Chapter 01 – Static Key Part 1

Chapter 01 Test Bank – Static KEY 1. What type of accounting system is part of an organisation's management information system for internal use only? A. Financial accounting B. Management accounting C. Governmental accounting D. All of the given answers AACSB: Reflective Difficulty: Easy Learning Objective: 1.03 Describe the major differences between management accounting and financial accounting information Topic: Role of Management Accountant in Value Creation 2. Which of the following statement/s about management accounting is/are true? i. It is a part of an organisation's management information system. ii. It is relied on by managers to plan and control an organisation's operations. iii. It is relied on by external users to make investment decisions. A. i and ii B. i, ii and iii C. iii D. ii AACSB: Reflective Difficulty: Easy Learning Objective: 1.02 Define management accounting in terms of value creation Topic: Role of Management Accountant in Value Creation 3. Which of the following statement/s about management accounting is/are true? i. It is concerned only with information obtained from the accounting records. ii. It is concerned with financial and non-financial information. iii. It can provide information useful for making decisions. A. i B. i and ii C. ii and iii D. ii AACSB: Reflective Difficulty: Medium Learning Objective: 1.02 Define management accounting in terms of value creation Topic: Role of Management Accountant in Value Creation 4. A strategy is i. another name for a long-term objective ii. the same as an objective iii. a means by which an organisation plans to meet its mission and achieve its objectives A. i B. ii C. iii D. i and ii AACSB: Reflective Difficulty: Medium Learning Objective: 1.06 Explain the basic concepts of strategy and how management accounting systems can support strategies Topic: Fundamental Management Processes 5. Which of the following is not an objective of management accounting? A. Providing information for making decisions B. Providing information for planning C. Providing information for control D. Providing information for profit and loss statements 1-1 AACSB: Reflective Difficulty: Medium Learning Objective: 1.06 Explain the basic concepts of strategy and how management accounting systems can support strategies Topic: Objectives of Management Accounting 6. Planning is A. comparing actual performance against targets B. setting objectives and formulating plans for future operations C. measuring the performance of managers against preset targets D. motivating managers towards achieving organisational goals AACSB: Reflective Difficulty: Easy Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 7. 'Control' involves A. formulating details of operations and finances for the next financial year B. comparing actual performance against targets C. deciding whether to expand activities D. All of the given answers AACSB: Reflective Difficulty: Medium Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 8. Part of the planning process involves A. formulating details of operations and finances for the next financial year B. comparing actual performance against targets C. making a choice between available alternatives D. measuring the performance of managers against preset targets AACSB: Reflective Difficulty: Medium Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 9. The role of management accounting is to A. provide information to parties outside the organisation B. provide information to managers within the organisation. C. provide information to government agencies. D. All of the given answers AACSB: Reflective Difficulty: Easy Learning Objective: 1.02 Define management accounting in terms of value creation Topic: Objectives of Management Accounting 10. Budgeting can be used in an organisation to A. motivate managers to achieve organisational goals. B. control operations. C. provide managers with information for making decisions and planning. D. All of the given answers AACSB: Reflective Difficulty: Medium Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 11. The benefits of management accounting information include A. improved decisions. B. more effective planning. 1-2 C. greater efficiency of operations. D. All of the given answers AACSB: Reflective Difficulty: Easy Learning Objective: 1.09 Describe the factors that may influence the design of management accounting systems including behavioural issues, cost-benefit trade-offs and the implications of contingency and institutional theories Topic: Fundamental Management Processes 12. Management accounting A. must comply with Australian accounting standards. B. focuses primarily on the needs of managers internal to the organisation. C. provides information for parties external to the organisation. D. involves reports focusing on the enterprise in its entirety. AACSB: Reflective Difficulty: Easy Learning Objective: 1.02 Define management accounting in terms of value creation Topic: Difference between Management and Financial Accounting 13. Which of the following is necessary for management accounting information to be useful? A. It must report to external users. B. It must develop a framework of principles and guidelines. C. It must adapt to accommodate changes in the business environment. D. It must focus on the enterprise in its entirety. AACSB: Reflective Difficulty: Easy Learning Objective: 1.10 Identify the organisational responses and management accounting responses to changes in the business environment Topic: Difference between Management and Financial Accounting 14. Both financial and management accounting A. draw on data from the organisation's basic information system. B. provide information for external users. C. must comply with Australian accounting standards. D. rely exclusively on historical data. AACSB: Reflective Difficulty: Easy Learning Objective: 1.02 Define management accounting in