Deck 1: Managerial Accounting, the Business Organization

Question 1

Which of the following is NOT a government regulation that influences accounting systems?

A)Sarbanes-Oxley Act
B)Foreign Corrupt Practices Act
C)tax rules promulgated by the Internal Revenue Service
D)International Financial Reporting Standards

Answer 1

D

Question 2

A(n)________ is a review to determine whether the policies and procedures specified by top management have been implemented.

A)management audit
B)internal audit
C)internal control
D)internal accounting control

Answer 2

A

Question 3

Financial accounting reports are usually prepared for a period of one year or less.

Answer 3

True

Question 4

________ is the field that produces information for managers within an organization.

A)Financial accounting
B)Management accounting
C)Financial auditing
D)External auditing

Question 5

Problem solving information would NOT be used in this situation.

A)decision to make or buy parts for a manufactured product
B)decision to replace equipment
C)decision to add or drop a division
D)evaluating the operating performance of a segment in the current year

Question 6

The Foreign Corrupt Practices Act requires ________.

A)companies to accept bribes from officials in foreign countries
B)all publicly held companies to follow the act only if they conduct business outside the United States
C)companies to maintain their accounting records in reasonable detail and accuracy
D)companies to prepare a separate report on their system of internal control

Question 7

The primary users of management accounting information are ________.

A)bankers
B)governmental regulatory bodies
C)managers in organizations
D)managerial accountants

Question 8

Behavioral considerations are of primary importance in financial accounting.

Question 9

Generally Accepted Accounting Principles are most closely connected to ________.

A)management accounting
B)financial accounting
C)internal auditing
D)management accounting

Question 10

Investigating the reasons for the variances on a department's performance report is an example of ________.

A)scorekeeping
B)attention directing
C)problem solving
D)auditing

Question 11

Which of the following activities would NOT be called scorekeeping?

A)estimating the cost of moving the corporate headquarters to another city
B)preparing a schedule of depreciation expense for trucks for the current year
C)preparing a schedule of sales for the current year
D)preparing a schedule of plant assets at the end of the current year

Question 12

Scorekeeping allows managers to evaluate organizational performance.

Question 13

When comparing management accounting and financial accounting,which of the following statements is FALSE?

A)Management accounting has a future orientation whereas financial accounting has a past orientation.
B)Management accounting prepares detailed reports whereas financial accounting prepares summary reports.
C)Management accountants are constrained by the principles of reporting promulgated by the Institute of Management Accountants whereas financial accountants are constrained by Generally Accepted Accounting Principles.
D)Behavioral considerations are of primary importance in management accounting,but not in financial accounting.

Question 14

What statement about management accounting is FALSE?

A)Management accounting is the process of identifying,measuring,accumulating,analyzing,preparing,interpreting and communicating information.
B)Management accounting helps managers fulfill organizational objectives.
C)Management accounting is used by managerial accountants to make strategic and operational decisions.
D)Management accounting produces information for managers in an organization.

Question 15

________ information involves routine reports that compare actual results to predicted results.

A)Budgets
B)Attention directing
C)Scorekeeping
D)Problem solving

Question 16

Generally Accepted Accounting Principles play an important role in management accounting.

Question 17

What type of information is used in making nonroutine decisions,such as the decision to replace a traditional assembly line with fully automated robots?

A)scorekeeping information
B)attention directing information
C)problem solving information
D)auditing information

Question 18

________ is the field of accounting that develops information for external parties such as stockholders,suppliers,banks and governmental regulatory bodies.

A)Auditing
B)Internal auditing
C)Management accounting
D)Financial accounting

Question 19

________ is the classification,accumulation,and reporting of data that help users understand and evaluate organizational performance.

A)Scorekeeping
B)Attention directing
C)Problem solving
D)Cost accounting

Question 20

________ information helps managers focus on operating problems,imperfections,inefficiencies and opportunities.

A)Scorekeeping
B)Attention directing
C)Problem solving
D)Performance

Question 21

Explain the cost-benefit balance in designing an accounting system.

Question 22

Management-by-exception means that managers should ________.

A)concentrate on areas that deviate from the plan
B)in the absence of other evidence,presume that areas that conform with plans are running smoothly
C)A and B
D)none of the above

Question 23

A manager using information to decide whether to add or drop a product is an example of problem solving.

Question 24

The Hola Company held a Christmas party.The company expected attendance of 100 people and prepared the following budget: One hundred people attended the party.The following costs were incurred:
What is the variance for total costs?

A)$115 Unfavorable
B)$115 Favorable
C)$25 Favorable
D)$140 Unfavorable

Question 25

The cost-benefit balance is the primary consideration in choosing among accounting systems and methods.

