Management Accounting and Management Decisions

focusing Accounting, Cdn. 6e (Horngren/Sundem/Stratton/Beaulieu) Chapter 1 commission Accounting and Management Decisions 1) Both privileged managers and external parties exercise bank noteing information. dissolvent straightforward Diff 2 token TF rapscallion ref 16 aim 8 2) Internal story reports must(prenominal) fol kickoff generally certain accountancy principles and account for assets at historical cost. re movement FALSE Diff 2 face TF varlet reviewer 16 objective 8 3) Organizations that do not puddle or sell tangible goods atomic number 18 called religious attend organizations. firmness of purpose TRUE Diff 1 geek TF scallywag ref 7 physical object 3 4) The cost-benefit balance is the primary consideration in choosing among accounting systems and methods. issue TRUE Diff 1 typecast TF page reader 2 prey 3 5) intend refers to setting objectives, implementing forges, and evaluating objectives. help FALSE Diff 1 sheath TF varlet referee 3 nonsu bjective 2 6) A budget is a quantitative expression of a visualise of action. cause TRUE Diff 1 vitrine TF paginate reader 2 heading 3 7) Management by exclusion involves a detailed analysis of all deviations from planned surgical procedure regardless of the amount. function FALSE Diff 1 caseful TF summon referee 2 heading 3 8) Sales growth occurs in the mature grocery store floor of product life cycle. arrange FALSE Diff 1 Type TF paginate reviewer 9 butt 4 9) Line authority is authority exerted downward oer subordinates. issue TRUE Diff 1 Type TF knave referee 12 neutral 5 10) Line departments support or service cater departments. manage FALSE Diff 1 Type TF rascal ref 12 fair game 5 11) According to the Financial Executives pioneer, the comptrollers function is to obtain both short-term and long-term loans. issue FALSE Diff 1 Type TF summon reader 14 12) The CMA program focuses on forethought accounting and its role in Canadian business. Answer TRUE Diff 1 Type TF Page Ref 16 target 8 13) The factors cause changes in management accounting now involve increased global competition, technological advances and increased w atomic number 18 by Canadian companies. Answer FALSE Diff 1 Type TF Page Ref 16 Objective 8 14) The essence of the just-in-time philosophy is to eliminate waste. Answer TRUE Diff 1 Type TF Page Ref 16 Objective 8 5) The companionship of Management Accountants of Canada (SMAC) has developed standards of estimable conduct for management accountants, which include standards of competence, confidentiality, integrity and objectivity. Answer TRUE Diff 1 Type TF Page Ref 20 Objective 9 16) A survey of managers selected which of the undermentioned business areas as the most common starting-point for future managers? A) Accounting. B) Finance. C) Legal surroundings of business. D) Computers in business. Answer A Diff 1 Type MC Page Ref 2 Objective 1 17) Management accounting refers to accounting information devel oped for A) shareholders.B) governmental authorities. C) managers within an organization. D) loan officers. Answer C Diff 1 Type MC Page Ref 16 Objective 8 18) ________ is a formal mechanism for reaching, organizing, and communicating information about an organizations activities. A) An accounting system B) Scorekeeping C) Management accounting D) management directing Answer A Diff 1 Type MC Page Ref 3 Objective 2 19) ________ refers to accounting information developed for users within an organization. A) An accounting system B) Scorekeeping C) Management accountingD) Financial accounting Answer C Diff 1 Type MC Page Ref 3 Objective 2 20) ________ is the accumulation and classification of data. A) An accounting system B) Scorekeeping C) Management accounting D) Attention directing Answer B Diff 1 Type MC Page Ref 3 Objective 2 21) ________ means account and interpreting information that helps managers to focus on operating problems, imperfections, inefficiencies, and opportunitie s. A) Scorekeeping B) Attention directing C) Problem-solving D) no(prenominal) of the to a higher place Answer B Diff 1 Type MC Page Ref 3 Objective 2 2) ________ is the feel of accounting that quantifies the likely results of possible courses of action and often recommends the best course to follow. A) Scorekeeping B) Attention directing C) Problem-solving D) None of the above Answer C Diff 