131 test bank for managerial accounting tools for business decision making 3rd

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131 Test Bank for Managerial Accounting Tools for

True - False Questions

Reports prepared in managerial accounting are general-purpose reports, whereas reports prepared in financial accounting are usually special-purpose reports

1. True

2 False

As a result of the Sarbanes-Oxley Act of 2002, managerial

accounting reports must now comply with accounting principles accepted by the accounting profession

1. True

2 False

Determining the unit cost of manufacturing a product is an

output of managerial accounting

1. True

2 False

The CEO is directly responsible for the company’s complement

of accounting and financial goals

1. True

2 False

A value chain refers to all the activities associated with providing

Top managers must certify that a company maintains an

adequate system of internal controls

1. True

2 False

The value chain is affected by technology through business on the Internet

business-to-1. True

2 False

Whereas management accountants used to be responsible for strategic cost management, their modern-day responsibilities are more focused on collecting and reporting costs to management

A primary outcome of managerial accounting is the

determination of costs for manufactured items and services

1. True

2 False

Given the decision to employ straight-line amortization or a usage-based amortization method, the management

accountant’s need to report the most relevant economic

information to external users will determine which method is used

Managerial accounting internal reports are prepared less

frequently than are classified financial statements

1. True

2 False

Employees with staff positions serve other employees, while those with line positions work directly in line with the company’s revenue generating goals

1. True

2 False

Managerial accounting information generally pertains to an entity

as a whole and is very detailed

Fundamentally, managerial accounting applies best to the

Management accounting is a discipline with a rather narrow

scope for career advancement

1. True

2 False

The management function of planning is mainly concerned with setting goals and objectives for the entity

1. True

2 False

Generally Accepted Accounting Principles (GAAP) form the backbone of managerial accounting conventions, and local and/or regional standards and professional judgement allow for variations among practitioners

1. True

2 False

Managers’ activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control

Multiple Choice Questions - Page 1

The major reporting standard for management accounting is

1. a the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management

2 b the Sarbanes-Oxley Act of 2002

3 c relevance to decisions

4 d generally accepted accounting principles

A company must inform readers of its annual report of:

1. a All changes in financial accounting policies

2 b Results of any overseas activities

3 c All changes in internal accounting information

4 b Changes to management’s bonus system

What broad functions do the management of an organization perform?

1. a Directing, manufacturing, and controlling

2 b Planning, directing, and controlling

3 c Planning, directing, and selling

4 d Planning, manufacturing and controlling

The organization chart of a company shows:

1. a the interrelationships of activities within a company

2 b the delegation of authority within a company

3 c the delegation of responsibility within a company

4 d all of the above

Which of the following uses managerial accounting?

1. a Manufacturing and service entities, but not merchandising

2 b Profit-oriented businesses only

3 c Service, manufacturing, and merchandising entities

4 d Only manufacturing entities

In establishing a good internal reporting system, a company should:

1. a Ensure that these reports agree to generally accepted accounting principles

2 b Have the Board of Directors agree to the information provided

3 c Establish clearly understood standards of performance

4 d All of the above are valid reasons

Which of the following statements about internal reports is true?

1. a Most internal reports are summarized rather than detailed

2 b Internal reports focus on general purpose needs of users

3 c The content of internal reports extends beyond the double-entry accounting system

4 d Internal reports are often very general

Which function is achieved when a manager is determining

whether planned goals are being met?

2 b Never more than monthly

3 c According to the company’s business cycle

Which one of the following describes internal reports?

1. a They are often audited by CAs

2 b They must be prepared according to GAAP

3 c They are aggregated

4 d They are detailed

How often are internal managerial reports communicated?

1. a Keeping track of quality improvements

2 b Showing the company’s percent of market share

3 c Showing statistics on plant safety

4 d All areas would benefit from providing internal management information

Which one of the following is true concerning the managerial function of controlling?

1. a It includes performance evaluation by management

2 b It is concerned mainly with operating a manufacturing segment

3 c It is performed only by the controller of a company

4 d It includes hiring and training employees

Which term describes managerial accounting reports?

1. a GAAP reports

2 b Special-purpose

3 c General-purpose

4 d Regulatory reports

Which of the following is not part of managerial accounting?

