130 test bank for introduction to management accounting 16th edition

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130 Test Bank for Introduction to Management

Accounting 16th Edition

True False Questions - Multiple Choice Questions

The primary users of management accounting information are

1 A) bankers

2 B) governmental regulatory bodies

4 D) managerial accountants

Performance reports compare actual results to

Performance reports also report

1 A) budgeted results; bonuses awarded

2 B) objectives; variances

4 D) projected results; stock options granted

involves an analysis of alternative courses of action and the identification of the best course of action to follow

1 A) Scorekeeping

2 B) Attention directing

4 D) Internal auditing

Taco Bell wants to increase profitability of stores in the Midwest

by adding new menu items and increasing advertising This is

an experiment and the company is unsure if these actions will

be fruitful On the part of management, this is an example of

1 A) control

2 B) scorekeeping

3 C) feedback

Southern Chicken is expanding the menu items offered in order

to increase profitability Management will evaluate the

profitability of each new menu item after six months Menu

items that are profitable will be retained and the others will be discontinued On the part of management, the evaluation and subsequent actions after six months is an example of

A company is considering whether to change the mix of

products sold They think it would be more profitable to

emphasize the products with the highest profit per unit What type of information is needed to answer this question?

1 A) scorekeeping

2 B) attention directing

4 D) internal auditing

An unfavorable variance occurs on a performance report when

1 A) the actual cost is less than the budgeted cost

2 B) the actual revenue is greater than the budgeted revenue

3 C) the actual profit is greater than the budgeted profit

4 D) the actual revenue is less than the budgeted revenue

To evaluate managers' decisions and the productivity of

organizational units, organizations use

1 A) annual financial statements

2 B) quarterly financial statements

3 C) bimonthly financial statements

4 D) internal accounting control

Companies produce most and information

on a routine basis such as every day, every month or every quarter

1 A) scorekeeping; problem-solving

2 B) scorekeeping; attention directing

3 C) problem-solving; attention directing

4 D) interim reports; problem-solving

Who provides assurance to external users about the reliability

of a company's financial statements?

1 A) Certified Management Accountants and Certified Public Accountants

2 B) Chartered Management Accountants and Certified Management Accountants

3 C) Certified Public Accountants and Chartered Management Accountants

Financial reports prepared by financial accountants focus on Financial reports prepared by management

accountants focus on

1 A) segments of the organization such as departments and divisions; segments of the organization such as departments and divisions

2 B) the organization as a whole; the organization as a whole

What are accounting systems?

1 A) The process used to streamline production processes

2 B) The process used to generate performance measures

an organization's activities

4 D) none of the above

The largest U.S association of professional accountants whose major interest is management accounting is the

1 A) American Institute of Certified Public Accountants

2 B) American Institute of Certified Management Accountants

4 D) American Institute of Management Accountants

Generally Accepted Accounting Principles are most closely connected to

1 A) management accounting

2 B) financial accounting

3 C) internal auditing

4 D) management auditing

is the field that produces information used primarily

by managers within an organization

1 A) decision to make or buy parts for a manufactured product

2 B) decision to replace equipment

3 C) decision to add or drop a division

4 D) evaluating the operating performance of a segment in the current year

Planning refers to

1 A) the implementation of organizational plans

2 B) the use of performance reports to evaluate the attainment of organizational

objectives

3 C) setting organizational objectives and establishing the path to attain them

4 D) an analysis of alternative courses of action

A company is setting the price on a special order of a

manufactured product routinely made What type of information

is needed to set the price?

2 B) Management accounting helps managers fulfill organizational objectives.

operational decisions.

4 D) Management accounting produces information for managers in an organization.

Which credential is associated with management accountants?

1 A) CPA

3 C) CFP

4 D) IMA

is the classification, accumulation, and reporting of data that help users understand and evaluate organizational performance

2 B) Attention directing

3 C) Problem solving

4 D) Cost accounting

When comparing management accounting and financial

accounting, which of the following statements is FALSE?

