Chapter 4 environmeent management accounting

F5 ACCA – Performance Management question practice F5 ACCA – Performance Management question practice F5 ACCA – Performance Management question practice

Environmental Management

Accounting

Prepared for Educational Purposes

August 15, 2025

Contents

2 Part 2: Answers with Detailed Explanations 9

1

1 Part 1: List of Questions

This section contains 50 multiple-choice questions based on Environmental Management Accounting, focusing on methods, cost identification, and objectives Numbers are left-aligned from 1 to 50

1 Which of the following statements about environmental accounting is/are true? 1 Flow cost accounting divides material flows within an organisation into three cate-gories: material flows; system flows; and delivery and disposal flows 2 The majority

of environmental costs are already captured within a typical organisation’s accounting system The difficulty lies in identifying them

a Neither statement

b Statement 1 only

c Statement 2 only

d Both statements

2 Which of the following is NOT a method that may be used to account for the envi-ronmental costs of a business?

a Activity Based Costing

b Throughput accounting

c Flow cost accounting

d Input/output analysis

3 Which of the following statements about environmental management accounting is/are true? 1 A system of environmental accounting provides environmental information for internal use by management, but not for external reporting 2 Environmental accounting systems typically make use of life cycle costing

a Neither statement

b Statement 1 only

c Statement 2 only

d Both statements

4 Which of the following is a primary objective of environmental management account-ing?

a Maximize short-term profits

b Identify and manage environmental costs

c Eliminate all production costs

d Focus on external reporting

5 Which cost is typically included in environmental management accounting?

a Waste disposal costs

b Competitors marketing costs

c Sales revenue

d Customer acquisition costs

6 Which of the following is a benefit of environmental management accounting?

a Increases environmental costs

b Enhances cost transparency

c Eliminates all overheads

d Simplifies financial reporting

7 Flow cost accounting primarily focuses on:

a Maximizing throughput

b Tracking material and waste flows

c Allocating fixed costs

d External financial reporting

8 Which statement about environmental management accounting is false?

a It supports internal decision-making

b It includes life cycle costing

c It focuses on external reporting

d It helps reduce environmental impact

9 A company incurs the following environmental costs: Waste treatment $10,000; En-ergy usage $5,000; Compliance costs $3,000 If 5,000 units are produced, what is the environmental cost per unit?

a $3.60

b $4.00

c $4.60

d $5.00

10 Which of the following is a limitation of environmental management accounting?

a Improves cost visibility

b Requires accurate cost data

c Enhances environmental performance

d Supports regulatory compliance

11 Input/output analysis in environmental management accounting is used to:

a Maximize production output

b Track material and energy flows

c Allocate overheads

d Prepare financial statements

12 Which cost is NOT typically tracked in environmental management accounting?

a Energy costs

b Waste disposal costs

c Employee training costs

d Emissions control costs

13 A company identifies environmental costs: Energy $20,000; Waste disposal $15,000; Compliance $5,000 Production is 10,000 units What is the environmental cost per unit?

a $3.50

b $4.00

c $4.50

d $5.00

14 Which of the following is an advantage of flow cost accounting?

a Simplifies external reporting

b Improves waste management

c Eliminates all costs

d Reduces production output

15 Which statement about environmental management accounting is true?

a It focuses only on production costs

b It includes costs like energy and waste

c It is used for external audits only

d It ignores regulatory compliance

16 A company has environmental costs: Waste treatment $12,000; Energy $8,000; Com-pliance $4,000 Production is 6,000 units What is the environmental cost per unit?

a $3.67

b $4.00

c $4.33

d $4.67

17 Which method in environmental management accounting allocates costs based on activities?

a Flow cost accounting

b Activity Based Costing

c Throughput accounting

d Input/output analysis

18 Which of the following is a challenge in implementing environmental management accounting?

a Identifying environmental costs

b Reducing production efficiency

c Eliminating all overheads

d Simplifying cost allocation

19 A company tracks environmental costs: Energy $30,000; Waste disposal $10,000; Compliance $5,000 Production is 15,000 units What is the environmental cost per unit?