terms of value creation Topic: Difference between Management and Financial Accounting 15. Which of the following statements regarding management accounting information is false? A. The cost of providing the information must be considered in the light of the benefits received from the information. B. All information derived is necessary despite the cost. C. The information entails both costs and benefits. D. The cost of the information includes the time spent by the user to read, understand and use the information. AACSB: Reflective Difficulty: Easy Learning Objective: 1.09 Describe the factors that may influence the design of management accounting systems including behavioural issues, cost-benefit trade-offs and the implications of contingency and institutional theories Topic: Fundamental Management Processes 16. A management accountant should be concerned with A. providing daily information on physical measures of operational performance. B. assisting in interdepartmental communications. 1-3 C. developing and implementing information systems. D. All of the given answers AACSB: Reflective Difficulty: Medium Learning Objective: 1.04 Explain where management accountants are located in organisations Topic: Role of Management Accountant in Value Creation 17. The largest professional organisation for management accountants in Australia is the A. CPA Australia. B. Australian Accounting Association. C. Institute of Chartered Accountants in Australia. D. Certified Institute of Management Accountants. AACSB: Reflective Difficulty: Easy Learning Objective: 1.12 After studying the appendix, discuss the professional qualifications that are relevant to becoming an accountant, and the ethical standards to which accountants must adhere Topic: Role of Management Accountant in Value Creation 18. Which of the following does not represent the ethics of professional accountants? A. Competence and confidentiality B. Integrity and objectivity C. Professional skepticism and efficiency D. Objectivity and confidentiality AACSB: Ethics Difficulty: Easy Learning Objective: 1.12 After studying the appendix, discuss the professional qualifications that are relevant to becoming an accountant, and the ethical standards to which accountants must adhere Topic: Ethics, Corporate Governance, and Corporate Social Responsibility 19. Which of the following statements regarding the competence of an accountant is true? The accountant must A. strive continually to improve technical services and keep knowledge up-to-date. B. not breach the trust of clients and employers. C. not disclose information acquired in the course of professional work, except where there is a legal or professional duty to disclose. D. at all times safeguard the interest of the clients and employers, provided it does not conflict with their duty to the community. AACSB: Ethics Difficulty: Easy Learning Objective: 1.12 After studying the appendix, discuss the professional qualifications that are relevant to becoming an accountant, and the ethical standards to which accountants must adhere Topic: Role of Management Accountant in Value Creation 20. Which of the following statements is an element of confidentiality? i. Accountants must not disclose information acquired in the course of their work. ii. Accountants must disclose information if there is a professional duty to do so. iii. Accountants may not use information gained in the course of their work for their own or another's personal advantage. A. i B. ii C. iii D. i, ii and iii AACSB: Ethics Difficulty: Easy Learning Objective: 1.12 After studying the appendix, discuss the professional qualifications that are relevant to becoming an accountant, and the ethical standards to which accountants must adhere Topic: Ethics, Corporate Governance, and Corporate Social Responsibility 21. The focus of management accounting over time has changed. Which is the correct historical order for the following foci? i. Cost 1-4 ii. Profitability iii. Resource management iv. Waste reduction A. i, ii, iii and iv B. ii, iii, i and iv C. i, ii, iv and iii D. i, iii, iv and ii AACSB: Reflective Difficulty: Easy Learning Objective: 1.11 After studying the appendix, describe how the focus of management accounting has evolved Topic: Fundamental Management Processes 22. Which of the following statement/s is/are false? Management accountants should i. help in the provision of physical data to managers. ii. be included in the management of information systems. iii. present their information in monetary terms only. iv. help to ensure effective interdepartmental communications. A. i and ii B. iii and iv C. iii D. iv AACSB: Reflective Difficulty: Medium Learning Objective: 1.03 Describe the major differences between management accounting and financial accounting information Topic: Role of Management Accountant in Value Creation 23. Which of the following are management accounting responses to the changing business environment? A. Activity-based costing. B. E-commerce. C. Supplier cost analysis. D. A and C. AACSB: Reflective Difficulty: Easy Learning Objective: 1.10 Identify the organisational responses and management accounting responses to changes in the business environment Topic: Difference between Management and Financial Accounting 24. Which of the following are ethical standards for management accountants? i. Competence ii. Objectivity iii. Confidentiality iv. Integrity A. i, ii, iii and iv B. ii, iii and iv C. i, ii and iv D. i, iii and iv AACSB: Ethics Difficulty: Easy Learning Objective: 1.12 After studying the appendix, discuss the professional qualifications that are relevant to becoming an accountant, and the ethical standards to which accountants must adhere Topic: Ethics, Corporate Governance, and Corporate Social Responsibility 25. The costs of providing information to management should be less than the benefits. Which of the following are costs of management