Question 26

List three types of accounting information that managers need to achieve their goals and objectives.

Question 27

Performance reports ________.

A)are quantitative expressions of plans for action
B)provide feedback by comparing actual results with planned results
C)ignore areas that are presumed to be running smoothly
D)provide information to enable managers to select a value chain function to emphasize

Question 28

Most scorecard and attention-directing information is produced on a nonroutine basis.

Question 29

Variances ________.

A)are quantitative expressions of plans of action
B)ignore areas that are problem areas
C)are deviations from a plan
D)ignore areas that are presumed to be running smoothly

Question 30

The same information may serve the attention-directing function and the problem-solving function.

Question 31

________ is (are)the accounting system's effect on the behavior and the decisions of managers.

A)Simplicity
B)Behavioral implications
C)The cost-benefit balance
D)The code of ethics

Question 32

A budget ________.

A)is a quantitative expression of a plan of action
B)provides feedback by comparing actual results with planned results
C)includes deviations from planned results
D)ignores areas that are presumed to be running smoothly

Question 33

Additional costly information should be acquired when the expected benefit of an improved decision exceeds the cost of the information.

Question 34

One advantage of the management-by-exception approach is that it ________.

A)frees managers from needless concern over operations that adhere to plans
B)allows managers to ignore aspects of the business outside their area of expertise
C)allows managers to ignore day-to-day operations
D)allows managers to ignore problem situations

Question 35

Feedback is usually not critical to the cycle of planning and control.

Question 36

Reports prepared by managerial accountants have a past orientation.

Question 37

The behavioral implications of an accounting system refers to the system's effects on the firm's customers.

Question 38

________ is (are)the primary consideration in choosing among accounting systems and methods.

A)Simplicity
B)Behavioral implications
C)The cost-benefit balance
D)Simplicity and behavioral implications

Question 39

List and explain the three types of accounting information that managers need to achieve their goals and objectives.

Question 40

Which of the following items should be considered by managers when designing accounting systems?

A)cost-benefit balances
B)behavioral implications
C)cost-benefit balances and behavioral implications
D)none of the above

Question 41

During the product development stage of the product life cycle,companies typically experience ________.

A)revenues and no costs
B)costs and no revenues
C)both costs and revenues
D)neither costs nor revenues

Question 42

Product life cycles may range from a few months to many years.

Question 43

Product life cycles ________.

A)do not pertain to services offered to customers
B)are the same length for all products
C)are not important when predicting revenues from a product
D)must be considered to effectively plan and control production of goods or services

Question 44

Which of the following statements is FALSE?

A)Management accounting allows accountants to plan and control operations.
B)Management accountants play a role in supporting all the functions of the value chain.
C)Management accounting allows an accountant to learn about interrelationships between different functional areas.
D)Management accounting helps an accountant understand how information can improve decisions in different functional areas.

Question 45

A fraternity held a party.The following budget was prepared for 25 expected attendees: Twenty-five people attended the party.The following costs were incurred:
Using the management-by-exception rule,which of the following costs deserves further examination?

A)room rental
B)food
C)entertainment
D)decorations

Question 46

Which stage of the product life cycle has a stable sales level?

A)product development stage
B)introduction to market stage
C)mature market stage
D)phase-out of product stage

Question 47

A budget is a qualitative expression of a plan of action.

Question 48

The Flintstone Company held a party.The company expected attendance of 100 people and prepared the following budget: One hundred people attended the party.The costs incurred were:
Which of the following costs deserve further examination assuming Flintstone Company uses the management-by-exception rule?

A)hotel room rental
B)food
C)entertainment
D)decorations

Question 49

The Hola Company held a Christmas party.The company expected attendance of 100 people and prepared the following budget: One hundred people attended the party.The costs incurred were:
What is the primary reason for the variance in total costs?

A)Hotel room rent cost more than expected.
B)Food cost more than expected.
C)Entertainment cost more than expected.
D)Decorations cost more than expected.

Question 50

Key Bank held a party.Key Bank expected attendance of 100 people and prepared the following budget: One hundred people attended the party.The following costs were incurred:
What is the variance for the cost of food?

A)$215 Unfavorable
B)$240 Favorable
C)$215 Favorable
D)$240 Unfavorable

Question 51

A sorority held a party.The sorority prepared the following budget for 25 expected attendees: Twenty-five people attended the party and the following costs were incurred:
What is the variance for food cost?

A)$30 Unfavorable
B)$30 Favorable
C)$10 Favorable
D)$70 Unfavorable

Question 52

Management by exception is the practice of ignoring areas that deviate from the plan.

Question 53

The various stages through which a product passes are called the ________.

