90 test bank for managerial accounting 1st edition

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90 Test Bank For Managerial Accounting 1st Edition

Multiple Choice Questions - Page 1

The opportunity cost of any decision option is:

1 A The value to the decision maker of the least-best option

2 B The total profit of the best option

3 C The total costs of the least option

4 D The value to the decision maker of the next best option

5 E None of the above

Which of the following is a reason for forming an organization?

1 A To help individuals in need

2 B To increase one’s wealth

3 C To maximize shareholder value

4 D To serve the public

5 E All of the above are reasons for forming an organization

In the planning and control cycle, the Evaluate stage deals with:

1 A Products and services

2 B Resources necessary

3 C Set performance targets

4 D Achievement of performance targets

5 E All of he above are part of the Evaluate stage

Managerial accounting is a branch of accounting which:

1 A Provides financial information to creditors and stockholders

2 B Summarizes financial information

3 C Assists in predicting future profits

4 D Assists in making business decisions

In the planning and control cycle, the Plan stage deals with:

1 A Use of resources to make products and deliver services

2 B Actual results

3 C Performance targets.

4 D Products and services

5 E Reasons for deviations

What is the first step in the decision-making process?

1 A Identify available options

2 B Specify the problem and goals

3 C Measure costs and benefits

4 D Make a final decision

Which of the following statements is false?

1 A Decisions help us accomplish goals

2 B When determining their goals, individuals generally agree on the factors they

consider and the importance they attach to the various factors

3 C Some decisions involve a small number of options

4 D For most businesses, identifying the set of options is one of the more important tasks of management

5 E Value is the contribution of an option to the decision maker’s goals

In order to make a good decisions, management must rely on:

1 A The company’s audited financial statements

2 B Historical documents such as bank statements

3 C Employee input

4 D The evaluation of the costs and benefits of each decision

Janice is traveling to see a friend in New York next month and

she is trying to decide whether to fly or take the train She found a round-trip airline ticket for $170 Janice feels that traveling on the train would be more convenient and she was able to find a ticket for $159, however the total trip time traveling by train will take two hours more than by plane Janice should:

1 A Take the train because it is the least expensive option

2 B Take the train because it is the most convenient option

3 C Take the plane if her goal is to spend as much time as possible with her friend.

4 D Take the plane because it has been proven to be the safest mode of transportation

Which of the following is not a stage in the planning and control

5 E All of the above are stages in the planning and control cycle

Which of the following is not associated with how organizations

motivate employees to achieve their goals?

1 A Policies and procedures

2 B Incentive schemes and performance evaluation

3 C Terminating employees

4 D Monitoring employees for enforcement of policies and procedures

The value of an option equals its:

1 A Benefits plus its costs

2 B Benefits less its costs

3 C Costs

4 D Profit

5 E None of the above

Greg, a college student, knows that the opportunity cost of

taking a class this summer is $1,200 This means that:

1 A Instead of taking the class, Greg could earn $1,200 by working instead

2 B Greg will need to pay $1,200 to take the class

3 C The difference between what he would earn working less the cost of the class is

$1,200

4 D By taking the class, Greg will have the opportunity to earn $1,200 more in a job than

he would without taking the class

The owner of a driving range is trying to determine the value of

hiring additional part time help If she is able to hire

someone to work in the shop for 15 hours per week for

$10 per hour, she estimates that she can teach

approximately 10 additional lessons for which she

charges $40 per lesson The value of hiring a new

1 A Products and services

2 B Best mix of products and services

3 C Motivate employees

4 D Actual results

5 E Reasons for deviations

Monitoring to enforce policies and procedures might include:

1 A Perform random drug and alcohol tests on employees

2 B Routinely walk around and make sure employees are doing their jobs

3 C Keep attendance records to discourage employees from claiming payment for time not worked

4 D Both A and B

5 E A, B and C are methods of monitoring

The organizational goal of management at Friedman Enterprises

is to maximize profits The goal of individual employees is

to maximize their paychecks One way in which

management can try to align these goals would be to:

1 A Increase employee pay, after all this should make employees more efficient

2 B Eliminate stringent policies and procedures, thus giving employees more freedom in their work.

3 C Increase employee incentives for exceptional work

4 D Decrease the amount of supervision of the employees, as this can be distracting to employees

The concepts of value and opportunity cost emphasize that

every decision involves:

1 A Eliminating any risks of making the decision

2 B Estimating the time value of money

3 C Trading off what the decision maker gets with what the decision maker gives up

4 D Comparing the current period’s opportunity costs with the previous period’s

opportunity costs

5 E None of the above

Which of the following is the best example of an opportunity

cost?