accounting information? i. Salary cost of management accounting personnel ii. Computer operating costs 1-5 iii. Managers' time in reading and acting on the information A. i, ii and iii B. ii and iii only C. i and iii only D. None of the given answers AACSB: Reflective Difficulty: Easy Learning Objective: 1.09 Describe the factors that may influence the design of management accounting systems including behavioural issues, cost-benefit trade-offs and the implications of contingency and institutional theories Topic: Fundamental Management Processes 26. Which of the following statements is correct? A. The primary objective of a firm's management is to increase the firm's value. B. The management accounting system needs to accumulate information from both internal and external sources. C. Managers may be faced with a conflict between increasing customer value and increasing shareholder value. D. All the given statements are correct. AACSB: Reflective Difficulty: Easy Learning Objective: 1.02 Define management accounting in terms of value creation Topic: Role of Management Accountant in Value Creation 27. Strategies A. are directions that a firm intend to take in the long term. B. describe the way the firm competes. C. are the same as objectives and goals. D. are independent of the firm's mission statement. AACSB: Reflective Difficulty: Easy Learning Objective: 1.06 Explain the basic concepts of strategy and how management accounting systems can support strategies Topic: Fundamental Management Processes 28. Which of the following statements is correct? A. Management accounting is a subset of cost accounting. B. Cost accounting is a subset of management accounting. C. Cost accounting is no longer required in today's competitive environment. D. Management accounting in today's environment is the same as it was many years ago. AACSB: Reflective Difficulty: Medium Learning Objective: 1.03 Describe the major differences between management accounting and financial accounting information Topic: Role of Management Accountant in Value Creation 29. Which of the following is the most logical sequence for a commencing organisation? A. Control, feedback, planning B. Planning, control, feedback C. Feedback (feedforward), planning, control, feedback D. Control, planning, feedback AACSB: Reflective Difficulty: Medium Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 30. Choose the statement that best completes this sentence: 'Traditional management accounting focuses on ...' A. budgets, financial performance measures and cost control. B. financial performance measures, external reporting and cost elimination. 1-6 C. non-financial performance measures, external reporting and cost control. D. external reporting, labour-related activity measures and cost elimination. AACSB: Reflective Difficulty: Easy Learning Objective: 1.10 Identify the organisational responses and management accounting responses to changes in the business environment Topic: Fundamental Management Processes 31. Which of the following would not be likely as a consistent focus for a firm following a product differentiation strategy? A. Quality B. Delivery C. Product innovation D. Cost reduction AACSB: Reflective Difficulty: Easy Learning Objective: 1.06 Explain the basic concepts of strategy and how management accounting systems can support strategies Topic: Fundamental Management Processes 32. Choose the statement that best completes this sentence: 'All management accounting information ...' A. has a focus on past costs. B. has a focus on future costs. C. is collected as required by internal management of the firm. D. is constrained by the requirements of the Australian Accounting Standards. AACSB: Reflective Difficulty: Easy Learning Objective: 1.03 Describe the major differences between management accounting and financial accounting information Topic: Role of Management Accountant in Value Creation 33. Which of the following statements is correct? A. A financial controller is only responsible for financial accounting. B. The primary role of the finance function of an organisation is to liaise with banks and financial intuitions to obtain finance to fund operations. C. In some organisations, management accountants are located in factories. D. Management accountants are responsible for external reporting as well as providing information to internal managers. AACSB: Reflective Difficulty: Medium Learning Objective: 1.04 Explain where management accountants are located in organisations Topic: Role of Management Accountant in Value Creation 34. The 'vision' of an organisation A. refers to the desired future state of an organisation. B. refers to a statement that defines the purpose of the organisation. C. refers to specific statements of objective, upon which goals can be set. D. is only useful for non profit organisations. AACSB: Reflective Difficulty: Medium Learning Objective: 1.06 Explain the basic concepts of strategy and how management accounting systems can support strategies Topic: Role of Management Accountant in Value Creation 35. Animus Ltd is a mining company. Which of the following is an example of a decision relating to formulating Animus Ltd's corporate strategy? A. Should Animus Ltd operate in the mining industry only, or expand to heavy machinery manufacturing and distribution? B. Should Animus Ltd compete based on price or product differentiation? C. Should Animus Ltd hire a new financial controller? D. Should Animus Ltd develop a new management accounting system? 