Evaluating operations by comparing actual results to budgeted results is a part of the controlling responsibility of management.: |
TRUE |
Controlling means overseeing the company’s day-to-day operations |
FALSE |
The purpose of managerial accounting is to gather, summarize, and report the cost and revenue data relevant to each decision that is made |
TRUE |
Budgeting is the process of evaluating the results of business operations against a plan and then making adjustments to that plan |
FALSE |
Planning, directing, and controlling are a manager’s three primary responsibilities |
TRUE |
Managerial accounting develops reports that help internal parties effectively and efficiently run the company.: |
TRUE |
Directing means setting goals and objectives for the company and determining how to achieve them |
FALSE |
Budgets are the quantitative expression of management’s plans |
TRUE |
The SEC requires that reports generated by the managerial accounting system must be audited by an independent certified public accountant (CPA). |
FALSE |
The design of a management accounting system should consider how reports affect employees’ behavior |
TRUE |
GAAP must be followed when preparing managerial accounting reports.: |
FALSE |
Management accounting requires independent audits of the firm’s books |
FALSE |
The primary purpose of managerial accounting information is to help external users make investing and lending decisions |
FALSE |
Internal users such as managers are the primary users of managerial accounting information. |
TRUE |
The primary managerial accounting product is the company’s audited financial statements |
FALSE |
Managerial accounting information emphasizes relevance over reliability and objectivity |
TRUE |
Managerial accounting information tends to report on segments of the business. |
TRUE |
Managerial accounting reports are always prepared on a quarterly and annual |
FALSE |
Managerial information is always based on historical transactions with external parties. |
FALSE |
Management accountants rarely interact with employees from other business functions such as marketing and customer service.: |
FALSE |
The CFO is the person responsible for the day-to-day operations of the company |
FALSE |
The treasurer and the controller report directly to the CFO.: |
TRUE |
The internal audit department reports directly to the audit committee, a subcommittee of the board of |
TRUE |
Managerial accountants no longer perform routine mechanical accounting tasks in most companies.: |
TRUE |
Managerial accountants are now considered to be similar to advisors and business analysts |
TRUE |
Oral and written communications skills are considered among the most valuable skills a management accountant can possess.: |
TRUE |
Technology has been a driving factor in the changing roles of management accountants |
TRUE |
Management accountants spend more time planning, analyzing and interpreting accounting data and less time recording routine accounting transactions than they have in the past. |
TRUE |
The only skill required of managerial accountants is that they have a solid knowledge of both financial and managerial accounting. |
FALSE |
Managerial accountants only need a solid understanding of managerial accounting, and not financial accounting. |
FALSE |
The IMA suggests that members discuss ethical dilemmas with the company’s board of directors |
FALSE |
The IMA is the professional association for managerial accountants.: |
TRUE |
The IMA issues the CMA designation.: |
TRUE |
Your company sends you to a conference to update your skills. It is a violation of the professional competency and integrity standards if you decide to skip the afternoon session and go sightseeing. |
TRUE |
The ethical principles and standards of the IMA always give clear guidance for every ethical situation |
FALSE |
The "Ethics Hotline" provides specific resolutions (answers) to IMA members who face ethical |
FALSE |
Just because a behavior is legal does not always mean it is ethical |
TRUE |
The IMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility.: |
TRUE |
The IMA suggests that, when faced with an ethical dilemma, the first thing management accountants should do is call the IMA’s ethics hotline |
FALSE |
Managerial accounting is becoming less relevant as the U.S. economy shifts away from the manufacturing industry towards the service industry.: |
FALSE |
The Sarbanes-Oxley Act was designed to hold corporations accountable for internal control and financial reporting functions |
TRUE |
The Sarbanes-Oxley Act has significantly impacted the responsibility for financial reporting by publicly traded corporations |
TRUE |
CPA firms cannot provide consulting services for their current audit clients.: |
TRUE |
Trends in the modern business environment include a shift to a service economy and the rise of the global marketplace.: |
TRUE |
The concept of the lean thinking philosophy is generally credited to General Motors |
FALSE |