1. a Determining whether planned goals are being met

2 b Reporting financial information to the shareholders

3 c Calculating product costs

4 d Controlling costs

Managerial accounting

1. a is concerned with costing products

2 b is governed by generally accepted accounting principles

3 c pertains to the entity as a whole and is highly aggregated

4 d places emphasis on special-purpose information

Which description identifies financial statements that are prepared for external users?

1. a External reports

2 b Special-purpose

3 c User-specific

4 d General-purpose

Managerial accounting information

1. a pertains to the entity as a whole and is highly aggregated

2 b must be prepared according to generally accepted accounting principles

3 c pertains to subunits of the entity and may be very detailed

4 d is prepared only once a year

Managerial accounting is also called

Which management function is a manager performing when objectives are being established?

1. a Regulating

2 b Planning

3 c Motivating

4 d Directing

Which one of the following does the planning function involve?

1. a Analyzing financial statements

2 b Setting goals and objectives for an entity

3 c Hiring the right people for a particular job

4 d Coordinating the accounting information system

Which one of the following tasks would not be performed by a management accountant?

1. a Being concerned with the impact of cost and volume on profits

2 b Strategic cost management

3 c Assisting in budget planning

4 d Preparing reports primarily for external users

How often should management receive or prepare reports on its internal process activities?

1. a On a fixed time basis

2 b As often as is necessary

3 c Never more than monthly

4 d Weekly

What activities and responsibilities are not associated with

1. a Monthly reports on activities to the Board of Directors

2 b Quarterly reporting to the Toronto Stock Exchange

3 c Specific purpose statements on services delivered

4 d Audited financial information in the annual report to shareholders

Which of the following represents two management functions?

1. a Regulating and directing

2 b Controlling and directing

3 c Controlling and auditing

4 d Auditing and planning

91 Free Test Bank for Managerial Accounting Tools for Business Decision Making 3rd Canadian Edition by

Weygandt Multiple Choice Questions - Page 2

The Ontario Securities Commission introduced regulations

governing the composition and duties of audit committees, as well as their members’ behaviour The new rules:

1. a are as robust as parallel rules required by the U.S Sarbanes-Oxley Act

2 b were adopted by all provincial and territorial securities regulators, except for British Columbia’s.

3 c were introduced in conjunction with the Canadian Securities Administrators

4 d all of the above

Directing includes

1. a providing a framework for management to have criteria to terminate employees when needed

2 b running a department under quality control standards universally accepted

3 c coordinating a company’s diverse activities and human resources to produce a

smooth-running operation

4 d developing a performance ranking system to give certain high performers good raises

A company acting ethically must adapt its external reports to any changes required:

1. a Instantly

2 b As it is appropriate for its business cycle

3 c As stipulated by the CICA

4 d If they are considered pertinent to its business activities

Which of the following is not required to become a CMA?

1. a Completion of a university degree

2 b Candidates must pass an entrance exam into the CMA program

3 c Completion of a two-year strategic leadership program concurrently with gaining industry experience

4 d Completion of a national exit exam

Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more

Which is the best definition of fraud?

1. a Unknowingly misrepresenting the facts

2 b Using business supplies for personal use

3 c The intentional misstatement of facts

4 d Misappropriating funds for personal financial gain

Which of the following is true?

1. a Dissatisfied employees cite a decline in ethical behaviour is a result of a change in corporate culture

2 b Unethical corporate behaviour occurs only in the United States because of its capitalistic environment

3 c Unethical behaviour rarely causes a decline in investor confidence

4 d Unethical actions are reasonable in an environment wherein unreasonable budgets and targets have been set

Some companies implement systems to reduce defects in

finished products with the goal of achieving zero defects What are these systems called?

1. a Activity-based costing systems

2 b Enterprise resource planning systems

3 c Value chain systems

4 d Total quality management systems

How have many companies significantly lowered inventory levels and costs?

1. a They use activity-based costing

2 b They utilize an enterprise resource planning system

3 c They have a just-in-time method

4 d They focus on a total quality management system

A company acting ethically must adapt its internal reports to any changes required:

1. a Instantly

2 b As it is appropriate for its business cycle

3 c As stipulated by the CICA

4 d If they are considered pertinent to its business activities

One of the advantages of a just in time inventory system is that it reduces inventory quantities Why is this considered to be a benefit?

