Deck 13: Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

Question 1

​The forward rate is the exchange rate of one currency for another for immediate delivery.

Answer 1

False

Question 2

Over 90% of large organizations with sales revenue of more than $1 billion engage in some type of enterprise risk management (ERM).

Answer 2

True

Question 3

Prevention costs are incurred to determine whether products and services are conforming to their requirements.​

Answer 3

False

Question 4

​In most countries and business environments, sustainability reporting must adhere to generally accepted accounting principles.

Question 5

​The lean control system replaces the traditional standard costing approach with a Box Scorecard that compares operational, capacity, and financial metrics with prior week performances and with a future desired state.

Question 6

​The decision to form a strategic alliance with a new business partner to respond to the risk of low product quality represents an example of risk avoidance.

Question 7

_________ are incurred to prevent poor quality in the products or services being produced.​

Question 8

​_________ refers to the voluntary public disclosure of qualitative and/or quantitative information about an organization's performance on one or more financial and/or nonfinancial dimensions.

Question 9

Outsourcing is a payment made by a company for a business function formerly done in house.

Question 10

_________ is measured as the benefit of risk response minus the cost of risk response.​

Question 11

​_________ can be defined as the difference between the inherent risk and the residual risk produced by the particular risk response.

Question 12

The Association of Certified Fraud Examiners (ACFE) is the largest provider of antifraud training and education.​

Question 13

Lean manufacturing reduces wait and move times dramatically and allows the production of small batches of differing products.​

Question 14

​Of all the costs of quality, external failure costs can be the most devastating.

Question 15

​Business sustainability is valuable because it improves decision making by helping managers understand how their various decisions involving stakeholder issues relate to important performance measures.

Question 16

​An inherent risk is the risk that remains after any risk management action has been taken.

Question 17

A companion to a demand-push system is JIT purchasing.​

Question 18

_________ is the external verification that an independent party provides concerning the content of a corporate sustainability report and/or the process used in preparing a corporate sustainability report.​

Question 19

​The three components of the fraud triangle are financial need, opportunity, and ability to rationalize.

Question 20

The term business sustainability is synonymous with the term environmental sustainability.​

Question 21

​After determining risk appetite, enterprise risk management process immediately involves:

A) ​assessing top risks at the inherent level.
B) ​managing risks such that the remaining residual risks align with the organization's risk appetite.
C) ​revaluating the accuracy of the management's risk assessments.
D) ​identifying the most important risks.

Question 22

​The U.S.government has set up _________, which are areas near a customs port of entry that are physically on U.S.soil but are considered to be outside U.S.commerce.

Question 23

​A company has decided to sell off a business unit as the management believes it cannot manage the associated risk(s) in a cost-beneficial manner.Which of the following risk response alternatives is represented by this example?

A) ​Accept
B) ​Avoid
C) ​Transfer
D) ​Retain

Question 24

​To avoid an inherent risk means that the company:

A) ​ceases to perform the activity that gave rise to the risk.
B) ​enacts some particular procedure to decrease the inherent risk to a lower residual risk level.
C) ​simply continues conducting business as normal.
D) ​transfers its risk to an insurance company.

Question 25

​Which of the following is true of an inherent risk?

A) ​An inherent risk is the probability or likelihood of a risk occurring multiplied by the impact should it actually occur.
B) ​An inherent risk is avoided by enacting some particular procedure to decrease the inherent risk to a lower residual risk level.
C) ​An inherent risk can be defined as the difference between the risk response benefit and the residual risk produced by the particular risk response.
D) ​An inherent risk is the risk that remains after any risk management action has been taken.

Question 26

​A(n) _________ is the gain on the exchange of one currency for another due to appreciation of the home currency.

Question 27

​Which of the following statements is true of the risk appetite determination step within the enterprise risk management (ERM) process of an organization?

A) ​Determining an organization's risk appetite involves identifying the top risks and assessing risks at the inherent level.
B) ​Determining an organization's risk appetite involves determining the organization's desired overall level of risk taking.
C) ​Determining an organization's risk appetite is the final step in the iterative enterprise risk management process.
D) ​Determining an organization's risk appetite requires input from a cross-functional team to capture all the threats-or risks-to the organization.

Question 28

​Which of the following is true of enterprise risk management (ERM)?

A) ​Enterprise risk management helps an organization make better decisions in uncertain business environments.
B) ​Only small organizations with sales revenue of $1 million or less engage in some type of ERM.
C) ​Most organizations in the world already have perfect ERM systems.
D) ​The most important reason for using enterprise risk management is to ensure complete elimination of all risks that an organization may face.

Question 29

​Enterprise risk management (ERM) uses a portfolio perspective to ensure:

A) ​that the organization's most important residual risks are aligned with its risk appetite.
B) ​that the organization's most important inherent risks are greater than its risk appetite.
C) ​that the organization's most important residual risks are less than its risk appetite.
D) ​that the organization's most important inherent risks are aligned with its risk appetite.