1 A The cost of filling up the company car with gasoline

2 B The time incurred in reviewing expense reports of key employees in the company

3 C Taking two days vacation at the end of the month instead of completing a project for

a client

4 D Asking the President of the company for a raise

In the planning and control cycle, the Revise stage deals with:

1 A Best mix of products and services

2 B Reasons for deviations

3 C Motivate employees

4 D Customer and prices

5 E None of the above is a part of the Revise stage

Groceries R Us is considering two different options: install four

self-service registers which would increase profits by

$1,800, or install 2 additional full-service registers which would increase profits by $400 What is the value and opportunity cost of the option of installing the full-service registers?

1 Value Opportunity Cost

1 A Ensuring that costs exceed benefits

2 B Maximizing shareholder value

3 C Paying significant dividends

4 D Launching a new product that is known to have potential defects

In applying the four-step decision-making framework, which of

the following is a difference in individuals’ and

organizations’ decision making process?

1 A Individuals’ goals might have several factors whereas organizations tend to have focused goals

2 B Individuals’ goals tend to be clear, whereas organizations’ goals tend to be unclear

3 C Individuals’ goals tend to be long-term, whereas organizations’ goals tend to be short-term

4 D Individuals’ goals’ may be monetary or nonmonetary, whereas organizations’ goals are always monetary

5 E All of the above are differences in individual and organizational decisions

The proper order for the steps in a planning and control cycle

are:

1 A Plan, revise, implement, and evaluate

2 B Implement, evaluate, revise, and plan.

3 C Implement, revise, evaluate, and plan

4 D Plan, implement, evaluate, and revise

Which of the following is not one of the four steps in the

decision making process?

1 A Specify the decision problem, including the decision maker’s goals

2 B Identify options

3 C Separate routine decision problems from non-routine decision problems

4 D Measure benefits and costs to determine the value of each option

5 E Make the decision, choosing the option with the highest value

Which part of the four step framework for making decisions is

linked directly to the formulation of the decision maker’s goals?

1 A Step 1: Specify the decision problem

2 B Step 2: Identify options

3 C Step 3: Measure benefits and costs

4 D Step 4: Make the decision

Firms promote goal congruence by:

1 A Requiring all employees to participate in the budgeting process

2 B Assuring that all decisions have a small number of options

3 C Reducing opportunity cost to a minimum

4 D Tailoring policies and procedures to fit the organization’s specific needs

5 E None of the above promotes goal congruence

Which of the following is something owners might do to

influence employees to achieve organizational goals?

1 A Maintain policies and procedures to define acceptable behavior

2 B Have incentive schemes and performance evaluations to motivate employees to consider organizational goals

3 C Monitor to enforce policies and procedures

4 D Both A and B

5 E A, B and C are things owners might do.

John has three options for summer work He can do lawn work

for $100 per week, babysit for $125 per week, or work at the local pool for $175 per week All of the options would require approximately 20 hours of work per week In

addition, if he chooses to work at the pool, he will incur

$20 in gas costs per week The opportunity cost if he

chooses to babysit is:

1 A $100

2 B $175

3 C $155

4 D $105

60 Free Test Bank for Managerial Accounting 1st Edition

by Balakrishnan Multiple Choice Questions - Page 2

Which of the following is not a provision of The Foreign Corrupt

Practices Act of 1977?

1 A It prohibits managers from giving bribes to foreign officials

2 B It requires firms to maintain internal control systems to properly execute and record all transactions

3 C It provides for penalties, including fines and jail time, for executives who knowingly alter, destroy, conceal or falsify records

4 D Both A and B

5 E A, B and C

Which of the following is not a competence requirement as

stated by the IMA Standards of Ethical Conduct for

Members?

1 A Maintain an appropriate level of professional competence by ongoing development

of their knowledge and skills

2 B Refrain from engaging in or supporting any activity that would discredit their

profession

3 C Perform their professional duties in accordance with relevant laws, regulations, and technical standards.

4 D Prepare complete and clear reports and recommendations after appropriate

analysis of relevant and reliable information

5 E All of the above are competence requirements

Which of the following is not a correct statement regarding the

Institute of Internal Auditors (IIA)?