1-7 AACSB: Reflective Difficulty: Medium Learning Objective: 1.06 Explain the basic concepts of strategy and how management accounting systems can support strategies Topic: Fundamental Management Processes 36. Animus Ltd is a mining company. Which of the following is an example of a business strategy decision? A. Should Animus Ltd operate in the mining industry only or expand to heavy machinery manufacturing and distribution? B. Should Animus Ltd compete based on price or product differentiation? C. Should Animus Ltd hire a new financial controller? D. Should Animus Ltd develop a new management accounting system? AACSB: Reflective Difficulty: Medium Learning Objective: 1.06 Explain the basic concepts of strategy and how management accounting systems can support strategies Topic: Fundamental Management Processes 37. Animus Ltd is a mining company. Which of the following is an example of 'planning'? A. Awarding bonuses to Aimus Ltd's top performing executives B. Setting production targets for the company's new mines C. Developing correction actions to respond to lower-than-expected production levels in the existing mines D. Pursuing legal actions against environmental activists who stole mining equipment AACSB: Reflective Difficulty: Medium Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 38. Animus Ltd is a mining company. Which of the following is an example of 'control'? A. Awarding bonuses to Aimus Ltd's top performing executives B. Setting production targets for the company's new mines C. Developing correction actions to respond to lower-than-expected production levels in the existing mines. D. Pursuing legal actions against environmental activists who stole mining equipment. AACSB: Reflective Difficulty: Medium Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 39. Animus Ltd is a mining company operating in Australia. The company has recently developed a new environmental management accounting system. According to institutional theory A. the new system is likely to be the result of the Australian culture of being environmentally conscious and the fact that negative environmental impacts can result in significant fines to the company. B. the new system is likely to be the result of gaining legitimacy and to imitate other mining companies who are 'doing the right thing'. C. the new system is likely to be the result of stringent government regulations. D. the new system is likely to be the result of careful, rational, cost-benefit analysis. AACSB: Reflective Difficulty: Medium Learning Objective: 1.09 Describe the factors that may influence the design of management accounting systems including behavioural issues, cost-benefit trade-offs and the implications of contingency and institutional theories Topic: Ethics, Corporate Governance, and Corporate Social Responsibility 40. Eddy Gunn is a management accountant. Which of the following is most likely to be Eddy's responsibility? A. Providing an environmental assurance report for his company's shareholders B. Compiling the company tax return C. Ensuring that the internal accounting system is compliant with generally accepted accounting standards D. Developing a production cost report for each of the company's three production lines AACSB: Reflective Difficulty: Medium 1-8 Learning Objective: 1.03 Describe the major differences between management accounting and financial accounting information Topic: Objectives of Management Accounting 41. Which of the following is not a widely recognised professional accounting body? A. The Institute of Production Accountants B. CPA Australia C. The Institute of Chartered Accountants D. The Institute of Management Accountants AACSB: Reflective Difficulty: Medium Learning Objective: 1.12 After studying the appendix, discuss the professional qualifications that are relevant to becoming an accountant, and the ethical standards to which accountants must adhere Topic: Role of Management Accountant in Value Creation 42. Which of the following changes in the business environment have led to the emergence of virtual organisations? A. Rapid advances in technology B. Increases in outsourcing and reliance on various forms of business networks C. Increased global mobility in labour D. Reliance on creating mutually strategic business alliances AACSB: Reflective Difficulty: Medium Learning Objective: 1.01 Describe changes that have taken place in the business environment in recent years Topic: Expanding and Changing Role of Management Accounting 43. Which of the following changes in the business environment have led to more complicated relationships and business structures? A. Rapid advances in technology B. Increases in outsourcing and reliance on various forms of business networks C. Increased global mobility in labour D. Reliance on creating mutually strategic business alliances AACSB: Reflective Difficulty: Medium Learning Objective: 1.01 Describe changes that have taken place in the business environment in recent years Topic: Role of Management Accountant in Value Creation 44. Management accounting focuses on A. compliance with the accounting standards. B. meeting the needs of external users. C. effective and efficient management of resources. D. financial data only. AACSB: Reflective Difficulty: Easy Learning Objective: 1.05 Describe the major processes that management accounting systems use to create value and manage resources Topic: Role of Management Accountant in Value Creation 45. Modern management accounting systems include techniques that support an organisation's A. strategy. B. mission. C. goals. D. decisions. AACSB: Reflective Difficulty: Easy Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 46. If a firm's senior management decide to follow a differentiation strategy, their focus should be to NOT concentrate on 1-9 A. product quality. B. product delivery. C. product innovation. D. product costs. AACSB: Reflective Difficulty: Easy Learning Objective: 1.07 Explain how planning and control mechanisms can be used to support resource management Topic: Fundamental Management Processes 47. The firm's primary accounting system that produces financial data for external users is governed by A. accounting standards. B. all of the choices are correct. C. generally accepted accounting principles. D. traditional accounting conventions. 1-10