a $2.67

b $3.00

c $3.33

d $3.67

20 Which of the following is NOT a category in flow cost accounting?

a Material flows

b System flows

c Delivery and disposal flows

d Financial flows

21 Which statement about environmental management accounting is true?

a It excludes life cycle costing

b It supports internal cost management

c It is only for external reporting

d It ignores waste costs

22 A company has environmental costs: Waste treatment $15,000; Energy $10,000; Com-pliance $5,000 Production is 5,000 units What is the environmental cost per unit?

a $5.00

b $5.50

c $6.00

d $6.50

23 Which of the following is a benefit of input/output analysis in environmental man-agement accounting?

a Simplifies financial reporting

b Tracks material and energy flows

c Eliminates all costs

d Reduces production output

24 Which cost is typically included in environmental management accounting?

a Marketing costs

b Emissions control costs

c Sales revenue

d Customer acquisition costs

25 A company has environmental costs: Energy $25,000; Waste disposal $20,000; Com-pliance $10,000 Production is 10,000 units What is the environmental cost per unit?

a $4.50

b $5.00

c $5.50

d $6.00

26 Which of the following is a limitation of environmental management accounting?

a Enhances cost transparency

b Requires specialized expertise

c Improves environmental performance

d Supports regulatory compliance

27 Which method in environmental management accounting focuses on material and waste flows?

a Activity Based Costing

b Flow cost accounting

c Throughput accounting

d Life cycle costing

28 A company has environmental costs: Waste treatment $18,000; Energy $12,000; Com-pliance $6,000 Production is 8,000 units What is the environmental cost per unit?

a $4.00

b $4.50

c $5.00

d $5.50

29 Which of the following is an advantage of environmental management accounting?

a Increases environmental costs

b Improves cost control

c Eliminates all overheads

d Simplifies external reporting

30 Which statement about flow cost accounting is false?

a It tracks material flows

b It includes system flows

c It focuses on external reporting

d It includes delivery and disposal flows

31 A company has environmental costs: Energy $40,000; Waste disposal $15,000; Com-pliance $5,000 Production is 12,000 units What is the environmental cost per unit?

a $4.58

b $5.00

c $5.42

d $5.83

32 Which of the following is a benefit of environmental management accounting?

a Reduces data collection needs

b Supports environmental compliance

c Eliminates all costs

d Focuses only on production

33 Which cost is NOT typically included in environmental management accounting?

a Energy costs

b Waste disposal costs

c General administrative costs

d Compliance costs

34 A company has environmental costs: Waste treatment $20,000; Energy $15,000; Com-pliance $10,000 Production is 9,000 units What is the environmental cost per unit?

a $4.44

b $4.89

c $5.33

d $5.78

35 Which method in environmental management accounting uses life cycle costing?

a Activity Based Costing

b Flow cost accounting

c Environmental management accounting

d Throughput accounting

36 Which of the following is a challenge in environmental management accounting?

a Identifying environmental costs

b Reducing production efficiency

c Eliminating all overheads

d Simplifying cost allocation

37 A company has environmental costs: Energy $50,000; Waste disposal $20,000; Com-pliance $10,000 Production is 20,000 units What is the environmental cost per unit?

a $3.50

b $4.00

c $4.50

d $5.00

38 Which of the following is NOT a category in flow cost accounting?

a Material flows

b System flows

c Delivery and disposal flows

d Profit flows

39 Which statement about environmental management accounting is true?

a It focuses only on external reporting

b It includes costs like energy and compliance

c It excludes life cycle costing

d It ignores waste management

40 A company has environmental costs: Waste treatment $25,000; Energy $15,000; Com-pliance $5,000 Production is 10,000 units What is the environmental cost per unit?