1 A) Management accounting has a future orientation whereas financial accounting has a past orientation.

2 B) Management accounting prepares detailed reports whereas financial accounting prepares summary reports.

3 C) Management accountants are constrained by the principles of reporting

promulgated by the Institute of Management Accountants whereas financial accountants are constrained by Generally Accepted Accounting Principles.

4 D) Behavioral considerations are of primary importance in management accounting, but not in financial accounting.

Starbucks experiments with adding ice cream sundaes to its menu at several stores in the state of Washington Financial reports are prepared showing revenues and costs for the new menu item Based on the reports, management at the corporate office will then decide whether to permanently add or remove the new menu item The financial reports are an example of

information

1 A) scorekeeping

2 B) attention directing

4 D) management auditing

What type of information is used in making nonroutine

decisions, such as the decision to replace a traditional

assembly line with fully automated robots?

1 A) scorekeeping information

2 B) attention directing information

4 D) auditing information

How is accounting information prepared by management

accountants used within an organization?

1 A) to help operating managers make decisions

2 B) to plan an organization's operations

3 C) to control an organization's operations

is the field of accounting that develops information for external parties such as stockholders, suppliers, banks and governmental regulatory bodies

1 A) Auditing

2 B) Internal auditing

3 C) Management accounting

A company is unsure whether it is more cost efficient to make

or buy a component used in a manufactured product that is mass produced What type of information is needed to make this decision?

1 A) scorekeeping

2 B) attention directing

4 D) management auditing

Which of the following organizations oversees the CMA Exam?

1 A) American Institute of Certified Public Accountants

2 B) Chartered Accountants Institute

4 D) American Institute of Certified Management Accountants

Starbucks generates many financial reports to evaluate the operating performance of each store at the end of each quarter The financial reports are an example of

2 B) attention directing

3 C) problem-solving

4 D) management auditing

The Foreign Corrupt Practices Act requires

1 A) companies to cease conducting business with companies in some foreign countries

2 B) companies to reject bribes from companies in foreign countries

3 C) companies to have an appropriate system of internal controls

4 D) companies to prepare a separate report on their accounting information system

information helps managers focus on operating

problems, imperfections, inefficiencies and opportunities

1 A) Scorekeeping

2 B) Attention directing

3 C) Problem solving

4 D) Performance

98 Free Test Bank for Introduction to Management

Accounting 16th Edition by Horngren Multiple Choice Questions - Page 2

When designing an accounting information system for

management, which governmental regulations are NOT

important?

1 A) Sarbanes-Oxley Act

2 B) Foreign Corrupt Practices Act

3 C) Tax rules promulgated by Internal Revenue Service

A budget

1 A) is a quantitative expression of a plan of action

2 B) provides feedback by comparing actual results with planned results

3 C) includes deviations from planned results

4 D) ignores areas that are presumed to be running smoothly

When designing an accounting information system, the cost to acquire additional information should be incurred

1 A) at all times so the operating manager has more information to make decisions

2 B) when information overload does not occur

3 C) at all times because the benefit cannot be quantified

4 D) when the expected benefit of an improved decision exceeds the cost of the

information

According to the Financial Executives Institute, a function of the controller is

1 A) investments

2 B) short-term financing

3 C) provision of capital

4 D) reporting and interpreting

Who is the primary user of performance reports used to plan and control operations?

Which stage of the product life cycle has a stable sales level?

1 A) product development stage

2 B) introduction to market stage

4 D) phase-out of product stage

Advertising is an example of the function of the value chain

1 A) distribution

2 B) selling

4 D) promotion

In a typical manufacturing factory, line functions do NOT include

2 B) stamping

3 C) welding

4 D) assembly

Which of the following items should be considered by

managers when designing accounting systems?

