58 test bank for managerial accounting 1st edition

58 Test Bank for Managerial Accounting 1st Edition
by Datar Multiple Choice Questions
Management accounting:
1.

A) focuses on measuring, analyzing, and reporting financial and nonfinancial
information to help managers estimate future revenue, costs, and other
measures to forecast activities and formulate strategies to increase the
competitive advantage of the organization.

2.

B) financial-information purpose is to communicate organization's financial
position to investors, banks, regulators, and suppliers.

3.

C) focus and emphasis is on past-oriented reports.

4.

D) rules of measurement reporting require financial statements to be prepared
in accordance of GAAP.

5.

E) behavioral information primarily reports economic events, but also
influences behavior because manager's compensation is often based on
reported financial data.

Sustainability:

1.

A) is the development of employment opportunities to decrease the national
job deficit.

2.

B) is a political term that corporate controllers use only at global
manufacturing operations when they refer to ethical standards of production.

3.

C) is the development and implementation of strategies to achieve long-term
financial, social, and environmental performance.

4.

D) is a technique that is used only when the organization outsources
operations in global operations.

5.

E) is a step in the decision-making process that managers only use to
enhance ethical standards in their organizations.

The ________ ________ is an administration function that includes
the human resource management function of training front-line
workers.
1.

A) design function


2.

B) distribution function

3.

C) production function

4.

D) marketing function

5.

E) customer service function

Some managerial accountants at companies choose to focus on a
product differentiation strategy. Which of the following is not a
characteristic of this strategy?
1.

A) Offer unique products.

2.

B) Offer different services.

3.

C) Offer lower-priced products or services.

4.

D) Offer less-popular products or services.

5.

E) Offer higher-priced products or services.

Management accountants work closely with other managers to
develop strategies. Which of the following is not a source of
competitive advantage they share to develop those strategies?
1.

A) Share company interdepartmental costs at meetings.

2.

B) Share productivity reports.

3.

C) Share best practices at meetings so other managers learn new and
innovative strategies.

4.

D) Share and understand the efficiency advantage relative to their
competitors.

5.

E) Share only time to attend luncheons and meetings, but never discuss
interdepartmental information.

Users of management accounting information include:
1.

A) banks.

2.

B) investors.

3.

C) suppliers.


4.

D) regulators.

5.

E) managers of the organization.

Which of the following statements concerning an organization's
strategy is not true?
1.

A) A strategy specifies how an organization matches its own capabilities with
the opportunities in the marketplace to accomplish its objectives.

2.

B) Management accountants provide input to help managers formulate
strategy.

3.
4.

5.

C) A good strategy will always overcome poor implementation.
D) Businesses usually follow one of two broad strategies: (1) offering a quality
product at a low price, and (2) offering a unique product or service priced
higher than the competition.
E) None of these are true.

The time it takes for companies to develop new products and
services and bring them to market is:
1.

A) delay.

2.

B) new-product development time.

3.

C) distribution time.

4.

D) important dimension.

5.

E) increased pace.

The managers at Apple are successful because they offer
consumers unique and different products. Which strategy do they
use to attract and retain customers?
1.

A) A cost leadership strategy.

2.

B) A product differentiation strategy.

3.

C) A low-cost leadership strategy.

4.

D) A low-product leadership strategy.


5.

E) That is what they do, there is no strategy.

Included in the ________ ________ is the function of analyzing,
reporting, and accounting for resources spent in different marketing
channels.
1.

A) marketing function

2.

B) distribution function

3.

C) process function

4.

D) planning function

5.

E) production function

Trader Joe's is known for delivering unique products to consumers
at reasonable prices. Which of the following is not one of the
strategies they use to attract and retain consumers?
1.

A) Delivers unique products at reasonable prices.

2.

B) Offers low-cost, high-end staples to attract and retain consumers.

3.

C) Minimize cost to attract and retain consumers with brand items.

4.

D) Maximize cost to attract and retain consumers with brand items.

5.

E) Implements precise, just-in-time ordering with daily distribution trips.

Strategic cost management describes cost management that:
1.

A) is not consistent with organizational goals.

2.

B) does not relate to ethical practices.

3.

C) has no focus on the organization.

4.

D) specifically focuses on strategic issues.

5.

E) does not specifically focus on strategic issues.

________ ________ measures, analyzes and reports financial
information and nonfinancial information that helps managers make
decisions to fulfill the goals of an organization.


1.

A) Financial Accounting

2.

B) Management Accounting

3.

C) Cost Accounting

4.

D) Cost Management

5.

E) Account Auditing

A ________ is used to specify how a managerial accountant at an
organization matches the capabilities with opportunities in the
marketplace to accomplish their objectives. It also helps managers
gain a competitive advantage at their company.
1.

A) goal

2.

B) ethic

3.

C) focus

4.

D) strategy

5.

E) production

Which of the following is not a way that a manager at a
manufacturing firm can improve the performance level in the
organization?
1.

A) A focus on the value-chain.

2.

B) A focus on supply-chain operations.

3.

C) A focus only on budgeting to improve all performance levels in the
organization.

4.

D) A focus on customer service and the distribution channels to enhance
operations.