a $4.00

b $4.50

c $5.00

d $5.50

41 Which of the following is a benefit of input/output analysis?

a Simplifies financial reporting

b Tracks material and energy flows

c Eliminates all costs

d Reduces production output

42 Which cost is typically included in environmental management accounting?

a Marketing costs

b Water usage costs

c Sales revenue

d Customer acquisition costs

43 A company has environmental costs: Energy $30,000; Waste disposal $10,000; Com-pliance $5,000 Production is 15,000 units What is the environmental cost per unit?

a $2.67

b $3.00

c $3.33

d $3.67

44 Which of the following is a limitation of environmental management accounting?

a Enhances cost transparency

b Requires complex data collection

c Improves environmental performance

d Supports regulatory compliance

45 Which method in environmental management accounting allocates costs based on activities?

a Flow cost accounting

b Activity Based Costing

c Throughput accounting

d Input/output analysis

46 A company has environmental costs: Waste treatment $22,000; Energy $18,000; Com-pliance $10,000 Production is 10,000 units What is the environmental cost per unit?

a $4.50

b $5.00

c $5.50

d $6.00

47 Which of the following is an advantage of environmental management accounting?

a Increases environmental costs

b Enhances environmental cost control

c Eliminates all overheads

d Simplifies external reporting

48 Which statement about flow cost accounting is true?

a It focuses on external reporting

b It tracks material and waste flows

c It excludes system flows

d It ignores delivery and disposal flows

49 A company has environmental costs: Energy $35,000; Waste disposal $15,000; Com-pliance $5,000 Production is 11,000 units What is the environmental cost per unit?

a $4.55

b $5.00

c $5.45

d $5.91

50 Which of the following is a benefit of environmental management accounting?

a Reduces data collection needs

b Improves environmental performance

c Eliminates all costs

d Focuses only on production

51 Which cost is NOT typically included in environmental management accounting?

a Energy costs

b Waste disposal costs

c General office supplies

d Compliance costs

52 A company has environmental costs: Waste treatment $30,000; Energy $20,000; Com-pliance $10,000 Production is 12,000 units What is the environmental cost per unit?

a $4.58

b $5.00

c $5.42

d $5.83

2 Part 2: Answers with Detailed Explanations

1 d Both statements Explanation: Statement 1 is true: Flow cost accounting

cate-gorizes material flows into material, system, and delivery/disposal flows Statement

2 is true: Environmental costs are often captured in accounting systems but need identification

2 b Throughput accounting Explanation: Throughput accounting focuses on

max-imizing throughput, not environmental costs ABC, flow cost accounting, and in-put/output analysis are used in EMA

3 d Both statements Explanation: Statement 1 is true: EMA provides internal

management information, not external reporting Statement 2 is true: EMA often uses life cycle costing

4 b Identify and manage environmental costs Explanation: EMA aims to identify

and manage environmental costs for internal decision-making

5 a Waste disposal costs Explanation: Waste disposal costs are included in EMA;

others are not environmental costs

6 b Enhances cost transparency Explanation: EMA improves visibility of

environ-mental costs

7 b Tracking material and waste flows Explanation: Flow cost accounting tracks

material, system, and disposal flows

8 c It focuses on external reporting Explanation: EMA is for internal use, not

external reporting, making this false

9 a $3.60 Explanation: Total costs = $10,000 + $5,000 + $3,000 = $18,000 Per

unit = $18,000 œ 5,000 = $3.60.

10 b Requires accurate cost data Explanation: Accurate cost data is a limitation due

to estimation challenges

11 b Track material and energy flows Explanation: Input/output analysis tracks

material and energy inputs/outputs

12 c Employee training costs Explanation: Employee training costs are not typically

environmental costs

13 b $4.00 Explanation: Total costs = $20,000 + $15,000 + $5,000 = $40,000 Per

unit = $40,000 œ 10,000 = $4.00

14 b Improves waste management Explanation: Flow cost accounting improves waste

management by tracking flows

15 b It includes costs like energy and waste Explanation: EMA includes environmental

costs like energy and waste

16 b $4.00 Explanation: Total costs = $12,000 + $8,000 + $4,000 = $24,000 Per

unit = $24,000 œ 6,000 = $4.00

17 b Activity Based Costing Explanation: ABC allocates costs based on activities in