Question 30

​Risk response net benefit is measured as the:

A) ​difference between an inherent risk and a residual risk produced by a particular risk response.
B) sum of an inherent risk and a residual risk produced by a particular risk response.
C) ​benefit of risk response minus the cost of risk response.
D) ​difference between the incremental cost incurred by a company to implement a particular risk response and the residual risk.

Question 31

​The _________ is a model that explains the factors causing someone to commit fraud.

Question 32

​Which of the following is true of a residual risk?

A) ​A residual risk is a risk that exists absent of any risk management action to reduce or avoid the risk.
B) ​A residual risk is a risk that can be avoided by enacting some particular procedure to decrease the residual risk to a lower inherent risk level.
C) A residual risk is a risk that remains after any risk management action has been taken.
D) ​A residual risk is the probability or likelihood of a risk occurring multiplied by the impact should it actually occur.

Question 33

The _________ is made up of all the processes that a product must pass through, from the initial customer order to the delivery to the customer.

Question 34

_________ is defined as wrongful or criminal deception intended to result in financial or personal gain.​

Question 35

​Risk response benefit can be defined as:

A) ​the difference between an inherent risk and a residual risk produced by a particular risk response.
B) ​the benefit of the risk response minus the cost of risk response.
C) ​the sum of an inherent risk and a residual risk produced by a particular risk response.
D) the difference between the incremental cost incurred by a company to implement a particular risk response and the residual risk.

Question 36

​Which of the following is the most important reason for an organization to use enterprise risk management?

A) ​To help an organization achieve its strategy through identifying, measuring, and managing the organization's most important risks and opportunities
B) ​To ensure complete elimination of all risks that the organization may face
C) ​To eliminate the possibility of the organization's present value of future cash flows being affected by exchange rate fluctuations
D) ​To help an organization recover the costs incurred to determine whether products and services conform to quality requirements

Question 37

A _________ is one that does not conform to quality specifications.​

Question 38

​Which of the following steps within the enterprise risk management (ERM) process should occur immediately after the risk assessment?

A) ​Risk Appetite Determination
B) ​Risk Monitoring
C) ​Risk Response
D) ​Risk Identification

Question 39

_________ requires suppliers to deliver parts and materials just in time to be used in production, eliminating the need for materials inventories.​

Question 40

​An organization's overall desired level of risk taking is referred to as its:

A) ​residual risk.
B) ​risk assessment ability.
C) ​risk response.
D) ​risk appetite.

Question 41

​Which of the following is true of risk response cost?

A) ​Risk response cost is not used to estimate the net benefit of each risk response alternative.
B) It is easy to accurately estimate risk response cost.
C) ​Risk response cost includes only indirect costs.
D) ​It is the incremental cost incurred by the company to implement the given risk response.

Question 42

​Which of the following is true of sustainability assurance?

A) ​It is the external verification that an independent party provides concerning the content of a corporate sustainability report.
B) ​Traditionally, most organizations have found it much easier to estimate the benefits of corporate sustainability reporting (CSR) assurance than the costs.
C) ​The cost of corporate sustainability reporting (CSR) assurance is always negligible.
D) ​The lack of a generally accepted set of reporting standards for preparing corporate sustainability reports leads to lower assurance costs.

Question 43

​Which of the following is true of stakeholder engagement?

A) ​It is the area within the business sustainability cycle that immediately follows sustainability reporting.
B) ​Stakeholder engagement is the area within the business sustainability cycle that immediately follows performance measurement.
C) ​Stakeholder engagement varies from casual, impromptu, informal conversations all the way to regular, structured interactions.
D) ​It is not possible to quantify the results of stakeholder engagement activities.

Question 44

​Global Reporting Initiative and the Sustainability Accounting Standards Board each have published reporting standards that:

A) ​are often used by organizations when preparing their corporate sustainability reports (CSRs).
B) ​must be used by organizations when preparing their corporate sustainability reports (CSRs).
C) are widely recognized as generally accepted.
D) ​have been under development since the early 1930s.

Question 45

​Which of the following is true of performance measurement?

A) ​It is the area within the business sustainability cycle that immediately follows sustainability reporting.
B) ​It is the area within the business sustainability cycle that immediately follows stakeholder engagement.
C) ​It is related to activities that are unrelated to an organization's stakeholders and risks.
D) ​It can help improve an organization's business sustainability efforts.

Question 46

​_____ immediately follows performance measurement within the business sustainability cycle.

A) ​Sustainability reporting
B) ​Sustainability assurance
C) ​Stakeholder engagement
D) ​Risk management

Question 47

​According to the KPMG's Survey of Corporate Responsibility Reporting (2015), _____ percent of the world's largest organizations issue a sustainability report.

