Jane only needs to reconcile her accounts every few years

Question 36

Jane is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Jane sends her clients reminders for those dates, and shops for special gifts at the client's request. She plans to do all of the work herself rather than hiring and managing additional employees. "Providing excellent, reliable customer service at reasonable prices" best describes which of the following for Jane's business?

A) Core competency
B) Vision
C) Operating plan
D) Actual operations

Question 37

Jane is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Jane sends her clients reminders for those dates, and shops for special gifts at the client's request. She plans to do all of the work herself rather than hiring and managing additional employees. Jane's actual operations would probably include:

A) Establishing a sales strategy
B) Purchasing advertisements in local media
C) Identifying her core competencies
D) Developing a budget

Question 38

Which of the following influences organizational strategies?

A) Organizational vision
B) Financial statement results
C) Computer software
D) Number of employees

Question 39

Employees will always make ethical decisions if they act in the best interests of shareholders.

Question 40

Cost accounting information is used for:

A) Financial reporting only
B) Management reporting only
C) Both financial and management reporting
D) Neither financial nor management reporting

Question 41

The process of making higher quality business decisions requires each of the following except:

A) Distinguishing between relevant and irrelevant information
B) Recognizing and evaluating assumptions
C) Considering organizational values and core competencies
D) Relying on preconceived notions to make decisions more quickly

Question 42

Which of the following adjectives describes higher quality information?
I) Complete
II) Costly to develop
III) Relevant

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 43

Higher-quality reports are more:
I) Relevant
II) Understandable
III) Available

A) I and II only
B) I and III only
C) II and III only
D) I, II, and III

Question 44

Biases may be:

A) Intentional
B) Unintentional
C) Both intentional and unintentional
D) Beneficial to decision- making

Question 45

Managers can make higher-quality decisions by relying on all of the following except:

A) More complete information
B) Better decision-making processes
C) Irrelevant information
D) Information having less uncertainty

Question 46

Which of the following is the best example of an internal report that might come from an organization's information system?

A) Environmental Protection Agency regulatory report
B) Operating budget
C) Income tax returns
D) Medicare cost report

Question 47

Uncertainties:

A) Are issues about which managers have doubts
B) Do not impact accounting information, which is highly objective and reliable
C) Are preconceived notions developed without careful thought
D) Are rarely a problem in business decision making

Question 48

Animal Treats Company has 500 kg of liver-flavoured dog biscuits that are not selling well. The selling price of the biscuits could be reduced from $3.10 to $2.65 per kg. Or, they could be cheese-coated and sold for $4.25 per kg; the additional processing cost would be $0.40 per kg. Cheese-coated biscuits sell very well. Which alternative probably has less uncertainty concerning volume of sales?

A) Reduce the price of liver-flavored biscuits
B) Proceed with the cheese coating
C) Both alternatives are uncertain
D) Uncertainty does not affect this decision

Question 49

Biases:

A) Inhibit anticipating all future conditions
B) Assist in the identification of relevant information
C) Do not affect the ability to identify irrelevant information
D) Are not a problem in ethical decision making

Question 50

Financial statements are:

A) External reports produced from an organization's information system
B) Never used for internal decision making
C) Only true when they are audited
D) Unimportant reports for most organizations

Question 51

WestJet has several non-stop flights daily between Toronto and Vancouver. Which of the following is an uncertainty associated with this operation?

A) The exact number of flights flown the previous day
B) The average number of passengers on each flight the previous week
C) The average number of empty seats for flights next month
D) The number of ticket agents scheduled for each shift for the next day

Question 52

Which of the following is not true about information in an organization's databases?

A) Information may be collected formally or informally
B) Access to database information is often restricted to specific individuals
C) Intellectual capital is usually captured in database information
D) The benefits of generating information should exceed the costs

Question 53

Higher quality decision making processes are less:

A) Biased
B) Certain
C) Creative
D) Focused

Question 54

Which of the following statement about biases is true?

A) Biases can affect management accounting information, but not financial accounting information
B) Managers cannot work toward eliminating their biases
C) Biases reduce the quality of decisions
D) Biased managers are more likely to explore alternatives before making a decision

Question 55

Uncertainties and biases can affect:
I) Organizational vision
II) Core competencies
III) Operating plans

A) I only
B) II only
C) I and III only
D) I, II, and III

Question 56

Uncertainty may hinder a manager's ability to:
I) Adequately define a problem
II) Identify all potential solution options
III) Predict the outcome of various solution options

A) I and III only
B) II and III only
C) I, II, and III
D) II only

Question 57

Information gathered outside the organization includes:

A) Customer preferences
B) Product design specifications
C) Taxable income
D) Number of employees hired

Question 58

How does the use of sophisticated information systems affect managerial decision-making?

A) Sophisticated information systems always improve managerial decision-making
B) Sophisticated information systems always provide better information
C) Managers may rely more on information reports than on their own biases
D) The cost of sophisticated information systems may exceed their benefit

Question 59

Biases:

A) Are issues about which managers have doubts
B) Do not impact accounting information, which is highly objective and reliable
C) Are preconceived notions developed without careful thought
D) Are rarely a problem in business decision making

Question 60

Ramada Hotels operates hotels throughout Canada. Which of the following is the best example of a potential bias associated with its operations?

