Test bank for cost management measuring monitoring and motivating performance 2nd edition

Test Bank for Cost Management Measuring Monitoring and Motivating Performance 2nd EditionWhich of the following often prevents managers from adequately exploring information before makin

Test Bank for Cost Management Measuring Monitoring and Motivating Performance 2nd Edition

Which of the following often prevents managers from adequately exploring information before making a decision?

1. a The existence of many uncertainties

2 b The need to distinguish between relevant and irrelevant information

3 c The managers’ biases

4 d The organization’s values

Irrelevant information may be I Useful in decision making II Internally-generated III Accurate

1. a I only

2 b I and II only

3 c II and III only

4 d I, II, and III

Whether a given type of information is relevant or irrelevant depends on

1. a Its accuracy

2 b Its objectivity

3 c Its relation to the decision to be made

4 d Whether it is cash-basis or accrual-basis

Relevant cash flows are

1. a Past cash flows

2 b Future cash flows

3 c Incremental cash flows

4 d Unavoidable cash flows

In a decision to lease or borrow money and build office space, which of the following is relevant?

1. a The current cost of office space

2 b The architect’s fee for drawing the building

3 c The number of employees currently working for the company

4 d The personal preferences of the decision makerA$2

Irrelevant cash flows are

3 c Both of the above

4 d None of the above

Frank is considering transportation modes to a client’s office He can drive his own car,

at an incremental cost of $0.55 per mile, or take a company car If he takes his own car,

he can be reimbursed $0.45 per mile If Frank makes his decision strictly from his

personal economic point of view, what is the relevant net cost associated with driving his own car?

1. a $0.10

2 b $0.45

3 c $0.55

4 d Some other amount

As an accountant, you are responsible for I Your own behavior II The behavior of any organizations you manage III The behavior of outside vendors with whom you

interact

1. a I only

2 b I and II only

3 c I and III only

4 d I, II, and III

When is the most appropriate time to identify ethical problems in organizations?

1. a When they are discovered by legal authorities

2 b As they arise

3 c After they arise

4 d When they are discovered by shareholders

Conflicts of interest often compromise managers’ ability to make ethical decisions Which of the following situations most likely includes a conflict of interest?

1. a Selling goods and services at discounted prices to some clients based on historical volumes

2 b Offering sales on credit only to creditworthy clients

3 c Paying dividends to shareholders rather than investing in an environmental project

4 d Using LIFO to report the cost of ending inventory on the balance sheet

Rewards for ethical behavior can include I Integrity II Reputation III Higher

profits

1. a I, II, and III

2 b I and III only

3 c I and III only

4 d I, II, and III

Fraudulent financial reporting I Is an example of unethical behavior II Eventually is likely to decrease organizational market value III Decreases the value of the

accounting profession

1. a I only

2 b II only

3 c I and III only

4 d I, II, and III

Decision quality

1. a Refers to a decision that had a positive outcome

2 b Refers to the characteristics of a decision that affects the likelihood of achieving a positive outcome

3 c Is reduced by uncertainty and bias

4 d Both (b) and (c) are correct

Which of the following statements is false?

1. a Managers must determine the organizational vision before further planning can occur

2 b Organizational strategies should take advantage of the organization’s core

competencies

3 c Operating plans are long-term in nature

4 d Organizational core competencies are an organization’s strengths relative to

competitors

Which of the following statements is true?

1. a Managerial accounting and cost accounting are the same thing

2 b Managerial accounting prepares reports used most frequently by external decision makers

3 c Cost accounting information is used for both management and financial accounting

4 d Preparation of the entity’s income tax return is an example of a cost accounting activity

All of the following are examples of external reports except:

1. a Tax returns

2 b Credit reports

3 c Financial statements

4 d Budgets

All of the following are examples of internal reports except:

1. a Cash flow analyses

2 b News releases

3 c Analyses of supplier quality

4 d Product mix analyses

If a manager is deciding whether to repair equipment or replace it, which of the

following is irrelevant to the decision?

1. a Cost of the repair

2 b Original cost of the equipment

3 c Warranty period for the repair

4 d Expected life of the equipment if it is not repaired

Lori is deciding whether to go to school full-time at the local community college or get a full time job Which of the following is not relevant to her decision?