5.

E) A focus on marketing strategies to develop new products and services.

Managers use management accounting information to do all of the
following except:
1.

A) collect.


2.

B) analyze.

3.

C) perform.

4.

D) categorize.

5.

E) summarize.

The managers at Vanguard follow a cost leadership strategy. Which
of the following is a characteristic of their strategy?
1.

A) Provide consumers unique products.

2.

B) Provide consumers different products.

3.

C) Provide consumers quality products or services at low prices by effective
cost management.

4.

D) Products are higher priced and less popular products or services than their
competitors.

5.

E) Provide budgets versus strategies and make more money by charging
higher prices.

When managers generate and experiment with ideas related to new
products, services or processes. this is:
1.

A) research and development.

2.

B) design of products and processes.

3.

C) production.

4.

D) marketing.

5.

E) distribution.

The ________ function is the function of analyzing, reporting, and
accounting for those resources spent in different marketing
channels; while the ________ function includes the human
resource management function of training front-line workers.
1.

A) distribution; marketing

2.

B) marketing; production


3.

C) customer service; distribution

4.

D) marketing; customer service

5.

E) production; customer service

Managers make cost management decisions to increase the value
of products and services they provide to customers and to achieve
organizational goals. Which of the following is not an example of an
effective cost management decision?
1.

A) The decision to enter a new market.

2.

B) A decision to change the design of a product.

3.

C) The decision to implement new organizational processes.

4.

D) Information and the accounting systems themselves.

5.

E) Decisions to use the information from accounting systems.

Financial accounting:

1.
2.

3.

A) focuses on reporting financial information to managers of the organization.
B) financial statements must comply with Generally Accepted Accounting
Principles (GAAP).
C) focus and emphasis is on future-oriented reports.

4.

D) rules of measurement are internal measures and reports do not have to
follow GAAP, but are based on cost-benefit analysis.

5.

E) behavioral implications are designed primarily to influence the behavior of
managers and other employees.

Processing orders and shipping products or services to customers
is:
1.

A) marketing.

2.

B) production.

3.

C) distribution.

4.

D) research and development.


5.

E) design of products and processes.

Which of the following is not a way for a company to improve
customer response time?
1.

A) An increase in capacity of bottleneck operations.

2.

B) Decrease in response time to consumer requests.

3.

C) Faster delivery procedures.

4.

D) Produce the product quicker.

5.

E) Effective management accounting information.

To lower costs and increase efficiency at Nike, the decision makers
moved its operations to China and Mexico. This is known as:
1.

A) outsourcing.

2.

B) managing.

3.

C) controlling.

4.

D) developing.

5.

E) implementing.

Which of the following is not a key success factor that managerial
accountants use to promote sustainability in their organizations?
1.

A) Cost.

2.

B) Efficiency.

3.

C) Quality.

4.

D) Time.

5.

E) Relevance.

An Enterprise Resource Planning (ERP) system is:
1.

A) a cost-management system that specifically focuses on strategic issues.


2.

B) a single database that collects data and feeds it into applications that
support each of the company's business activities, such as purchasing,
production, distribution, and sales.

3.

C) a sequence of business functions in which customer usefulness is added
to products.

4.

D) a strategy that integrates people and technology in all business functions
to deepen relationships with customers, partners, and distributors.

5.

E) an integrated philosophy of management for continuously improving the
quality of products and processes.

Which of the following is not one of the six primary business
functions that managerial accountants use to create value for their
customers?
1.

A) Research and development (R&D).

2.

B) Design of products and processes.

3.

C) Production and marketing.

4.

D) Distribution and customer service.

5.

E) Profit focus versus customer service.

The ________ ________ contains six primary business functions in
modern organizations.
1.

A) value chain

2.

B) design chain

3.

C) product chain

4.

D) production chain

5.

E) organizational chain

Financial accounting managers are more concerned about:
1.

A) future-oriented budgets.

2.

B) past-oriented reports.


3.

C) reports that do not follow GAPP.

4.

D) reports that are based on cost-benefit analysis.

5.

E) utilizing information to help managers make decisions to achieve
organizational goals.

58 Free Test Bank for Managerial Accounting 1st Edition
by Datar Multiple Choice Questions - Page 2
________ can lead to changes in goals, strategies, and the ways
decision alternatives are identified, and the range of information
collected when making predictions, and can lead to changes in
managers.

1.

A) Learning

2.

B) Performance

3.

C) Accounting

4.

D) Recording

5.

E) Costs

A recent Performance Report from Baker's Chocolate Factory
revealed that there were budgeted revenues in October, 2012, of
$2,000,000; and, the actual revenues were $2,110,000. Is the
difference favorable or unfavorable?
1.

A) $1.05; favorable

2.

B) $1.05; unfavorable

3.

C) $110,000 favorable

4.

D) $110,000 unfavorable

5.

E) $4,110,000; favorable

A manager at Best Buy had a television advertising expense in
2013. The company is required to report the expense to external
shareholders. According to GAAP, when is the manager at Best
Buy required to show the expense?


1.

A) 2012

2.

B) 2013

3.

C) 2014

4.

