47 free test bank for management accounting 7th

47 Free Test Bank for Management Accounting 7th
Edition by Langfield Smith
Multiple Choice Questions
The focus of management accounting over time has changed.
Which is the correct historical order for the following foci? i. Cost;
ii. Profitability; iii. Resource management; iv. Waste reduction
1.

i, ii, iii and iv

2.

ii, iii, i and iv

3.

i, ii, iv and iii

4.

i, iii, iv and ii

Which of the following does not represent the ethics of
professional accountants?
1.

Competence and confidentiality

2.

Integrity and objectivity

3.

Professional scepticism and efficiency

4.

Objectivity and confidentiality

Planning is:
1.

comparing actual performance against targets

2.

setting objectives and formulating plans for future operations

3.

measuring the performance of managers against preset targets

4.

motivating managers towards achieving organisational goals

Which of the following are management accounting responses to
the changing business environment?
1.

Activity-based costing.

2.

E-commerce.

3.

Supplier cost analysis.

4.

A and C.


Which of the following statements regarding the competence of
an accountant is true? The accountant must:
1.

strive continually to improve technical services and keep knowledge up-todate.

2.

not breach the trust of clients and employers.

3.

not disclose information acquired in the course of professional work, except
where there is a legal or professional dut disclose.

4.

at all times safeguard the interest of the clients and employers, provided it
does not conflict with their duty to the com

Choose the statement that best completes this sentence: 'All
management accounting information …'
1.

has a focus on past costs.

2.

has a focus on future costs.

3.

is collected as required by internal management of the firm.

4.

is constrained by the requirements of the Australian Accounting Standards.

Which of the following is the most logical sequence for a
commencing organisation?
1.

Control, feedback, planning

2.

Planning, control, feedback

3.

Feedback (feedforward), planning, control, feedback

4.

Control, planning, feedback

Which of the following is not an objective of management
accounting?
1.

Providing information for making decisions

2.

Providing information for planning

3.

Providing information for control

4.

Providing information for profit and loss statements

The benefits of management accounting information include:

1.

improved decisions.


2.

more effective planning.

3.

greater efficiency of operations.

4.

All of the given answers

Animus Ltd is a mining company. Which of the following is an
example of a business strategy decision?
1.

Should Animus Ltd operate in the mining industry only or expand to heavy
machinery manufacturing and distribution

2.

Should Animus Ltd compete based on price or product differentiation?

3.

Should Animus Ltd hire a new financial controller?

4.

Should Animus Ltd develop a new management accounting system?

What type of accounting system is part of an organisation's
management information system for internal use only?
1.

Financial accounting

2.

Management accounting

3.

Governmental accounting

4.

All of the given answers

Which of the following statements is correct?
1.

Management accounting is a subset of cost accounting.

2.

Cost accounting is a subset of management accounting.

3.

Cost accounting is no longer required in today's competitive environment.

4.

Management accounting in today's environment is the same as it was many
years ago.

Management accounting focuses on:
1.

compliance with the accounting standards.

2.

meeting the needs of external users.

3.

effective and efficient management of resources.

4.

financial data only.

The role of management accounting is to:

1.

provide information to parties outside the organisation

2.

provide information to managers within the organisation.

3.

provide information to government agencies.

4.

All of the given answers

Which of the following is not a widely recognised professional
accounting body?
1.

The Institute of Production Accountants

2.

CPA Australia

3.

The Institute of Chartered Accountants

4.

The Institute of Management Accountants

Which of the following is necessary for management accounting
information to be useful?
1.

It must report to external users.

2.

It must develop a framework of principles and guidelines.

3.

It must adapt to accommodate changes in the business environment.

4.

It must focus on the enterprise in its entirety.

Strategies:
1.

are directions that a firm intend to take in the long term.

2.

describe the way the firm competes.

3.

are the same as objectives and goals.

4.

are independent of the firm's mission statement.

If a firm's senior management decide to follow a differentiation
strategy, their focus should be to NOT concentrate on:
1.

product quality.

2.

product delivery.

3.

product innovation.

4.

product costs.

Which of the following would not be likely as a consistent focus
for a firm following a product differentiation strategy?
1.

Quality

2.

Delivery

3.

Product innovation

4.

Cost reduction

The firm's primary accounting system that produces financial data
for external users is governed by:
1.

accounting standards.

2.

all of the choices are correct.

3.

generally accepted accounting principles.

4.

traditional accounting conventions.

Which of the following statements is correct?
1.

A financial controller is only responsible for financial accounting.

2.

The primary role of the finance function of an organisation is to liaise with
banks and financial intuitions to obtain fin fund operations.

3.

In some organisations, management accountants are located in factories.

4.

Management accountants are responsible for external reporting as well as
providing information to internal managers

Budgeting can be used in an organisation to:
1.

motivate managers to achieve organisational goals.

2.

control operations.

3.

provide managers with information for making decisions and planning.

4.

All of the given answers

Modern management accounting systems include techniques that
support an organisation's:
1.

strategy.

2.

mission.


3.

goals.

4.

decisions.

A management accountant should be concerned with:
1.

providing daily information on physical measures of operational
performance.

2.

assisting in interdepartmental communications.

3.

developing and implementing information systems.

4.

All of the given answers

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.
1.

i

2.

ii

3.

iii

4.

i, ii and iii

Animus Ltd is a mining company. Which of the following is an
example of 'planning'?
1.

