INTRODUCTION TO COST AND MANAGEMENT ACCOUNTING
Materials purchased on credit are now returned to the original supplier.
1. What double entry would be made to account for this return?
A. Debit: Materials control
Credit: Payables
B. Debit: Materials control
Credit: Bank
C. Debit: Payables
Credit: Materials control
D. Debit: Bank
Credit: Materials control
A feature of a computerised accounting system is that it enforces controls on
accounting entries and recording.
2. What is the impact of this feature?
A. Accountants are no longer necessary.
B. It enables communication with different business systems.
C. It reduces the risk of errors and fraud.
D. It saves system implementation costs.
3. Which of the following is NOT an accurate distinction between external
financial reporting and management accounting?
Financial Reporting
Management Accounting
A. Statutory requirement
Optional
B. Describes the entire business
Can focus on smaller parts of the business
C. Annual requirement
Required more frequently
D. Reports historical information
Reports future information only
4. Which statements are true?
Statement (1) – Rules and regulations govern external financial reporting and
management accounting.
Statement (2) – External financial reporting satisfies the needs of external parties,
whereas management accounting satisfies the requirements of internal and external
parties.
A. 1 only
B. 2 only
C. 1 and 2
D. Neither
5. Which option is NOT a purpose of management information?
A. To help management plan
B. To comply with statutory requirements
C. To assist management with controlling operations
D. To help ensure the efficient use of resources
A trainee management accountant has provided information about a new product’s
costs and selling price:
1. The expected absorption cost of the product is based on an estimate of 10,000
units.
2. Materials will be purchased overseas and subject to currency conversion.
3. The trainee has used a selling price of $20 per unit, as instructed.
6. What is NOT a valid limitation of the management accounting information
provided by the trainee accountant?
A. Material costs may not be accurate due to currency exchange rate movements.
B. The selling price may be incorrectly calculated
C. The company may produce fewer units than expected
D. Material prices may change due to economic conditions
7. Which branch of accounting includes the systematic recording of the
transactions undertaken by an organisation?
A. Financial reporting
B. Management accounting
C. Cost accounting
D. Financial accounting
8. What is NOT a focus of management accounting?
A. Planning
B. Control
C. Financial statements
D. Decision making
Two incomplete statements follow.
1. A trainee management accountant would prepare information intended mainly for
_____ use.
2. Financial statements are prepared mainly for _____ use.
9. Which words correctly complete each statement?
A. 1 External, 2 Internal
B. 1 Internal, 2 Internal
C. 1 External, 2 External
D. 1 Internal, 2 External
A data file contains 'standing' or reference data such as customer names and
addresses.
10. What type of file is this?
A. Transaction file
B. Spreadsheet file
C. Key file
D. Master file
11. Which branch of accounting is concerned with variance analysis?
A. Financial reporting
B. Management accounting
C. Treasury
D. Financial accounting
Two statements relating to management activities are shown below.
1. Planning involves monitoring of actions and comparing them to expected
outcomes.
2. An example of planning is choosing between various business options.
12. Is each statement true or false?
A. Statement 1 is true, Statement 2 is false
B. Both statements are true
C. Statement 1 is false, Statement 2 is true
D. Both statements are false
13. What is NOT an advantage of a computerised accounting system compared
to a manual accounting system?
A. Errors in source documents are identified more quickly
B. There is a reduction in the amount of paper used and stored
C. A wider variety of management reports can be produced promptly
D. There is less scope for arithmetic errors
The following is an extract from the list of accounts of a motor manufacturer:
Overhead costs
Account codes
Production
from 100 to 199
Administration
from 200 to 299
Selling
from 300 to 399
Distribution
from 400 to 499
14. Which transactions are coded correctly to the list of accounts?
Transaction
Description
Code
1
Wages of a supervisor in the finished goods warehouse
410
2
Wages of the human resources department staff
110
A. Transaction 1 only
B. Transaction 2 only
C. Both transactions
D. Neither transaction
INFORMATION FOR MANAGEMENT
1. Which option contains the best attributes that good information should
have?
A. Accurate, Complete, Timely
B. Authoritative, Cost-effective, Numerical
C. Accurate, Extensive, User-friendly
D. Historical, Complete, Relevant
2. What is an example of information rather than data?
A. Number of products sold last year
B. Total value of expense claims authorised so far this year
C. Number of new starters appointed last month
D. Actual spending against budget analysed by month
3. What are examples of internal information for an organisation’s
management?
I.
II.
III.
Health and safety regulations
Discounts given to customers
Production output report
A. I and II
B. II and III
C. I and III
D. I, II and III
4. Which statement correctly reflects the distinction between data and
information?
A. Data comprises quantitative items only, whereas information contains both
quantitative and qualitative items
B. Data comprises historical items only, whereas information contains futureorientated and historical items
C. Data comprises internal facts, whereas information contains internal and external
facts
D. Data comprises raw facts and figures, whereas information has been processed
to provide meaning for the user
5. What is NOT usually a feature of useful management information?
A. It contains all the information that can be reasonably expected to be included to
make a management accounting decision.
B. The information is reliably sourced.
C. The cost of generating the information is more than its benefit.
D. The information is received on time.
The following is an extract from monthly management accounts.
June May
Gross Profit margin (%) 22.6
24.8
Sales ($000) 1,250 1,135
An account excerpt says, “Sales in June have increased by 10% due to offering
discounts to our major customer. This is reflected in the fall in gross profit margin.”
(1) The extract contains forecasted information.
(2) Information contained in the extract is useful to management to assess whether the
discount offered in June was worthwhile.
6. Are statements (1) and (2) true or false?
Statement (1)
A. True
B. True
C. Fales
D. Fales
Statement (2)
Fales
True
Fales
True
7. Which data source is LEAST likely to be used by a trainee management
accountant as part of their work?
A. Accounting records
B. Timesheets
C. Corporation tax records
D. Production budget
8. What is NOT a characteristic of useful information?
A. Accurate whatever the cost
B. Arrives on time
C. Understandable to the user
D. Easy to use
A trainee management accountant analyses departmental expense claims submitted
during the previous quarter.
9. Which option describes the source and nature of this information?
A. External and historical
B. External and future-orientated
C. Internal and historical
D. Internal and future-orientated