1 A) cost-benefit balances

2 B) behavioral implications

3 C) cost-benefit balances and behavioral implications

4 D) none of the above

When does a company earn the majority of revenue for a product that goes through the product life cycle?

1 A) phase-out of product and introduction to market stages

3 C) product development and mature market stages

4 D) mature market and phase-out of product stages

The is mainly concerned with the company's

operating matters whereas the is mainly concerned with the company's financial matters

1 A) treasurer; controller

2 B) controller; treasurer

3 C) managerial accountant; financial accountant

4 D) chief executive officer; chief financial officer

What type of managers supports line managers by providing information and advice?

2 B) operating managers

3 C) assembly room managers

4 D) welding room managers

Distribution is the function of the value chain that involves

2 B) the manner by which individuals or groups learn about the value and features of products or services

3 C) the support activities provided to the customer

4 D) none of the above

A new weight loss product is sold by a mail-order system The mail-order system is an example of the function in the value chain

is (are) the primary consideration in choosing among accounting systems.

1 A) Simplicity

2 B) Behavioral implications

4 D) Simplicity and behavioral implications

Research and development is the function of a value chain that involves

1 A) the detailed design and engineering of products, services or processes

2 B) the generation of ideas related to new products, services or processes

3 C) the generation of ideas related to new products only

4 D) the detailed design and engineering of new processes

The function of the value chain that provides support activities

to the customer is called

Management-by-exception means that managers should

1 A) concentrate on areas that deviate from the plan

2 B) in the absence of other evidence, presume that areas that conform with plans are running smoothly

4 D) none of the above

In a typical manufacturing factory, staff functions do NOT

is (are) the accounting system's effect on the behavior and the decisions of managers

1 A) Simplicity

3 C) The cost-benefit balance

4 D) The code of ethics

What type of managers is directly involved with making and selling an organization's products?

2 B) only favorable and unfavorable variances that are large in size

3 C) only unfavorable variances that are large in size

4 D) only favorable variances that are large in size

A favorable variance occurs on a performance report when

1 A) the actual cost is greater than the budgeted cost

2 B) the actual revenue is less than the budgeted revenue

3 C) the actual profit is less than the budgeted profit

4 D) the actual profit is greater than the budgeted profit

A telephone hotline is established for customers to call with questions about a new electronic device This is an example of the function in the

1 A) marketing; value chain

2 B) distribution; value chain

4 D) marketing; product life cycle

Each value chain function should focus on activities that

1 A) create profits for the seller

2 B) create bonuses for top management

3 C) create higher stock prices for the company's stock

During the product development stage of the product life cycle, companies typically experience

1 A) revenues and no costs

3 C) both costs and revenues

4 D) neither costs nor revenues

Marketing is the function of the value chain that involves

1 A) the mechanism by which a company delivers products or services to the customer

2 B) the manner by which individuals or groups learn about the value and features of products or services

3 C) selling activities and delivery activities

4 D) selling activities and customer service

When developing a price for a new product, the price must cover

1 A) costs in phase-out and product development cycles only

2 B) costs in mature market and introduction to market cycles only

3 C) costs in product development and phase-out cycles plus direct production costs

4 D) costs incurred in all stages of the product life cycle

98 Free Test Bank for Introduction to Management

Accounting 16th Edition by Horngren Multiple Choice Questions - Page 3

The Institute of Management Accountants has adopted a set of standards for ethical conduct which includes

1 A) competence, integrity, confidentiality and objectivity

2 B) competence, confidentiality, credibility and objectivity

3 C) competence, confidentiality, credibility and integrity

4 D) competence, integrity, morality and confidentiality

If an employee observes unethical behavior in an organization, the employee is first obligated to

1 A) report the behavior to the police

2 B) report the behavior to his or her supervisor

3 C) report the behavior to the Securities and Exchange Commission

4 D) follow the company's policies for unethical behavior

All service organizations are similar in that

1 A) they are labor intensive

2 B) output is easy to measure

3 C) major inputs and outputs can be stored