1. a Tuition costs

2 b Potential salary she could earn in a full-time job

3 c Cost of books

4 d Monthly rent on her apartment

Relevant cash flows are

1. a Unavoidable

2 b Incremental cash flows

3 c Constant across alternatives

4 d Those that occurred in the past

Which of the following is not one of the steps in ethical decision making?

1. a Identify the ways you might get caught doing something unethical

2 b Identify the stakeholders to the decision

3 c Identify the ethical dilemma

4 d Identify the effects of the decision on the stakeholders

Which of the following statements is false?

1. a Strategic cost management focuses on reducing costs as well as strengthening an organization’s strategic position

2 b The balanced scorecard is a formalized approach to strategic cost management

3 c The balanced scorecard may include both financial and nonfinancial measures

4 d Cost accounting information used for strategic cost management includes only measures of costs

An internal report is

1. a Used for decision making primarily inside the organization

2 b Used for decision making primarily outside the organization

3 c Used to explain new personnel policies

4 d Used by financial analysts

Cost accounting is all of the following except

1. a A process of gathering and summarizing information

2 b Preparing employee evaluation reports

3 c Preparing information for internal reporting and decision making

4 d Preparing information used in financial statements

Financial accounting is all of the following except

1. a A process of gathering and summarizing information primarily for external reports

2 b Preparing financial statements according to Generally Accepted Accounting Principles

3 c Information used by shareholders, creditors, and regulators for decision making

4 d Preparing information for internal reporting and decision making

Decision quality can best be increased by

1. a Thinking harder

2 b Controlling for bias and uncertainties

3 c Asking an expert for help

4 d Using the most current technology

Biases are

1. a Necessary for decision making

2 b Expert opinions

3 c Ideas that are adopted without careful thought

4 d Always part of decision making

1. a Plays no part in decision making

2 b Varies with the action taken

3 c Must be based on the opinion of experts

4 d Is the same as unavoidable cash flows

Avoidable cash flows are

1. a Usually relevant to a decision

2 b Cash flows that are incurred no matter which action is taken

3 c Ignored in decision making

4 d Are the same as irrelevant cash flows

Ethical decision making

1. a Does not include ongoing improvement

2 b Considers the well-being of those affected by the decision

3 c Has little to do with professional reputation

4 d Is not important for accountants

The incremental cash flow approach

1. a Analyzes the additional cash inflows and outflows for a specific decision

2 b Is not useful for decision making

3 c Is a search for as many cash flows as possible so they can all be used in making

decision-4 d Includes unavoidable cash flows

Strategic cost management focuses on all of the following except

1. a Strengthening an organization’s strategic position

2 b Reducing costs

3 c Both financial and non-financial measures

4 d Producing financial statements

Information for decision making

1. a Is only produced inside an organization

2 b Includes estimates and predictions

3 c Ensures certainty in the decision making process

4 d Is easy to identify

Cost accounting differs from financial accounting in that cost accounting is

1. a Primarily concerned with income determination

2 b Relied on for analyzing and implementing internal decisions

3 c Focused only on qualitative information

4 d Primarily concerned with external reporting

Tom is gathering information about buying a new car to replace his existing car The following items are irrelevant

1. a The purchase price of the new car

2 b The gasoline mileage of the new car

3 c The cost of parking at the university

4 d The money Tom will receive for selling the old car

Lisa would like to start a new business selling pet toys to local pet shops To reduce her uncertainty about the volume of toys she can sell in a month, she should do all of the following except

1. a Ask pet store managers how many pet toys they sell every month

2 b Determine the average price of the pet toys sold each month at local pet stores

3 c Take a sample of toys to local stores and ask how many of each item the managers would be willing to buy

4 d Produce as many toys as possible the first month to be certain she has enough

(CMA) When comparing strategic planning with operational planning, which one of the following statements is most appropriate?

1. a Strategic planning is performed at all levels of management

2 b Operational planning results in budget data

3 c Strategic planning focuses on authority and responsibility

4 d Operational planning is long-range in focus

(CMA) Wong Company utilizes both strategic planning and operational budgeting Which one of the following items would normally be considered in a strategic plan?