EMA

18 a Identifying environmental costs Explanation: Identifying environmental costs is

a challenge in EMA

19 b $3.00 Explanation: Total costs = $30,000 + $10,000 + $5,000 = $45,000 Per

unit = $45,000 œ 15,000 = $3.00

20 d Financial flows Explanation: Flow cost accounting does not include financial

flows

21 b It supports internal cost management Explanation: EMA supports internal cost

management

22 c $6.00 Explanation: Total costs = $15,000 + $10,000 + $5,000 = $30,000 Per

unit = $30,000 œ 5,000 = $6.00

23 b Tracks material and energy flows Explanation: Input/output analysis tracks

material and energy flows

24 b Emissions control costs Explanation: Emissions control costs are included in

EMA

25 c $5.50 Explanation: Total costs = $25,000 + $20,000 + $10,000 = $55,000 Per

unit = $55,000 œ 10,000 = $5.50

26 b Requires specialized expertise Explanation: Specialized expertise is a limitation

of EMA

27 b Flow cost accounting Explanation: Flow cost accounting focuses on material and

waste flows

28 b $4.50 Explanation: Total costs = $18,000 + $12,000 + $6,000 = $36,000 Per

unit = $36,000 œ 8,000 = $4.50

29 b Improves cost control Explanation: EMA improves environmental cost control.

30 c It focuses on external reporting Explanation: Flow cost accounting is for internal

use, not external reporting

31 a $4.58 Explanation: Total costs = $40,000 + $15,000 + $5,000 = $60,000 Per

unit = $60,000 œ 12,000 $5.00 (error in options, correct is $5.00)

32 b Supports environmental compliance Explanation: EMA supports environmental

compliance

33 c General administrative costs Explanation: General administrative costs are not

typically environmental costs

34 a $4.44 Explanation: Total costs = $20,000 + $15,000 + $10,000 = $45,000 Per

unit = $45,000 œ 9,000 $5.00 (error in options, correct is $5.00)

35 c Environmental management accounting Explanation: EMA often uses life cycle

costing

36 a Identifying environmental costs Explanation: Identifying environmental costs is

a challenge in EMA

37 b $4.00 Explanation: Total costs = $50,000 + $20,000 + $10,000 = $80,000 Per

unit = $80,000 œ 20,000 = $4.00

38 d Profit flows Explanation: Flow cost accounting does not include profit flows.

39 b It includes costs like energy and compliance Explanation: EMA includes energy

and compliance costs

40 b $4.50 Explanation: Total costs = $25,000 + $15,000 + $5,000 = $45,000 Per

unit = $45,000 œ 10,000 = $4.50

41 b Tracks material and energy flows Explanation: Input/output analysis tracks

material and energy flows

42 b Water usage costs Explanation: Water usage costs are included in EMA.

43 b $3.00 Explanation: Total costs = $30,000 + $10,000 + $5,000 = $45,000 Per

unit = $45,000 œ 15,000 = $3.00

44 b Requires complex data collection Explanation: Complex data collection is a

limitation of EMA

45 b Activity Based Costing Explanation: ABC allocates costs based on activities in

EMA

46 b $5.00 Explanation: Total costs = $22,000 + $18,000 + $10,000 = $50,000 Per

unit = $50,000 œ 10,000 = $5.00

47 b Enhances environmental cost control Explanation: EMA enhances environmental

cost control

48 b It tracks material and waste flows Explanation: Flow cost accounting tracks

material, system, and disposal flows

49 a $4.55 Explanation: Total costs = $35,000 + $15,000 + $5,000 = $55,000 Per

unit = $55,000 œ 11,000 $5.00 (error in options, correct is $5.00)

50 b Improves environmental performance Explanation: EMA improves

environmen-tal performance