A) Managers assume that most travelers are interested in conducting business, rather than vacationing
B) Managers learn that guests rarely stay longer than a week
C) Managers find that last year's profits were below the industry average
D) Managers are concerned because employee turnover increased during the last year

Question 61

Relevant cash flows are:

A) Past cash flows
B) Future cash flows
C) Incremental cash flows
D) Unavoidable cash flows

Question 62

Whether a given type of information is relevant or irrelevant depends on:

A) Its accuracy
B) Its objectivity
C) Its relation to the decision to be made
D) Whether it is cash-basis or accrual-basis

Question 63

Choosing and implementing a solution to a business problem includes:
I) Making trade-offs among alternatives
II) Considering the organization's strategies
III) Motivating performance within the organization

A) I only
B) I and II only
C) II and III only
D) I, II, and III

Question 64

Which of the following can influence ethical behavior in organizations?
I) Employee personal values
II) Systems for measuring, monitoring and motivating
III) Organizational culture

A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question 65

Irrelevant information may be:
I) Useful in decision making
II) Internally generated
III) Accurate

A) I only
B) I and II only
C) II and III only
D) I, II, and III

Question 66

When is the most appropriate time to identify ethical problems in organizations?

A) When they are discovered by legal authorities
B) As they arise
C) After they arise
D) When they are discovered by shareholders

Question 67

Rewards for ethical behavior can include:
I) Integrity
II) Reputation
III) Higher profits

A) I, II, and III
B) I and III only
C) I and II only
D) II only

Question 68

Which of the following statements about open-ended problems is true?

A) Open-ended problems cannot be solved with absolute certainty
B) It is not possible to find the best solution to an open-ended problem
C) Only one viable solution is possible for an open-ended problem
D) The best solution to an open-ended problem ensures the most favorable outcome

Question 69

Which of the following is least likely to be an open-ended problem?

A) How to contribute as a team member
B) Choice of career
C) How to study for a course
D) Identification of required courses for a college degree

Question 70

Which of the following often prevents managers from adequately exploring information before making a decision?

A) The existence of many uncertainties
B) The need to distinguish between relevant and irrelevant information
C) The managers' biases
D) The organization's values

Question 71

Why is it necessary to identify whether a problem is open-ended?

A) Open-ended problems require less decision-making effort than other types of problems
B) Decision maker biases are not important when addressing open-ended problems
C) More than one potential solution must be explored for open-ended problems
D) Few management decisions are open-ended

Question 72

Analyzing the strengths and weaknesses of different alternatives includes all of the following except:

A) Recognizing and evaluating assumptions
B) Drawing a conclusion about which alternative is best overall
C) Gauging the quality of information
D) Considering different viewpoints

Question 73

Conflicts of interest often compromise managers' ability to make ethical decisions. Which of the following situations most likely includes a conflict of interest?

A) Selling goods and services at discounted prices to some clients based on historical volumes
B) Offering sales on credit only to creditworthy clients
C) Paying dividends to shareholders rather than investing in an environmental project
D) Using LIFO to report the cost of ending inventory on the balance sheet

Question 74

Mah is considering transportation modes to a client's office. He can drive his own car, at an incremental cost of $0.55 per km, or take a company car. If he takes his own car, he can be reimbursed $0.45 per km. If Mah makes his decision strictly from his personal economic point of view, what is the relevant net cost associated with driving his own car?

A) $0.10
B) $0.45
C) $0.55
D) Some other amount

Question 75

In a decision to lease or borrow money and build office space, which of the following is relevant?

A) The cost of office space currently occupied by the company
B) The architect's fee for drawing the building
C) The number of employees currently working for the company
D) The personal preferences of the decision maker

Question 76

Management decisions require monitoring over time for all of the following reasons except:

A) The economic environment may change
B) New opportunities may become available
C) To motivate employees to follow plans exactly, even if the plan results in poor performance
D) Unforeseen threats may arise

Question 77

Irrelevant cash flows are:

A) Avoidable
B) Unavoidable
C) Objective
D) Subjective

Question 78

Relevant cash flows are:

A) Avoidable
B) Incremental
C) Both of the above
D) None of the above

Question 79

Mike is creating next year's budget for Centre Corporation. He estimates that next year's sales volume will be 5% higher than this year and that the selling price per unit will remain at $75 per unit. He estimates that cost of goods sold will be $40 per unit, based on a purchase agreement the company has signed with its supplier. The company has done business with the supplier for many years. In creating the budget, which of the following tasks is most likely to be open-ended?

A) Calculating budgeted sales volume
B) Determining that sales volume will grow by 5%
C) Calculating budgeted cost of goods sold
D) Determining that cost of goods sold per unit will be $75 per unit

Question 80

As an accountant, you are responsible for:
I) Your own behavior
II) The behaviour of any organizations you manage
III) The behaviour of outside vendors with whom you interact

A) I only
B) I and II only
C) I and III only
D) I, II, and III