Implementing a program to bill customers electronically, therefore saving paper, is a green initiative that would reduce not only waste, but also company costs |
TRUE |
Lean production cuts the throughput time of a manufacturing concern |
TRUE |
ISO 9001:2008 is a certification program for companies that adhere to an international set of quality management standards and guidelines |
TRUE |
According to SOX, at least one member of the audit committee should be a financial expert |
TRUE |
IFRS stands for "important financial reporting standards |
FALSE |
XBRL will be required of both public and private companies.: |
FALSE |
Managerial accounting has its roots in the industrial age of manufacturing.: |
TRUE |
Lean thinking is both a philosophy and a business strategy of manufacturing without waste |
TRUE |
The American Institute of Certified Public Accountants was the first professional membership organization in the United States to earn the ISO 9001 certification.: |
TRUE |
Sustainability is generally described as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. |
TRUE |
Company initiatives to address sustainability and corporate responsibility not only "do the right thing," but also can lead to economic profits by increasing demand for the company’s products and services |
TRUE |
________ gathers, summarizes, and reports on the financial impact of changes to business operations |
managerial accounting |
Creating budgets are part of which primary management responsibility? |
planning |
Which of the following is not one of the primary responsibilities of management? |
Adhering to GAAP |
Planning involves which of the following activities? |
Setting goals and objectives for the company |
Which of the following is being fulfilled when management compares the budget to actual results? |
controlling |
When management uses feedback to take corrective action on the budgets, which of the following management responsibilities are being fulfilled? |
controlling |
When management analyzes whether to move production to another country or to keep the production located where it currently is, which of the following management responsibilities is being performed? |
planning |
Which one of the following items is not one of the three primary manager responsibilities? |
adjusting |
Using product cost information to determine sales prices is an example of |
directing and planning |
When management reviews hourly sales reports to determine the level of staffing needed to service customers, which of management’s three primary responsibilities is fulfilled? |
Directing and planning |
Budgets are a way for managers to communicate their |
plans |
Comparing actual results to budgets is an example of which of the following management functions? |
controlling |
Overseeing the day-to-day operations of a company is an example of which of the following management functions? |
directing |
Preparing budgets is an example of which of the following management functions? |
planning |
Evaluating results against the plan is an example of which of the following management functions? |
controlling |
What are the three primary responsibilities of managers as described in the chapter? Give an example of each type of responsibility. |
a. Planning: An example of planning is when the manager of a local McDonald’s restaurant makes the schedule of employee work hours for the upcoming week. b. Directing: An example of directing is when the manager of the local McDonald’s adjusts the menu to reflect local tastes and preferences. c. Controlling: An example of controlling is when the manager of the local McDonald’s compares the actual number of hamburger patties used over the past week to the budgeted number of hamburger patties. |
What is one constraint placed on the information provided by a managerial accounting system? |
Cost – Benefit |
How often should managerial accounting reports be prepared? |
as often as necessary |
Which of the following statements is true regarding managerial accounting information? |
It is audited by CPAs. |
The focus of management accounting is on |
internal reporting. |
Which of the following people is most likely to only use financial accounting information? |
Bank loan officer |
Managerial accounting would use which of the following types of information? |
Forecasts of future earnings Financial information Nonfinancial information D) All of the above |
Which of the following persons or groups would be least likely to receive detailed managerial accounting reports? |
Current shareholders |
________ is designed to meet the needs of internal decision makers. |
Managerial accounting |
The primary goal of managerial accounting is to provide information to |
internal decision-makers. |
The primary goal of financial accounting is to provide information for |
governmental regulators. creditors. potential investors. D) all of the above. |
Which of following statements is true? |
Management accounting focuses on relevant data. |
Which statement is true? |