1 Type MC Page Ref 3 Objective 2 23) The codes of conduct for integrity include all of the following EXCEPT A) avoiding actual or discernible conflicts of sideline. B) refusing to dismiss or assist with the commission of fraud. C) recognizing and communicating professional limitations. D) communicating information subjectively. Answer DDiff 1 Type MC Page Ref 20 Objective 9 24) A clerk prepares a monthly report comparing the actual phone bill with the expected phone costs. This activity would be classified as A) problem-solving. B) scorekeeping. C) formulation. D) attention directing. Ans wer D Diff 1 Type MC Page Ref 3 Objective 2 25) Broad guide funds and detailed practices that together make up accepted accounting practice at a lendn time are referred to as A) GAAS. B) accounting conventions. C) GAAP. D) Revenue Canada regulations. Answer C Diff 1 Type MC Page Ref 16 Objective 8 26) helper organizationsA) sell tangible goods. B) are not wholesalers. C) are considered manufacturers. D) must be profit-seeking. Answer B Diff 1 Type MC Page Ref 7 Objective 3 27) A feature film of service organizations is that A) labour is intensive. B) output is easy to define. C) major inputs and outputs can be stored. D) plant and equipment costs are broad(prenominal) in proportion to labour costs. Answer A Diff 1 Type MC Page Ref 7 Objective 3 28) The watchword for the installation of systems in service industries and nonprofit organizations is A) maximize. B) simplicity. C) constraints. D) complexity.Answer B Diff 1 Type MC Page Ref 7 Objective 3 29) Which of the following is a characteristic of both profit-seeking and nonprofit service organizations? A) Labour is intensive. B) Output is usually difficult to define. C) Major inputs and outputs cannot be stored. D) in all of the above are characteristics. Answer D Diff 1 Type MC Page Ref 7 Objective 3 30) Financial accounting is constrained by GAAP. Management accounting is constrained by A) GAAS. B) the cost-benefit balance. C) Revenue Canada. D) the controller. Answer B Diff 1 Type MC Page Ref 16 Objective 8 1) The primary consideration in choosing among accounting systems and methods is A) simplicity. B) behavioural issues. C) cost-benefit balance. D) computerization. Answer C Diff 1 Type MC Page Ref 3 Objective 2 32) An accounting system should give accurate, well-timed budgets and performance reports in a form useful to A) shareholders. B) bankers. C) Revenue Canada. D) managers. Answer D Diff 1 Type MC Page Ref 3 Objective 2 33) ________ is (are) a quantitative expression(s) of a plan of action. A) A budget B) Performance reports C) Variances D) Management by exclusion Answer ADiff 1 Type MC Page Ref 3 Objective 2 34) ________ provide(s) feedback by comparing results with plans and by highlighting deviations from plans. A) A budget B) Performance reports C) Variances D) Management by exception Answer B Diff 1 Type MC Page Ref 3 Objective 2 35) ________ is (are) deviations from plans. A) A budget B) Performance reports C) Variances D) Management by exception Answer C Diff 1 Type MC Page Ref 3 Objective 2 36) ________ concentrate(s) on areas that deviate from the plan and ignore(s) areas that are presumed to be running smoothly. A) A budgetB) Performance reports C) Variances D) Management by exception Answer D Diff 1 Type MC Page Ref 3 Objective 2 37) Launching a new product line is an example of A) decision making. B) planning. C) unequivocal. D) organization. Answer A Diff 1 Type MC Page Ref 3 Objective 2 38) respondent the following questions When is dinner? Who is coo king it? is an example of A) planning. B) controlling. C) budgeting. D) analyzing. Answer A Diff 1 Type MC Page Ref 3 Objective 2 39) Cooking dinner and tasting the food are examples of A) planning. B) controlling. C) budgeting.D) analyzing. Answer B Diff 1 Type MC Page Ref 3 Objective 2 40) Planning determines action, action generates feedback, and feedback influences A) reports. B) accounting systems. C) further planning. D) deviations. Answer C Diff 1 Type MC Page Ref 3 Objective 2 41) A quantitative expression of a plan of action is a A) variance. B) performance report. C) control. D) budget. Answer D Diff 1 Type MC Page Ref 3 Objective 2 42) Actual results are compared to budgeted amounts in a A) performance report. B) financial statement. C) occupation