A)value chain
B)product life cycle
C)performance plan
D)product performance plan

Question 54

A sorority held a party.The sorority prepared the following budget for 25 expected attendees: Twenty-five people attended the party.The costs incurred were:
What is the variance for the room rental cost?

A)$30 Unfavorable
B)$35 Favorable
C)$30 Favorable
D)$70 Unfavorable

Question 55

Which of the following products have a product life cycle of a few months?

A)fashion clothing
B)automobiles
C)airplanes
D)refrigerators

Question 56

The product life cycle for a refrigerator is usually a few months.

Question 57

A fraternity held a party.The fraternity prepared the following budget for 25 expected attendees: Twenty-five people attended the party.The following costs were incurred:
What is the primary reason for the unfavorable variance for total costs?

A)room rental
B)food
C)entertainment
D)decorations

Question 58

Variances are deviations from planned results.

Question 59

A fraternity held a party.The fraternity prepared the following budget for 25 expected attendees: Twenty-five people attended the party.The following costs were incurred:
What is the variance for total costs?

A)$10 Unfavorable
B)$35 Unfavorable
C)$35 Favorable
D)$70 Unfavorable

Question 60

When does a company earn the majority of revenue for a product that goes through the product life cycle?

A)phase-out of product and introduction to market stages
B)introduction to market and mature market stages
C)product development and mature market stages
D)mature market and phase-out of product stages

Question 61

The only function in the value chain where accountants are of any importance is the production function.

Question 62

A telephone hotline is established for customers to call with questions about a new electronic device.This is an example of the ________ function in the ________.

A)marketing; value chain
B)distribution; value chain
C)customer service; value chain
D)marketing; product life cycle

Question 63

Distribution is the function of the value chain that involves ________.

A)the mechanism by which a company delivers products or services to the customer
B)the manner by which individuals or groups learn about the value and features of products or services
C)the support activities provided to the customer
D)none of the above

Question 64

According to the Financial Executives Institute,a function of the controller is ________.

A)investments
B)short-term financing
C)provision of capital
D)reporting and interpreting

Question 65

Process engineers at Starbucks investigate methods to reduce the time to roast coffee beans and to better preserve their flavor.This is an example of the ________ or the ________ functions of the value chain.

A)research and development; production
B)design of products,services or processes; production
C)production; engineering
D)research and development; design of products,services or processes

Question 66

The value chain refers to the various stages through which a product passes.

Question 67

An example of a staff department at a clothing manufacturer is the ________.

A)pressing department
B)cutting department
C)sewing department
D)maintenance department

Question 68

Research and development is the function of a value chain that involves ________.

A)the detailed design and engineering of products,services or processes
B)the generation of ideas related to new products,services or processes
C)the generation of ideas related to new products or services
D)the detailed design and engineering of new processes

Question 69

The ________ is mainly concerned with the company's operating matters whereas the ________ is mainly concerned with the company's financial matters.

A)treasurer; controller
B)controller; treasurer
C)managerial accountant; financial accountant
D)chief executive officer; chief financial officer

Question 70

Marketing is the function of the value chain that involves ________.

A)the mechanism by which a company delivers products or services to the customer
B)the manner by which individuals or groups learn about the value and features of products or services
C)selling activities and delivery activities
D)selling activities and customer service

Question 71

Accountants support only some of the value-chain functions.

Question 72

Accountants do NOT support the ________ function of the value chain.

A)research and development
B)design of products,services or processes
C)customer service
D)none of the above

Question 73

The management accountant prepares the following performance report for a company's first year of operations:
Required:

A)Compute variances for each line item on the income statement.Also indicate if the variances are favorable or unfavorable.
B)Using the management-by-exception approach,which variances should be investigated further?

Question 74

Line managers are directly involved with making and selling the organization's products or services.

Question 75

The detailed design and engineering of products,services or processes is called the ________ function in the value chain.

A)research and development
B)design of products,services or processes
C)engineering of products,services or processes
D)production

Question 76

At a clothing manufacturer,which department head has line authority?

A)the head of the receiving department
B)the head of the shipping department
C)the head of the clothing assembly department
D)the head of the factory maintenance department

Question 77

According to the Financial Executives Institute,a function of the treasurer is ________.

A)reporting and interpreting
B)short-term financing
C)protection of assets
D)government reporting

Question 78

The function of the value chain that provides support activities to the customer is called ________.

A)marketing
B)distribution
C)customer service
D)consumer relations

Question 79

Advertising is an example of the ________ function of the value chain.

A)distribution
B)selling
C)marketing
D)promotion

Question 80

Staff managers give advice to line managers and have authority over line managers.