Management uses financial information to analyze costs. Management uses financial information to plan internal operations. Management uses reports created for internal parties. D) All of the above are true. |
Which of the following statements is false? |
Financial accounting provides sufficient information for managers to effectively plan and control operations. |
Which of the following statements is true? |
Managerial accounting reports provide detailed internal information. |
Which of the following are the internal decision-makers of a company? |
Managers |
Which one of the following reports is most likely to be required to be audited by an outside entity? |
Annual financial statements |
Which of the following groups are external users of financial information? |
Customers of the company Potential investors of the company Vendors of the company D) All of the above |
A company’s budget information is most likely to be used by which of the following groups? |
managers |
________ are a company’s decision makers. |
managers |
________ are owners of a company. |
shareholders |
External parties receive information about past performance from |
financial accounting reports |
Internal parties receive information about past performance from |
managerial accounting reports |
What position is typically responsible for financial accounting, managerial accounting, and tax reporting? |
controller |
Despite the proliferation of technology, managerial accountants are still needed to provide professional judgment in which of the following areas? |
Recording non-routine transactions Adjusting the financial records Designing computer information systems D) All of the about activities require professional judgment |
The IMA issues which of the following certifications? |
CMA |
A CFO would have all of the following responsibilities except |
investing in new production equipment. |
Which of the following positions typically manages the daily operations of a company? |
the CEO |
Oversight and strategy formulation and guidance for a large corporation are typically provided by which of the following positions? |
The Board of Directors |
To whom would the vice-president of operations typically directly report? |
the COO |
The COO is responsible for managing which of the following aspect(s) of the company? |
Research and development, production, and distribution |
Which of the following positions report to the audit committee of the Board of Directors? |
The internal audit department and the independent CPA firm |
Which of the following positions is primarily responsible for raising capital and investing funds? |
the treasurer |
What factor has changed the way that we now view managerial accountants? |
technology |
Which of the following tasks are performed by management accountants? |
Help design information systems Provide decision support Ensure financial records are correct D) All of the above |
Managerial accountants may be responsible for |
providing decision support. communicating results. analyzing data. D) all of the above. |
Managerial accountants are required to possess which of the following skills? |
Analytical skills Oral and written communication skills The ability to work on a team D) All of the above |
The ________ is a subgroup of the Board of Directors. |
audit committee |
Which person or group is not an employee of the corporation? |
A member of the audit committee |
Which person is hired directly by the board of directors to manage the daily operations of the company? |
The CEO |
According to the textbook, managerial accountants often work on |
cross-functional teams. |
A company’s Board of Directors meets |
periodically, as needs dictate. |
Companies listed on the New York Stock Exchange (NYSE) are required to have an internal audit function by |
The NYSE. |
The person who is directly responsible for all financial functions is the |
CFO |
The person who is directly responsible for the company’s operations, such as research and development, production and distribution is the |
COO |
To resolve ethical dilemmas, the IMA suggests that management accountants should first |
follow their company’s established policies for reporting unethical behavior. |
Which of the following is not one of the IMA’s overarching ethical principles? |
creativity |
The standards in the IMA Statement of Ethical Professional Practice include |
Competence, Confidentiality, Integrity, and Credibility |
All of the following are overarching principles in the IMA Statement of Ethical Professional Practice except |
integrity |
The standards of the IMA Statement of Ethical Professional Practice include which of the following? |
integrity |
Preparing financial statements in accordance with GAAP is an example of |
competence |
Communicating information fairly and objectively is an example of which ethical standard? |
credibility |
Performing duties in accordance with relevant laws, regulations, and technical standards comprise the IMA professional ethics standard of |
competence |