1 A Offers a certification that designates an accounting professional as Certified

Financial Manager

2 B Advocates the value of internal auditing

3 C Provides education on best practices in internal auditing

4 D Provides leadership for the global professional of internal auditing

5 E All of the above are correct statements regarding the IIA

Which one of the following is considered a stage of the

planning and control cycle?

1 A Analyze markets

2 B Revise

3 C Develop budgets

4 D Modify

According to the IMA Code of Ethics, to determine whether a

decision is good or bad:

1 A The decision-maker must compare his/her options with some standard of perfection

2 B The decision-maker must assess the situation and the values of the parties affected

The Institute of Management Accountant’s (IMA) Code of Ethics

includes standards covering all of the following except:

2 B A county taxing authority

3 C A sales manager of one of the company’s divisions

4 D A bank that loaned a company $2,000,000

Which of the following best describes the nature of control

decisions of the planning and control cycle?

1 A Deciding which products to sell

2 B Evaluating future advertising based on the effectiveness of a past ad campaign

3 C Creating a management report that is typically not reviewed

4 D Giving employees pay increases without regard to performance

The position of Treasurer typically includes the following

responsibilities except:

1 A Managing daily cash flow needs

2 B Ensuring that capital is used wisely

3 C Serving as the company’s liaison with creditors, particularly banks

4 D Ensuring that the financial statements are presented fairly and are in compliance with Generally Accepted Accounting Principals (GAAP)

An organization’s employees use managerial accounting data to

determine:

1 A Who to hire and how to pay them

2 B Which products and services to offer

3 C The prices of products and services

4 D What equipment to purchase.

5 E All of the above

The Sarbanes-Oxley Act of 2002 requires that:

1 A Executives of publicly-traded companies take responsibility for the accuracy of financial reports

2 B Publicly-traded companies release financial statements on a quarterly basis

3 C Publicly-traded companies notify stockholders if there is any turnover in executive positions

4 D Publicly-traded companies provide a dividend to stockholders at least every other year

Which of the following is not a provision of the Sarbanes-Oxley

Act of 2002?

1 A It mandates that executives of publicly traded companies take individual

responsibility for the accuracy and completeness of financial reports

2 B It requires executive and financial officers to certify, in writing, the truthfulness of quarterly and annual reports filed with the SEC

3 C It provides for penalties, including fines and jail time, for executives who knowingly alter, destroy, conceal or falsify records

4 D It prohibits managers from giving or taking bribes, even if such acts are part of the normal business practices in another country

5 E All of the above are provisions of the Sarbanes-Oxley Act of 2002

The main responsibility for ethical behavior rests on:

1 A Professional bodies

2 B The Government

3 C Employers

4 D The individuals involved

5 E The legal system

Which of the following is a correct hierarchical relationship

among positions in an organization?

1 A Board of Directors, Chief Executive Officer, Treasurer, Functional Manager

2 B Board of Directors, Chief Financial Officer, Chief Executive Officer, Division

Manager

3 C Board of Directors, Chief Financial Officer, Functional Managers, internal Auditor

4 D Board of Directors, Chief Executive Officer, Functional Manager, Division Manager

5 E Board of Directors, Chief Executive Officer, Division Manager, Functional Manager

According to the IMA Code of Ethics, two good questions to ask

when faced with an ethical dilemma are:

1 A “Will my actions be fair and just to all parties affected?” and “Would I be pleased to have my closest friends learn of my actions?”

2 B “Will the personal benefits outweigh the costs of my decision?” and “Would I be pleased to have my closest friends learn of my actions?”

3 C “Will my actions be fair and just to all parties affected?” and “Will the personal

benefits outweigh the costs of my decision?”

4 D “Have I considered all the consequences of my decision?” and “Will my actions be fair and just to all parties affected?”

5 E “Will the personal benefits outweigh the costs of my decision?” and “Have I

considered all the consequences of my decision?”

Which one of the following is a characteristic of managerial

accounting?

1 A Involves only quantitative information

2 B Involves decision makers internal to the company

3 C Prepared based on fixed periods of reporting

4 D Required by GAAP

Ethical standards are often considered difficult to enforce

Which one of the following is a good approach to

ensuring ethics are followed?

1 A Randomly inquiring of certain employees whether they are being ethical or not

2 B Routinely check to ensure that applicants make truthful statement on their

employment applications

3 C Ensuring the CEO always includes a comment on the newsletter that ethics are important and must be followed