Managerial Accounting Applies to All Types of Business

1. Managerial accounting applies to all types of business—service, merchandising, manufacturing, and to all forms of business organizations. True False 2. Planning is the process of keeping the company's activities on track. True False 3. Under the just-in-time method, goods are manufactured or purchased only when they are actually needed for use. True False 4. Managerial accounting is governed by generally accepted accounting principles. emphasizes special-purpose information. pertains to the entity as a whole and is highly aggregated. is limited to cost data. 5. All of the following are distinguishing features of managerial accounting except internal users. independent audits. reports pertaining to subunits of the entity. provision of special-purpose information. 6. The management of an organization performs several broad functions. They are planning, directing and motivating, and selling. planning, directing and controlling. planning, manufacturing, and controlling. directing and motivating, manufacturing, and controlling. 7. The officer responsible for all of the accounting and finance issues a company faces is the chief executive officer. chief financial officer. controller. treasurer. 8. The management function that requires management to look ahead and establish objectives is controlling. directing. evaluating. planning. 9. The process of keeping the firm’s activities on track is controlling. directing. evaluating. planning. 10. Which of the following is not one of the categories in Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management? confidentiality competence integrity independence 11. A management accountant’s responsibility to avoid conflicts of interests relates to which of the IMA’s codes of conduct? integrity competency confidentiality credibility 12. A management accountant’s responsibility to communicate information fairly and objectively relates to which of the IMA’s codes of conduct? integrity competency confidentiality credibility 13. Many companies have significantly lowered inventory levels and costs by using enterprise resource planning. total quality management. just-in-time inventory methods. activity-based costing. 14. Many companies can now manufacture products that have minimal or no defects through enterprise resource planning. total quality management. just-in-time inventory methods. activity-based costing. 15. All activities associated with providing a product or service is referred to as the value chain. total quality management systems. just-in-time inventory methods. activity-based costing. 16. The goal of Total Quality Management is to manage value chain. reduce inventory levels. produce products untouched by human hands. reduce defects in finished products. 17. The theory of constraints refers to identifying bottlenecks that impede a company's ability to provide a good or service. fixing bottlenecks to maximize profitability. the cost/benefit trade-off. identifying bottlenecks that impede a company's ability to provide a good or service and fixing bottlenecks to maximize profitability. 18. What does lean manufacturing refer to? Managing operations more efficiently and with more control. Managing operations with fewer managers. Managing operations with fewer employees. Manufacturing products with the leanest of costs and administration. 19. Activity-based costing is a method of allocating overhead costs to products. True False 20. Which of the following is not an internal user? corporate officers staff employees stockholders department manager 21. Which term describes managerial accounting reports? GAAP reports special-purpose general-purpose regulatory reports 22. Which one of the following involves coordinating a company’s activities to produce a smooth-running operation? auditing controlling planning directing 23. Which one of the following is true concerning the managerial function of controlling? It includes performance evaluation by management. It is concerned mainly with operating a manufacturing segment. It is performed only by the controller of a company. It includes hiring and training employees. 24. Directing includes providing a framework for management to have criteria to terminate employees when needed. running a department under quality control standards universally accepted. coordinating a company’s diverse activities and human resources to produce a smoothrunning operation. developing a performance ranking system to give certain high performers good raises. 25. The IMA’s Statement of Ethical Professional Practice provides codes of conduct with regard to: competence, confidentiality, assurance and credibility. confidentiality, integrity, credibility and responsibility. comprehension, competence, integriy and credibility. competence, confidentiaility, integrity and credibility 26. Which of the following is true? Managerial accountants are the employees who are principally responsible for ethical behaviour. Investment losses have been precipitated by lax ethical standards. Corporate fraud was found to have decreased between the years 1998 and 2003. Expense account abuse has been cited as one of the rarest forms of unethical employee behaviour. 27. Which is the best definition of fraud? unknowingly misrepresenting the facts using business supplies for personal use the intentional misstatement of facts misappropriating funds for personal financial gain 28. 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 that is the way it has always been done. conservative accounting practise requires that he not under report expenses. by overestimating expenses, it will make it easier for him to come in under budget and receive a favourable evaluation. 29. Managerial accounting has become more important in service industries due to the decline of the manufacturing sector has freed up many accountants. service delivery is extremely complex and requires proper monitoring. the economy has become more service-oriented recently. the increase in complexity in computer systems requires accounting specialists. No 30. The theory of constraints is a theory that the benefit of making a change in a production process should be weighed against the cost of making that change. that even the best suggestions for improvement are likely to be rejected due to opposition from those who have to implement the changes. a specific approach used to identify and manage constraints in order to achieve the company’s goals. not applicable to service operations. 31. Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion? theory of constraints just-in-time inventory activity-based costing total-quality management 32. The value chain is affected by technology through business-to-business on the Internet. refers to all the activities associated with providing a product with the exception of research and development. has not been enhanced by computerization and automation. refers to all the activities associated with providing a service with the exception of sales and marketing. 33. A company acting ethically must adapt its internal reports to any changes required instantly. as it is appropriate for its business cycle. as stipulated by the CPA Canada handbook and GAAP. if they are considered pertinent to its business activities. 34. The Ontario Securities Commission introduced regulations governing the composition and duties of audit committees, as well as their members’ behaviour. The new rules are as robust as parallel rules required by the U.S. Sarbanes-Oxley Act. were adopted by all provincial and territorial securities regulators, except for British Columbia’s. were introduced in conjunction with the Canadian Securities Administrators. all of the above. 35. Reports scrutinized by managerial accountants o not include those focused on business subunits. do not include non-financial data relevant to business decision making. are highly aggregated. are special purpose for specific decisions. 36. Decision making is an integral part of the planning, directing, and motivating functions, but not of the controlling function. True False 37. Management accounting and financial accounting, while in the same field, are mutually exclusive disciplines. True False 38. 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. True False