Inflating your expenses for a company-sponsored conference is a violation of what ethical standard? |
integrity |
To ensure a profit in the current year a company ships out pre-ordered merchandise the last week of December, instead of in mid-January as the customer instructed. This early shipment could be a violation of which ethical standard? |
integrity |
What ethical standard is being violated when you tell a friend that the company you work for is going to report lower than expected earnings next week? |
confidentiality |
An accountant who does not understand "accrual accounting" fails which ethical standard? |
competence |
What ethical standard would you violate if you take pens home from work for personal use? |
integrity |
What is the name of the professional association for managerial accountants? |
Institute of Management Accountants |
Which of the following certifications is issued by the IMA? |
CMA |
Which of the following is an example of the IMA’s competence standard? |
Provide decision support that is accurate, clear, concise and timely. |
Which of the following is an example of the IMA’s credibility standard? |
Communicate information fairly and objectively. |
Which of the following is an example of the IMA’s integrity standard? |
Abstain from engaging in or supporting any activity that might discredit the profession. |
Which of the following is an example of the IMA’s confidentiality standard? |
Keep information confidential, except when disclosure is legally required. |
Which of the following is not one of the IMA’s credibility standards? |
To disclose all relevant information To disclose deficiencies in internal control To communicate information fairly and objectively D) All of the above are part of IMA’s credibility standard. |
Which ethical standard is demonstrated when you attend a class to maintain your professional knowledge? |
competence |
Not disclosing sensitive information is an example of which ethical standard? |
Confidentiality |
Refusing gifts or favors that could be perceived to influence your actions is an example of which ethical standard? |
Refusing gifts or favors that could be perceived to influence your actions is an example of which ethical standard? |
Accepting a job that you know can be better performed by someone else with the required skills would violate the ethical conduct standard of |
competency |
It would be a violation of which ethical standard to withhold relevant information? |
Credibility |
Failure to mitigate a conflict of interest would violate which ethical standard of conduct? |
integrity |
A wave of accounting scandals around the turn of the 21st century prompted which of the following? |
SOX |
Increased competition with foreign companies and the rise of the global marketplace is mainly due to which of the following? |
Decreased barriers to international trade |
Which type of system integrates ALL of the company’s departments, functions, and data? |
ERP System |
According to the Sarbanes-Oxley Act, who is responsible for establishing and maintaining internal controls over financial reporting? |
The CEO and CFO |
The Sarbanes-Oxley Act requires the CPA firm to rotate the audit partner off of the audit engagement every ________ year(s). |
five |
Which of the following is not an advantage of an ERP system? |
Lower initial cost than traditional systems |
The ability to meet the needs of the present without compromising the needs of the future is often referred to as |
sustainability |
The "triple bottom line" focuses on these three factors that influence a firm’s ability to survive and thrive in the long run: |
profit, people, planet |
Under SOX, a CPA firm is permitted to perform which of the following services for an audit client with pre-approval from the client’s audit committee? |
tax |
According to SOX, a company’s financial statements must be certified by the company’s |
CFO and CEO |
A requirement of SOX is that publicly traded companies must have which of the following assessed annually? |
Internal control system and financial reporting system |
The SEC is considering the move to adopt IFRS for which types of companies? |
All U.S. publicly traded companies |
IFRS stands for |
International Financial Reporting Standards. |
XBRL stands for |
eXtensible Business Reporting Language. |
In what year will XBRL be required for all publicly traded companies? |
2011 |
XBRL can best be described as a |
a tagging system for financial statement data. |
Which of the following statements about XBRL is false? |
The US is the first country to mandate use of XBRL. |
________ is the business philosophy and a strategy of manufacturing without waste. |
Lean thinking |
Companies may adopt which of the following in an attempt to increase their competitive edge? |
TQM Green initiatives Lean thinking D) All of the above |
Movements toward sustainability and corporate responsibility often |
result in increased demand for the company’s product or service. include monetary support of local schools and charities. include green initiatives. D) All of the above are correct. |