report. D) flexible report.Answer A Diff 1 Type MC Page Ref 3 Objective 2 43) Management by exception means management concentrates on A) significant activities proceeding as planned. B) significant deviations from expected re sults. C) unimportant activities proceeding as planned. D) insignificant deviations from expected results. Answer B Diff 1 Type MC Page Ref 3 Objective 2 44) A synonym for deviation is A) planned. B) systematic. C) variance. D) reported. Answer C Diff 1 Type MC Page Ref 3 Objective 2 45) A significant bad variance A) should be ignored because of materiality.B) could not result from careless budgeting. C) is the result of proper planning. D) should be analyzed, and measures should be taken to correct the situation. Answer D Diff 1 Type MC Page Ref 3 Objective 2 46) The product development stage in a products life cycle corresponds to A) no sales. B) sales growth. C) stable sales level. D) low and fall sales. Answer A Diff 1 Type MC Page Ref 9 Objective 4 47) The introduction to market stage in a products life cycle corresponds to A) no sales. B) sales growth. C) stable sales level. D) low and decreasing sales. Answer BDiff 1 Type MC Page Ref 9 Objective 4 48) The mature market st age in a products life cycle corresponds to A) no sales. B) sales growth. C) stable sales level. D) low and decreasing sales. Answer C Diff 1 Type MC Page Ref 9 Objective 4 49) The phase-out-of-product stage in a products life cycle corresponds to A) no sales. B) sales growth. C) stable sales level. D) low sales to no sales. Answer D Diff 1 Type MC Page Ref 9 Objective 4 50) The various stages through which a product passes are called the A) product life cycle. B) takings plan. C) market analysis. D) product initiative.Answer A Diff 1 Type MC Page Ref 9 Objective 4 51) Product life cycles A) are the same for all products. B) must be considered to effectively plan for production. C) are computerized bicycles. D) use up nothing to do with product profitability. Answer B Diff 1 Type MC Page Ref 9 Objective 4 52) Authority exerted downward over subordinates is referred to as A) line authority. B) staff authority. C) general authority. D) specific authority. Answer A Diff 1 Type MC Pag e Ref 12 Objective 5 53) Authority to hash out but non command is called A) line authority. B) staff authority.C) general authority. D) specific authority. Answer B Diff 1 Type MC Page Ref 12 Objective 5 54) An example of a line department at a jewelry manufacturer is the A) accounting department. B) finance department. C) maintenance department. D) sales department. Answer D Diff 1 Type MC Page Ref 12 Objective 5 55) According to the Financial Executives Institute, one function of controllership is A) investments. B) short-term financing. C) preparedness of capital. D) reporting and interpreting. Answer D Diff 1 Type MC Page Ref 14 56) The result accounting officer in an organization is oftenA) the controller. B) the treasurer. C) the CFO. D) the CEO. Answer A Diff 1 Type MC Page Ref 14 57) ________ is mainly touch with the companys financial matters. A) The controller B) The treasurer C) The secretary D) None of the above Answer B Diff 1 Type MC Page Ref 14 58) ________ is th e designation that provides the superlative orientation toward management accounting. A) CIA B) CMA C) CEO D) CGA Answer B Diff 1 Type MC Page Ref 14 59) According to the Financial Executives Institute, one function of treasurership is A) planning for control.B) protection of assets. C) investor relations. D) economic appraisal. Answer C Diff 1 Type MC Page Ref 14 Objective 6 60) Chartered Accountants are A) internal auditors. B) management accountants. C) external auditors. D) clerical accountants. Answer C Diff 1 Type MC Page Ref 16 Objective 8 61) The largest Canadian association of professional accountants whose major interest is management accounting is the A) Canadian Institute of Chartered Accountants. B) Certified General Accountants of Canada. C) Government Accounting Institute. D) Society of Management Accountants of Canada.Answer D Diff 1 Type MC Page Ref 16 Objective 8 62) A philosophy to eliminate waste by reducing the time products spend in the production subroutine and eliminating the time that products spend on activities that do NOT add nurse is A) computer-integrated manufacturing. B) just-in-time. C) better late than