1. a Carrying inventory incurs storage costs, hence reducing inventory quantities reduces costs

2 b Carrying large inventory raises the risk that customers will want an item that you do not have

3 c Carrying large inventory reduces the risk that customers will want an item that you do not have

4 d None of the above

What is one primary benefit of an enterprise resource planning (ERP) system?

1. a It reduces inventory levels

2 b It permits companies to be more streamlined in production

3 c It replaces research and development in a company

4 d It requires an increased emphasis on product quality

How do most companies manage their value chain?

1. a By using activity-based costing

2 b By creating enterprise resource planning systems

3 c Using an action plan

4 d Using total quality management systems

Though their areas of specialization overlap, which of the three bodies of professionally designated accountants would be best

to engage for implementation of an activity-based costing

inventory system?

1. a Chartered Accountant

2 b Certified General Accountant

3 c Certified Public Accountant

4 d Certified Management Accountant

In Canada the three different professional accounting

designations are

1. a CPA, CA, CMA

2 b CMA, CGA, CPA

3 c CA, CMA, CGA

4 d MA, CPA, CA

In Canada, which of the following professional accounting

organizations play an important role in promoting high standards

of ethics in the accounting profession?

1. a The Society of Management Accountants of Canada

2 b The Canadian Institute of Chartered Accountants

3 c The Certified General Accountants Association of Canada

4 d All of the above

Choose the correct statement

1. a CGA stands for Certified Generic Accountant

2 b CMA stands for Certified Managing Accountant

3 c CA stands for Chartered Accountant

4 d CPA stands for Certified Professional Accountant

What is “balanced” in the balanced scorecard approach?

1. a The number of products produced

2 b The emphasis on financial and non-financial performance measurements

3 c The amount of costs allocated to products

4 d The number of defects found on each product

What term describes all activities associated with providing a product or service?

1. a The manufacturing chain

2 b The product chain

3 c The supply chain

4 d The value chain

In order to obtain more accurate product costs, how do many companies allocate overhead?

1. a They use activity-based costing

2 b They use enterprise resource planning systems

3 c They use just-in-time methods

4 d They use total quality management systems

For what purpose is the theory of constraints used?

1. a To reduce product defects

2 b To balance performance measurement

3 c To identify and manage constraints that bottle-neck operations

4 d To reduce inventory levels

The production manager at ABC Inc is responsible for

formulating the budget for his department He will be evaluated

on his ability to control costs After considerable thought, he arrives at his best estimate of costs, and then adds a further 10%

to the projections Chances are he has inflated the cost

projections because

1. a that is the way it has always been done

2 b conservative accounting practise requires that he not under report expenses

3 c by overestimating expenses, it will make it easier for him to come in under budget andreceive a favourable evaluation

4 d none of the above

Many companies now manufacture products that are untouched

by human hands What do they use to achieve this?

1. a Activity-based costing

2 b Computer-integrated manufacturing

3 c Enterprise resource planning systems

4 d Total quality management systems

Which one of the following is not a main component of the value chain sequence?

1. a ERP

2 b Sales and marketing

3 c Production

4 d Customer relations

Which statement is correct?

1. a All three of Canada’s professional accounting designations require completion of a university degree in accounting

2 b All three of Canada’s professional accounting designations require completion of some post-secondary education

3 c The educational requirements of the three professional accounting designations focus

on broadly-based accounting and financial management concepts

4 d Each of the three professional accounting bodies publishes its own magazine to promote the interests of its membership

Which of the following statements is true?

1. a In recent decades, the Canadian economy in general has shifted towards an

emphasis on providing services rather than goods This trend has reduced the importance

of managerial accounting

2 b In recent decades, the Canadian economy in general has shifted towards an

emphasis on providing goods rather than services This trend has reduced the importance

of managerial accounting

3 c In recent decades, the Canadian economy in general has shifted towards an

emphasis on providing services rather than goods This trend has NOT reduced the importance of managerial accounting