Awarding bonuses to Aimus Ltd's top performing executives

2.

Setting production targets for the company's new mines

3.

Developing correction actions to respond to lower-than-expected production
levels in the existing mines

4.

Pursuing legal actions against environmental activists who stole mining
equipment

Animus Ltd is a mining company. Which of the following is an
example of a decision relating to formulating Animus Ltd's corpo
strategy?


1.

Should Animus Ltd operate in the mining industry only, or expand to heavy
machinery manufacturing and distributio

2.

Should Animus Ltd compete based on price or product differentiation?

3.

Should Animus Ltd hire a new financial controller?

4.

Should Animus Ltd develop a new management accounting system?

Management accounting:
1.

must comply with Australian accounting standards.

2.

focuses primarily on the needs of managers internal to the organisation.

3.

provides information for parties external to the organisation.

4.

involves reports focusing on the enterprise in its entirety.

Animus Ltd is a mining company operating in Australia. The
company has recently developed a new environmental
management accounting system. According to institutional
theory:
1.

the new system is likely to be the result of the Australian culture of being
environmentally conscious and the fact that

2.

negative environmental impacts can result in significant fines to the
company.

3.

the new system is likely to be the result of gaining legitimacy and to imitate
other mining companies who are 'doing thing'.

4.

the new system is likely to be the result of stringent government
regulations.

5.

the new system is likely to be the result of careful, rational, cost-benefit
analysis.

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.
1.

i and ii


2.

iii and iv

3.

iii

4.

iv

Eddy Gunn is a management accountant. Which of the following
is most likely to be Eddy's responsibility?
1.

Providing an environmental assurance report for his company's
shareholders

2.

Compiling the company tax return

3.

Ensuring that the internal accounting system is compliant with generally
accepted accounting standards

4.

Developing a production cost report for each of the company's three
production lines

Which of the following are ethical standards for management
accountants? i. Competence; ii. Objectivity; iii. Confidentiality; iv.
Integrity
1.

i, ii, iii and iv

2.

ii, iii and iv

3.

i, ii and iv

4.

i, iii and iv

The largest professional organisation for management
accountants in Australia is the:
1.

CPA Australia.

2.

Australian Accounting Association.

3.

Institute of Chartered Accountants in Australia.

4.

Certified Institute of Management Accountants.

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.
1.

i and ii

2.

i, ii and iii

3.

iii

4.

ii

Which of the following changes in the business environment have
led to more complicated relationships and business structures?
1.

Rapid advances in technology

2.

Increases in outsourcing and reliance on various forms of business
networks

3.

Increased global mobility in labour

4.

Reliance on creating mutually strategic business alliances

Part of the planning process involves:
1.

formulating details of operations and finances for the next financial year

2.

comparing actual performance against targets

3.

making a choice between available alternatives

4.

measuring the performance of managers against preset targets

Which of the following changes in the business environment have
led to the emergence of virtual organisations?

1.

Rapid advances in technology

2.

Increases in outsourcing and reliance on various forms of business
networks

3.

Increased global mobility in labour

4.

Reliance on creating mutually strategic business alliances

The 'vision' of an organisation:
1.

refers to the desired future state of an organisation.

2.

refers to a statement that defines the purpose of the organisation.


3.

refers to specific statements of objective, upon which goals can be set.

4.

is only useful for non profit organisations.

'Control' involves:
1.

formulating details of operations and finances for the next financial year

2.

comparing actual performance against targets

3.

deciding whether to expand activities

4.

All of the given answers

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 nonfinancial information; iii. It can provide information useful for
making decisions.
1.

i

2.

i and ii

3.

ii and iii

4.

ii

Animus Ltd is a mining company. Which of the following is an
example of 'control'?
1.

Awarding bonuses to Aimus Ltd's top performing executives

2.

Setting production targets for the company's new mines

3.

Developing correction actions to respond to lower-than-expected production
levels in the existing mines.

4.

Pursuing legal actions against environmental activists who stole mining

equipment.

Which of the following statements is correct?
1.

The primary objective of a firm's management is to increase the firm's
value.

2.

The management accounting system needs to accumulate information from
both internal and external sources.


3.

Managers may be faced with a conflict between increasing customer value
and increasing shareholder value.

4.

All the given statements are correct.

Which of the following statements regarding management
accounting information is false?
1.

The cost of providing the information must be considered in the light of the
benefits received from the information.

2.

All information derived is necessary despite the cost.

3.

The information entails both costs and benefits.

4.

The cost of the information includes the time spent by the user to read,
understand and use the information.

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
1.

i

2.

ii

3.

iii

4.

i and ii

Choose the statement that best completes this sentence:
'Traditional management accounting focuses on …'
1.

budgets, financial performance measures and cost control.

2.

financial performance measures, external reporting and cost elimination.

3.

non-financial performance measures, external reporting and cost control.

4.

external reporting, labour-related activity measures and cost elimination.

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;
iii. Managers' time in reading and acting on the information


1.

i, ii and iii

2.

ii and iii only

3.

i and iii only

4.

None of the given answers

Both financial and management accounting:
1.

draw on data from the organisation's basic information system.

2.

provide information for external users.

3.

must comply with Australian accounting standards.

4.

rely exclusively on historical data.