never. D) added value tax. Answer B Diff 1 Type MC Page Ref 16 Objective 8 63) Systems that use computer-aided design and computer-aided manufacturing, together with robots and computer-controlled machines are called A) just-in-time systems. B) robotic-computer systems.C) computer-integrated manufacturing systems. D) manufacturing-robotic systems. Answer C Diff 1 Type MC Page Ref 16 Objective 8 64) Which of the following factors is causing changes in management accounting today? A) Shift from a manufacturing-based to a service-based economy. B) Increased global competition. C) Advances in technology. D) All of the above are factors. Answer D Diff 1 Type MC Page Ref 16 Objective 8 65) Systems that use CAD and CAM together with robots and computer-controlled machines are called A) JIT. B) CMA. C) CIM. D) none of the above.Answe r C Diff 1 Type MC Page Ref 16 Objective 8 66) Below is a statement from the Code of Professional Ethics for the Society of Management Accountants. Maintain at all times independence of thought and action. It is an example of A) competence. B) confidentiality. C) integrity. D) objectivity. Answer D Diff 1 Type MC Page Ref 20 Objective 9 67) Management accountants are similar to CAs and CGAs in that they A) give opinions on financial statements. B) are licensed by the Canadian Institute of public accountancy. C) hang to codes of conduct.D) are independent of the company they work for. Answer C Diff 1 Type MC Page Ref 16 Objective 8 68) The Society of Management Accountants has adopted a set of standards of professional ethics which includes codes of conduct regarding all of the following EXCEPT A) competence. B) independence. C) integrity. D) confidentiality. Answer B Diff 1 Type MC Page Ref 20 Objective 9 69) Which of the following individuals would likely NOT be users of manageme nt accounting reports? A) company presidents B) university deans C) bankers D) chief physicians Answer CDiff 2 Type MC Page Ref 16 Objective 8 70) Which of the following statements about management accounting is FALSE? A) It is concerned with how measurements and reports will influence managers daily behaviour. B) It is less sharply defined than financial accounting. C) Its primary users are organisational managers at various levels. D) It is constrained by generally accepted accounting principles. Answer D Diff 2 Type MC Page Ref 16 Objective 8 71) Which of the following statements about ethical dilemmas faced by management accountants is FALSE?Ethical dilemmas A) are clear-cut. B) involve conflict between two or more ethical standard. C) require individual integrity and judgment. D) require the application of ethical standards. Answer A Diff 2 Type MC Page Ref 20 Objective 9 72) Which of the following statements about line authority is TRUE? Line authority A) is similar to staff authority. B) is indirectly link up to the base activities of an organization. C) is exerted upwardly from subordinates. D) includes the authority to command action. Answer D Diff 1 Type MC Page Ref 12 Objective 5 3) Broad concepts or guidelines and detailed practices, including all conventions, rules, and procedures that together make up accepted accounting practice at a given time. Answer Generally accepted accounting principles Diff 1 Type SA Page Ref 16 Objective 8 74) The person from whom the controller derives authority to set accounting procedures. Answer The company president Diff 1 Type SA Page Ref 12 75) Weighing known costs against probable benefits, the primary consideration in choosing among accounting systems and methods. Answer Cost-benefit balance Diff 1 Type SA Page Ref 11Objective 7 76) A quantitative expression of a plan of action, and an aid to coordinating and implementing the plan. Answer Budget Diff 1 Type SA Page Ref 2 Objective 2 77) Deviations from plans. Answer Variances Diff 1 Type SA Page Ref 2 Objective 2 78) Concentrating on areas that deserve attention and ignoring areas that are presumed to be running smoothly. Answer Management by exception Diff 1 Type SA Page Ref 2 Objective 2 79) Authority exerted downward over subordinates. Answer Line authority Diff 1 Type SA Page Ref 12Objective 5 80) Authority to advise but not to command. It may be exerted downward, laterally, or upward. Answer Staff authority Diff 1 Type SA Page Ref 12 Objective 5 81) The largest Canadian