1. a Setting a target of 12 percent return on sales

2 b Maintaining the image of the company as the industry leader

3 c Setting a market price per share of stock outstanding

4 d Distributing monthly reports for departmental variance analysis

Maude’s actual operations would probably include

1. a Establishing a sales strategy

2 b Purchasing advertisements in local media

3 c Identifying her core competencies

2 b Maude needs audited financial statements every year

3 c Maude can track cash flows on a monthly basis

4 d Maude only needs to reconcile her accounts every few years

Belief systems are an important part of what framework?

1. a Levers of information

2 b Levers of control

3 c Levers of belief

4 d Control systems

The code of conduct of a firm would likely be considered

1. a Belief system

2 b Boundary system

3 c Diagnostic control system

4 d Interactive control system

Accounting information I Can be used to guide organizational vision II Is a core competency for most companies III Can be used to motivate performance

1. a I only

2 b I and II only

3 c I, II, and III

4 d I and III only

Cost accounting information is used for

1. a Financial reporting only

2 b Management reporting only

3 c Both financial and management reporting

4 d Neither financial nor management reporting

Which of the following is a type of external report produced by an organization’s information system?

1. a Cash flow plan

2 b Analysis of potential acquisition

Which of the following is the best example of an internal report that might come from

an organization’s information system?

1. a Environmental Protection Agency regulatory report

2 b Operating budget

3 c Income tax returns

4 d Medicare cost report

Financial statements are

1. a External reports produced from an organization’s information system

2 b Never used for internal decision making

3 c Only true when they are audited

4 d Unimportant reports for most organizations

Information gathered outside the organization includes

1. a Customer preferences

2 b Product design specifications

3 c Taxable income

4 d Number of employees hired

Which of the following is not true about information in an organization’s

databases?

1. a Information may be collected formally or informally

2 b Access to database information is often restricted to specific individuals

3 c Intellectual capital is usually captured in database information

4 d The benefits of generating information should exceed the costs

How does the use of sophisticated information systems affect strategic

managementerial decision making?

1. a Sophisticated information systems always improve strategic managementrial decision making

2 b Sophisticated information systems always provide better information

3 c Managers may overlook potential uncertainties and bias in their information

4 d The cost of sophisticated information systems may exceed their benefit

Irrelevant information may be I Useful in decision making II Internally-generated III Accurate

1. a I only

2 b I and II only

3 c II and III only

4 d I, II, and III

Whether a given type of information is relevant or irrelevant depends on

1. a Its accuracy

2 b Its objectivity

3 c Its relation to the decision to be made

4 d Whether it is cash-basis or accrual-basis

Relevant cash flows are

1. a Past cash flows

2 b Future cash flows

3 c Incremental cash flows

4 d Unavoidable cash flows

In a decision to lease or borrow money and build office space, which of the following is relevant?

1. a The current cost of office space

2 b The architect’s fee for drawing the building

3 c The number of employees currently working for the company

4 d The personal preferences of the decision maker

Irrelevant cash flows are

3 c Both of the above

4 d None of the above

Frank is considering transportation modes to a client’s office He can drive his own car,

at an incremental cost of $0.55 per mile, or take a company car If he takes his own car,

he can be reimbursed $0.45 per mile If Frank makes his decision strictly from his

personal economic point of view, what is the relevant net cost associated with driving his own car?

1. a Are issues about which managers have doubts

2 b Do not impact accounting information, which is highly objective and reliable

3 c Are preconceived notions developed without careful thought

4 d Are rarely a problem in business decision making

Alaska Airlines flies several non-stop flights daily between Los Angeles and Vancouver Which of the following is a business risk associated with this operation?

1. a The exact number of flights flown the previous day

2 b The average number of passengers on each flight the previous week

3 c The average number of empty seats for flights next month

4 d The number of ticket agents scheduled for each shift for the next day22 Biases

Biases

1. a Are issues about which managers have doubts

2 b Do not impact accounting information, which is highly objective and reliable

3 c Are preconceived notions developed without careful thought

4 d Are rarely a problem in business decision making

UncertaintyBusiness risk may hinder a manager’s ability to: I Adequately define a problem II Identify all potential solution options III Predict the outcome of various solution options

1. a I and III only

2 b II and III only