A) ​50
B) ​10
C) ​92
D) ​25

Question 48

​The residual risk associated with a particular risk response alternative equals the:

A) ​likelihood that remains after the alternative is implemented multiplied by the impact that remains after the alternative is implemented.
B) ​likelihood that remains after the alternative is implemented divided by the impact that remains after the alternative is implemented.
C) ​likelihood that remains after the alternative is implemented divided by the risk response cost.
D) ​likelihood that remains after the alternative is implemented multiplied by the risk response cost.

Question 49

​Which of the following is the most significant benefit of having a corporate sustainability report (CSR) assured by an independent third party?

A) ​The assurance will enable management to address all stakeholder concerns with equal priority.
B) ​The assurance will enable the organization to eliminate all the risks it may face.
C) ​The assurance will enable people to trust the CSR's content for external stakeholders more easily.
D) ​The assurance will provide exemption to an organization from filing annual reports.

Question 50

​Which of the following is true of integrated reporting?

A) ​Integrated reporting occurs when an organization combines its annual report with its sustainability report to form one combined report for all stakeholders.
B) ​Integrated reporting is not required to follow any particular set of rules when preparing the information contained within the report.
C) ​In most countries and business environments, integrated reporting is not required to have the report contents verified by an independent third party.
D) ​Integrated reporting regulations have been under development since the early 1910s.

Question 51

​A company has recently taken a fire insurance policy on a warehouse facility.Which of the following risk response alternatives is represented by this?

A) ​Accept
B) ​Avoid
C) ​Reduce
D) ​Retain

Question 52

​Which of the following is true of traditional financial reporting?

A) Traditional financial reporting is not mandatory but voluntary in nature.
B) ​Traditional financial reporting must adhere to generally accepted accounting principles.
C) ​Traditional financial reporting does not require that the report contents be verified by an independent third party.
D) ​Traditional financial reporting is synonymous with corporate sustainability reporting.

Question 53

​Management accountants play an important role in:

A) ​helping managers better understand the connection between specific decisions and key stakeholder concerns.
B) ​addressing all stakeholder concerns or giving them all equal priority.
C) ​eliminating all the risks that an organization may face.
D) helping managers randomly respond to stakeholders who yell the loudest hoping for the best.

Question 54

​Which of the following areas in the business sustainability cycle immediately follows stakeholder engagement?

A) ​Performance measurement
B) ​Sustainability reporting
C) ​Sustainability assurance
D) Risk Management

Question 55

​Which of the following is true of corporate sustainability reporting?

A) ​Corporate sustainability reporting is synonymous with traditional financial reporting.
B) ​Corporate sustainability reporting must adhere to generally accepted accounting principles.
C) ​Corporate sustainability reporting is required to have the report contents verified by an independent third party.
D) Corporate sustainability reporting is voluntary in nature.

Question 56

​Which of the following is true of business sustainability?

A) ​Business sustainability requires that management considers the numerous stakeholders, as well as threats and opportunities, involved with major decisions throughout the company.
B) ​The term business sustainability is synonymous with the term environmental sustainability.
C) ​Business sustainability requires that management considers only shareholder concerns involved with major decisions throughout the company.
D) ​Business sustainability begins first and foremost with the organizational risk management process.

Question 57

​As per PricewaterhouseCoopers' survey of 1,409 CEOs from across 83 countries, the stakeholders who had the greatest impact on an organization's strategy are:

A) customers and clients.
B) speculators.
C) lobbyists.
D) nongovernment organizations.

Question 58

​The benefit associated with a particular risk response alternative equals the:

A) ​inherent risk plus the response cost.
B) ​inherent risk minus the residual risk.
C) ​inherent risk plus the residual risk.
D) ​residual risk minus the response cost.

Question 59

​Which of the following is true of greenwashing?

A) ​Greenwashing occurs when an organization follows reporting standards and combines its annual report with its sustainability report to form one combined report for all stakeholders, including investors.
B) ​It is a situation in which stakeholders believe that an organization's corporate sustainability report contains environmental information that is materially biased in favor of the reporting organization.
C) ​Greenwashing always results in positive organizational benefits over the long run.
D) ​It can be avoided by not following optional reporting rules.

Question 60

​Business sustainability is valuable because:

A) ​it improves decision-making by managers.
B) it enables organizations to please all key stakeholders all the time.
C) it enables organizations to eliminate all the risks they may face.
D) ​it ensures complete elimination of stakeholder concerns.

Question 61

​When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about _____ of total quality costs.

A) ​10 to 15%
B) ​80 to 85%
C) ​20 to 30%
D) ​40 to 50%

Question 62

Which of the following is true of an interim quality cost report?