professional organization of accountants whose major interest is management accounting. Answer Society of Management Accountants Diff 1 Type SA Page Ref 16 Objective 8 82) A philosophy to eliminate waste, by reducing the time products spend in the production process and eliminating the time that products spend on activities that do not add value. Answer Just-in-time philosophyDiff 1 Type SA Page Ref 16 Objective 8 83) Describe the major users of accounting informati on. Answer In general, users of accounting information fall into three categories (1) Internal managers who use the information for short-term planning and controlling routine operations. (2) Internal managers who use the information for making nonroutine decisions and formulating overall policies and long-range plans. (3) External parties, such as investors and government authorities, who use the information for making decisions about the company. Diff 1 Type ES Page Ref 2 Objective 1 4) Explain the cost-benefit and behavioral issues involved in designing an accounting system. Answer The cost-benefit balance, weighing known costs against probable benefits, is the primary consideration in choosing among accounting systems. The systems value must exceed its cost. In addition, the systems effects on the behaviour of managers should also be considered. The system must provide accurate, timely budgets and performance reports in a form useful to managers. Diff 1 Type ES Page Ref 14 Objec tive 7 85) Distinguish between line and staff roles in an organization, and give an example of each.Answer Line authority is authority exerted downward over subordinates. Staff authority is authority to advise but not to command. It may be exerted downward, laterally, or upward. Line departments are directly responsible for conducting the basal mission of the organization, that is, producing and selling a product or service. Staff departments are indirectly related to these basic activities through servicing and supporting the line departments. An example of a line role would be the sales executives, whereas a staff role would include the top accounting executive.Diff 1 Type ES Page Ref 12 Objective 5 86) Contrast the functions of controllers and treasurers. Answer The treasurer is concerned mainly with the companys financial matters such as investor relations, provision of capital, short-term financing, credits and collections, and banking. The controller is concerned with operati ng matters such as reporting and interpreting, evaluating and consulting, tax administration, government reporting, and protection of assets. Diff 1 Type ES Page Ref 1 87) Explain a management accountants ethical responsibilities.Answer A certified management accountant must adhere to a code of conduct regarding competence, confidentiality, integrity, and objectivity developed by the Society of Management Accountants. An unethical act is one that violates the ethical standards of the profession. Management accountants have an obligation to the organizations they serve, their profession, the public, and themselves to maintain the highest standards of ethical conduct. Diff 1 Type ES Page Ref 20 Objective 9 88) Explain the role of budgets and performance reports in planning and control.Answer Budgets and performance reports are essential tools for planning and control. Budgets result from the planning process. Managers use them to translate the organizations goals into action. A perfor mance report compares actual results to the budget. Managers use these reports to monitor, evaluate, and reward performance and, thus, exercise control. Diff 3 Type ES Page Ref 3 Objective 2 89) Discuss the role that management accountants play in the companys value-chain functions. Answer Management accountants play a key role in planning and control.Throughout the companys value chain, management accountants gather and report cost and revenue information for decision makers. Diff 2 Type ES Page Ref 9 Objective 4 90) Identify current trends in management accounting. Answer Many factors have caused changes in accounting systems in recent years. Most significant are globalization, technology, and a shift from a manufacturing-based to a service-based economy. Without continuous adaptation and improvement, accounting systems would be obsolete. Diff 2 Type ES Page Ref 16 Objective 8