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Basic Concepts IN Management Accounting TEST BANK
Conceptual Framework of Accounting Standard (Universal College of Parañaque)
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Junior Philippine Institute of Accountants
University of Cebu – Banilad Chapter
BASIC CONCEPTS IN MANAGEMENT ACCOUNTING
TEST BANK
I.
True or False
______1.
Managerial accounting places less emphasis on precision and more
emphasis on flexibility and relevance than financial accounting.
______2.
Managerial accounting is not governed by generally accepted
accounting principles (GAAP).
______3.
Financial accounting and managerial accounting reports must be
prepared in accordance with generally accepted accounting principles (GAAP).
______4.
When carrying out their directing and motivating activities,
managers mobilize the organization's human and other resources so that the
organization's plans are carried out.
______5.
When carrying out planning activities, managers rely on feedback to
ensure that the plan is actually carried out and is appropriately modified as
circumstances change.
______6.
When carrying out their directing and motivating activities,
managers select a course of action and specify how the action will be implemented.
______7.
Persons occupying staff positions provide support and assistance to
other parts of the organization.
______8.
Staff departments generally have direct authority over line
departments in an organization.
______9.
Informal relationships and channels of communication often
develop that do not appear on the organization chart.
______10.
The controller's position in a retail company is considered a line
position rather than a staff position.
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______11.
The Chief Financial Officer of an organization should present facts
and refrain from offering advice and personal opinion.
______12.
A strategy is a game plan that enables a company to attract
customers by distinguishing itself from competitors.
______13.
A strategy requires effective use of Six Sigma improvement
techniques.
______14.
A customer value proposition is essentially a reason for customers
to choose a company's products over its competitors' products.
______15.
Customer value propositions tend to fall into three broad
categories--customer intimacy, operational excellence, and product leadership.
______16.
Companies that adopt a customer intimacy strategy are in essence
saying to their target customers, “The reason you should choose us is because we
understand and respond to your individual needs better than our competitors.”
______17.
Companies that choose an operational excellence strategy are in
essence saying to their customers, “Choose us rather than our competitors
because we strive for zero defects.”
______18.
A value chain consists of the major business functions that add
value to the company's products and services.
______19.
Efforts designed to increase the rate of output should generally be
applied to the workstation that is the constraint.
______20.
The lean thinking model is a five step management approach that
organizes resources such as people and machines around the flow of business
processes and that pulls units through these processes in response to customer
orders.
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Multiple Choice
II.
1. Managerial accounting places considerable weight on:
A) generally accepted accounting principles.
B) the financial history of the entity.
C) ensuring that all transactions are properly recorded.
D) detailed segment reports about departments, products, and customers.
2. The plans of management are often expressed formally in:
A) financial statements.
B) performance reports.
C) budgets.
D) ledgers.
3. The phase of accounting concerned with providing information to managers for
use in planning and controlling operations and in decision making is called:
A) throughput time.
B) managerial accounting.
C) financial accounting.
D) controlling.
4. A staff position:
A) relates directly to the carrying out of the basic objectives of the organization.
B) is supportive in nature, providing service and assistance to other parts of the
organization.
C) is superior in authority to a line position.
D) none of these.
5. For a manufacturing company, what type of position (line or staff) is each of the
following?
A
B
C
D
Manager of a Data
Processing Department
Staff
Staff
Line
Line
Manager of a
Production
Department
Staff
Line
Staff
Line
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6. A _______________ position in an organization is directly related to the
achievement of the organization's basic objectives.
A) line
B) management
C) staff
D) None of the above.
7. ______________ is an example of a line position.
A) Controller for a merchandising company
B) Chief financial officer of a merchandising company
C) Store manager for Best Buy
D) Human resources manager for a community college
8. Which of the following is NOT one of the three major customer value
propositions discussed in the text?
A) customer intimacy
B) discount pricing
C) operational excellence
D) product leadership
9. Which of the following is NOT one of the five steps in the lean thinking model
discussed in the text?
A) Continuously pursue perfection in the business process.
B) Identify value in specific products/services.
C) Implement an enterprise system.
D) Create a pull system that responds to customer orders.
10. One consequence of a change from a push to a properly implemented pull
production system can be:
A) an increase in work in process inventories.
B) an extremely difficult cultural change due to enforced idleness when demand
falls below production capacity.
C) an increased mismatch between what is produced and what is demanded by
customers.
D) an increase in raw materials inventories.
11. All of the following are characteristics of a pull production system EXCEPT:
A) Inventories are reduced to a minimum by purchasing raw materials and
producing units only as needed to meet consumer demand.
B) Raw materials are released to production far in advance of being needed to
ensure no interruptions in work flows due to shortages of raw materials.
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C) Products are completed just in time to be shipped to customers.
D) Manufactured parts are completed just in time to be assembled into products.
12. The five step framework used to guide Six Sigma improvement efforts includes all
of the following EXCEPT:
A) Analyze.
B) Control.
C) Digitize.