The Sarbanes-Oxley Act was enacted |
to prevent accounting scandals like Enron. |
Which of the following was not a result of the Sarbanes-Oxley Act? |
The COO assumes financial statement responsibility. |
The Sarbanes-Oxley Act requires companies to have their internal audit procedures assessed at least |
annually |
The Sarbanes-Oxley Act allows for a maximum of ________ years of imprisonment for knowingly destroying or creating documents to obstruct any federal investigation. |
20 |
What is a business philosophy that focuses on providing customers with superior products and services? |
TQM |
What is a system that requires suppliers to deliver materials at the exact time the materials are needed? |
JIT |
ISO 9001:2008 is a(n) |
certification that a company complies with international quality standards. |
Which of the following is a software system that integrates all of a company’s departments? |
ERP |
Companies that wish to demonstrate their commitment to international quality standards may become certified by what organization? |
ISO |
Which of the following methods cuts throughput time? |
JIT |
Which type of company utilizes managerial accounting? |
Service Manufacturers Retailers D) All of the above |
CPA firms are permitted to provide which of the following services to audit clients? |
Tax preparation |
The philosophy that centers on production as needed is known as |
JIT |
What is the business philosophy of providing superior goods and services? |
TQM |
What would a company need to conduct when considering whether to install an ERP system or not? |
cost-benefit analysis |
Which of the following would have the least effect on a cost-benefit analysis? |
Constant prices |
Which of the following is not used in a cost-benefit analysis? |
Book value of past investment in equipment |
Torque Engine Company is considering opening a plant in China. It will cost $3,500,000 to set up the plant and $750,000 to train employees. An additional $100,000 will be spent to build relationships with the local suppliers. The company anticipates gross profit of $4,400,000 from this new plant. Do the benefits outweigh the costs or do the costs outweigh the benefits, and by how much? |
Benefits outweigh costs by $50,000. |
Country Western Clothing Outfitters is considering investing in an inventory tracking system. It will have $10,000 in software costs and $8,000 in employee training costs. Computer hardware also needs to be upgraded for the system; the hardware upgrades are expected to be $12,000. The expected benefits from the inventory tracking system should be $28,000. Do the benefits outweigh the costs or do the costs outweigh the benefits, and by how much? |
Costs outweigh benefits by $2,000. |
Pete’s Cola Company is investigating the possibility of adopting a lean thinking philosophy throughout their organization. Estimated costs to set up the computer system are $1,650,000; training employees in lean operations is estimated to cost $175,000; and the general expenses of establishing the program are estimated at $315,000. The estimated value of the potential savings is $1,975,000. Do the benefits outweigh the costs or do the costs outweigh the benefits, and by how much? |
Costs outweigh benefits by $165,000. |
Gilmore Corporation is investigating the possibility of adopting a lean thinking philosophy in its manufacturing facilities. The plant manager has done a cost-benefit analysis and has found that the costs of the lean production program exceed the benefits by $115,000. You analyze the situation and make some adjustments to the cost estimates. After doing your analysis, you find that costs still outweigh benefits by less than 5%. Which might be a sound course of action? |
Consider dropping the plan. Look for ways to lessen costs. Re-evaluate the value of benefits. D) All of the above should be considered. |
Johnson Scooter Company is considering whether or not to expand into a new area of the US. They produce high-performance gas scooters with moderate gas mileage, but have developed a new battery technology that combines a small amount of electrical energy with the existing gas power. This new technology will significantly increase the fuel economy of their bikes. They will need to spend $5,075,000 to retrofit a building to incorporate the new fuel-saving technology. New worker training will cost $1,984,000. Other expenses involved in getting the new plant up and running amount to $332,000. The CEO anticipates that, with gas price increases, the profit potential of this expansion is $7,588,000. Do the benefits outweigh the costs or do the costs outweigh the benefits, and by how much? |
Sales from expansion $ 7,588,000 Less costs: Cost to retrofit a building $ (5,075,000) New worker training $ (1,984,000) Other plant expenses $ (332,000) Benefits outweigh costs by $ 197,000 |
accounting chapter 1 e1
Share This
Unfinished tasks keep piling up?
Let us complete them for you. Quickly and professionally.
Check Price