A) ​​At the end of a period, an interim quality cost report compares the actual quality costs for the period with the budgeted costs.
B) ​It provides a chart or graph that tracks the change in quality from the beginning of the program to the present.
C) ​An interim quality cost report highlights the progress trend since the inception of the quality improvement program.
D) ​An interim quality cost report does not consider prevention costs.

Question 63

​Which of the following is true of a multiple-period quality trend report?

A) ​It provides management with information concerning the within-period progress measured relative to specific goals.
B) ​At the end of a period, it compares actual quality costs for a period with budgeted costs.
C) ​It provides a chart or graph that tracks the change in quality from the beginning of a quality improvement program to the present.
D) ​A multiple-period quality trend report does not consider prevention costs.

Question 64

_____ are costs incurred because products or services are produced that do not conform to specifications.

A) ​Control costs
B) ​Failure costs
C) ​Detection costs
D) ​Appraisal costs

Question 65

​The objective of quality cost management is to find ways to reduce total quality costs to _____, the optimal range recommended by quality experts.

A) ​2 to 4% of sales
B) ​5 to 10% of sales
C) ​7 to 8% of sales
D) ​9 to 10% of sales

Question 66

Learner Corp.had total sales of $20,000,000 for the fiscal year ending on December 31, 20X1.
Learner's costs of quality are as follows:

Calculate Learner' s appraisal cost for the year.

A) $965,000
B) $510,000
C) $265,000
D) $710,000

Question 67

​_____ are incurred to determine whether products and services are conforming to their requirements.

A) ​Prevention costs
B) ​Appraisal costs
C) ​Opportunity costs
D) ​Sunk costs

Question 68

​Which of the following is an appraisal cost?

A) ​Retesting
B) ​Complaint adjustment
C) ​Field testing
D) ​Design changes

Question 69

Which of the following is an external failure cost?​

A) ​Rework
B) ​Reinspection
C) ​Prototype inspection
D) ​Warranties

Question 70

​Which of the following is true of internal failure costs?

A) ​These are costs of preventing or detecting poor quality.
B) ​These costs are incurred to determine whether products and services are conforming to their requirements.
C) ​These costs are incurred when lack of conformity to requirements is discovered prior to external sale.
D) ​These are costs that can be most devastating of all the quality costs.

Question 71

​Which of the following is true of external failure costs?

A) These are costs of preventing or detecting poor quality.
B) ​These are costs that can be most devastating of all the quality costs.
C) ​These costs are incurred to determine whether products and services are conforming to their requirements.
D) ​Examples of external failure costs are quality engineering, quality training programs, and quality planning.

Question 72

​Lean manufacturing is concerned with:

A) ​eliminating waste in manufacturing processes.
B) ​increasing lead time in manufacturing processes.
C) ​increasing materials inventory levels in manufacturing processes.
D) ​eliminating cycle time in manufacturing processes.

Question 73

The key factors in achieving reduced wait and move times in manufacturing processes are:​

A) ​low setup times and continuous flow manufacturing.
B) ​high cycle time and traditional manufacturing setup.
C) ​high wait times and large batches of products.
D) ​low variety of products and high changeover times.

Question 74

Which of the following is true of lean manufacturing?​

A) ​Lean manufacturing results in increased human efforts.
B) ​Lean manufacturing seeks to achieve zero defects.
C) ​In a lean manufacturing setup, production is organized by function into departments and products are produced in large batches.
D) ​In a lean manufacturing setup, there is significant move time and wait time as each batch moves from one department to another and waits for its turn.

Question 75

​The financial significance of quality costs can be assessed more easily by expressing these costs as a percentage of:

A) ​actual sales.
B) ​net income.
C) ​gross margin.
D) ​operating income.

Question 76

Planet Company had total sales of $15,000,000 for the fiscal year ending on December 31, 20X1. Planet's costs of quality are as follows:

Calculate Planet's prevention cost for the year.

A) $105,000
B) $510,000
C) $600,000
D) $710,000

Question 77

​Which of the following is a prevention cost?

A) ​Inspection of materials
B) ​Field testing
C) ​Product acceptance
D) Marketing research

Question 78

​Which of the following is an internal failure cost?

A) ​Warranties
B) ​Recalls
C) ​Field testing
D) ​Repairs

Question 79

​Control costs can be subdivided into prevention and:

A) ​appraisal costs.
B) ​sunk costs.
C) ​opportunity costs.
D) ​failure costs.

Question 80

​Which of the following is true of prevention costs?

A) ​As prevention costs increase, we would expect the costs of failure to decrease.
B) ​As prevention costs decrease, we would expect the costs of external failure to decrease.
C) ​As prevention costs increase, we would expect the costs of sustainability reporting to decrease.​
D) ​As prevention costs increase, we would expect the costs of internal failure to increase.