D) Measure.
13. The Sarbanes-Oxley Act of 2002 contains all of the following provisions EXCEPT:
A) The audit committee of the board of directors of a company must hire,
compensate, and terminate the public accounting firm that audits the
company's financial reports.
B) Financial statements must be audited once every three years by the
Government Accounting Office.
C) Both the CEO and CFO must certify in writing that their company's financial
statements and accompanying disclosures fairly represent the results of
operations.
D) A company's annual report must contain an internal control report.
14. The Institute of Management Accountants' Standards of Ethical Conduct
contains a policy regarding confidentiality that requires that management
accountants:
A) refrain from disclosing confidential information acquired in the course of
their work except when authorized by management.
B) refrain from disclosing confidential information acquired in the course of
their work in all situations.
C) refrain from disclosing confidential information acquired in the course of
their work except when authorized by management, unless legally obligated
to do so.
D) refrain from disclosing confidential information acquired in the course of
their work in all cases since the law requires them to do so.
15. Which of the following is NOT one of the Institute of Management Accountants'
five Standards of Ethical Conduct?
A) Competence
B) Confidentiality
C) Independence
D) Integrity
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16. Which of the following statements about managerial accountants is false?
A. Managerial accountants more and more are considered "business partners."
B. Managerial accountants often are part of cross-functional teams.
C. An increasing number of organizations are segregating managerial
accountants in separate managerial-accounting departments.
D. In a number of companies, managerial accountants make significant business
decisions and resolve operating problems.
E. The role of managerial accountants has changed considerably over the past
decade.
17. The day-to-day work of management teams will typically comprise all of the
following activities except:
A. decision making.
B. planning.
C. cost minimizing.
D. directing operational activities.
E. controlling.
18. Which of the following functions is best described as choosing among available
alternatives?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Budgeting.
19. Which of the following managerial functions involves a detailed financial and
operational description of anticipated operations?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Measuring.
20. Which of the following involves the coordination of daily business functions
within an organization?
A. Decision making.
B. Planning.
C. Directing operational activities.
D. Controlling.
E. Motivating.
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21. Titan Company has set various goals, and management is now taking appropriate
action to ensure that the firm achieves these goals. One such action is to reduce
outlays for overhead, which have exceeded budgeted amounts. Which of the
following functions best describes this process?
A. Decision making.
B. Planning.
C. Coordinating.
D. Controlling.
E. Organizing.
22. Which of the following is not an objective of managerial accounting?
A. Providing information for decision making and planning.
B. Assisting in directing and controlling operations.
C. Maximizing profits and minimizing costs.
D. Measuring the performance of managers and subunits.
E. Motivating managers toward the organization's goals.
23. The role of managerial accounting information in assisting management is a(n):
A. financial-directing role.
B. attention-directing role.
C. planning and controlling role.
D. organizational role.
E. problem-solving role.
24. Employee empowerment involves encouraging and authorizing workers to take
initiatives to:
A. improve operations.
B. reduce costs.
C. improve product quality.
D. improve customer service.
E. all of the above.
25. The process of encouraging and authorizing workers to take appropriate
initiatives to improve the overall firm is commonly known as:
A. planning and control.
B. employee empowerment.
C. personnel aggressiveness.
D. decision making.
E. problem recognition and solution.
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26. Which of the following business models considers financial, customer, internal
operating, and other measures in the evaluation of performance?
A. Deterministic simulation.
B. Balanced scorecard.
C. Payoff matrix.
D. Decision tree.
E. Chart of operating performance (COP).
27. Which of the following perspectives is normally absent in a balanced scorecard?
A. Financial.
B. Customer.
C. Internal operations.
D. Learning and innovation/growth.
E. None of the above.
28. Managerial accounting:
A. focuses only on historical data.
B. is governed by GAAP.
C. focuses primarily on the needs of personnel within the organization.
D. provides information for parties external to the organization.
E. focuses on financial statements and other financial reports.
29. Managerial accounting:
A. is unregulated.
B. produces information that is useful only for manufacturing organizations.
C. is based exclusively on historical data.
D. is regulated by the Securities and Exchange Commission (SEC).
E. generally focuses on reporting information about the enterprise in its entirety
rather than by subunits.
30. Which of the following would likely be considered an internal user of accounting
information rather than an external user?
A. Stockholders.
B. Consumer groups.
C. Lenders.
D. Middle-level managers.
E. Government agencies.
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Answer key:
I. True or False
1. True
2. True
3. False
4. True
5. False
6. False
7. True
8. False
9. True
10. False
11. False
12. True
13. False
14. True
15. True
16. True
17. False
18. True
19. True
20. True
II. Multiple Choice
1. D
2. C
3. B
4. B
5. B
6. A
7. C
8. B
9. C
10. B
11. B
12. C
13. B
14. C
15. C
16. C
17. C
18. A
19. B
20. C
21. D
22. C
23. B
24. E
25. B
26. B
27. E
28. C
29. A
30. D
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