D) 2015

5.

E) 2016

The act that requires CEOs and CFOs to certify that their financial
statements fairly represent the results of operations is the:
1.

A) Taft Hartley Act.

2.

B) Uniform Electronics Act.

3.

C) Jumpstart our Business Act.

4.

D) United States Justice Act.

5.

E) Sarbanes Oxley Act.

A manager can install a budgeting system to replace the old
accounting system and to develop formal planning methods. Which
of the following is not a correct statement or benefit of implementing
the new budgeting system to trace costs?
1.

A) It compels managers to plan ahead.

2.

B) It compares actual to budgeted information.

3.

C) Managers learn and take action to make different decisions to improve firm
performance.

4.

D) Managers can take corrective action with information discovered from
budgeting.

5.

E) Time spent on implementing budgeting process is always easy to quantify.

Planning:
1.

A) is the band range of relevant activity level or volume in which there is a
specific relationship between the level of activity or volume and the cost in
question.


2.

B) occurs when purchase materials and components are converted into
various finished goods.

3.

C) is the band or range of normal activity level or volume in which there is a
specific relationship between the level of activity or volume and the cost in
question.

4.

D) is a general term that encompasses tracing direct costs to a cost object
and allocating indirect costs to a cost object.

5.

E) comprises taking actions that implement the planning decisions, deciding
how to evaluate performance, and providing feedback and learning to help
future decision making.

Which of the following is not a true statement about a manager that
utilizes the cost-benefit approach?

1.

A) Senior managers could spend resources if the expected benefits to the
company exceed the expected costs.

2.

B) Senior managers can compare the expected benefits to the expected costs
associated with a project.

3.

C) Senior managers can compare the expected benefits, exercise judgment,
and make decisions when they use this approach.

4.

D) Senior managers are unable to compare the expected benefits to the
expected costs associated with a project.

5.

E) Senior managers should spend resources if the expected benefits to the
company exceed the expected costs.

Which of the following is not an ethical behavior of Practitioner's of
Management Accounting and Financial Managers?
1.

A) Maintains an appropriate level of professional expertise by continually

developing knowledge and skills.

2.

B) Performs professional duties in accordance with relevant laws, regulations,
and technical standards.

3.

C) Provides decision support information and recommendations that are
accurate, clear, concise, and timely.

4.

D) Permits the executives to accept bribes to award supply contracts to
foreign firms.


5.

E) Ensures that all employees understand that value is quickly destroyed by
unethical behavior in other countries.

A budget:
1.

A) is the qualitative expression of a proposed plan of action by management.

2.

B) is the band range of relevant activity level or volume in which there is a
specific relationship between the level of activity or volume and the cost in
question.

3.

C) occurs when purchase materials and components are converted into
various finished goods.

4.

D) is a benchmark against which actual performance can be prepared.

5.

E) comprises taking actions that implement the planning decisions, deciding
how to evaluate performance, and providing feedback and learning to help
future decision making.

The term used to describe the concept that includes providing
financial information for reports to managers and shareholders, and
oversight to the overall operations of the accounting system is:
1.

A) internal audit.

2.

B) external audit.

3.

C) controllership.

4.

D) treasury.

5.

E) funding.

Which of the following is true about the modern concept of
controllership?
1.

A) The controller does not affect the entire company.

2.

B) Has no influence on employee behavior.

3.

C) Does not attend meetings with other managers.

4.

D) The controller affects the entire company.

5.

E) Does not exert a force that impels line managers toward better decisions.


Which of the following is not true about the five-step decision
making process?
1.

A) Identifies the problems and uncertainties.

2.

B) Obtains information.

3.

C) Makes predictions about the future.

4.

D) Helps managers make decisions.

5.

E) Managers cannot evaluate performances or learn.

The strategy that integrates people and technology in all business
functions to enhance relationships with customers, partners, and
distributors is:

1.

A) supply-chain analysis.

2.

B) customer relationship management.

3.

C) value-chain analysis.

4.

D) continuous quality improvement.

5.

E) cost leadership.

The ________ is the financial executive primarily responsible for
management accounting and financial accounting.
1.

A) treasurer

2.

B) controller

3.

C) manager

4.

D) COO (Chief Operating Officer)

5.

E) CIO (Chief Information Officer)

________ have a behavioral affect by motivating and rewarding
employees for achieving organizational goals.
1.

A) Costs


2.

B) Controls

3.

C) Technologies

4.

D) Budgets

5.

E) Distributions

Line management:
1.

A) is also known as staff management.

2.

B) is directly responsible for achieving the goals of the organization.

3.

C) is never responsible for achieving the goals of the organization.

4.

5.

D) is not responsible for achieving the financial goals of the organization
because that is the job of the CFO.
E) never have organizational goals to achieve.

Which of the following is not true about a managerial accountant
that links rewards to performance?
1.

A) Not used to motivate managers.

2.

B) Allows companies to charge premium prices.

3.

C) Should only be based on financial information.

4.

D) Recognizes managers for a well-done job.

5.

E) Rewards managers by salary, bonuses, and performance.

________ comprises the actions that implement the planning
decisions, deciding how to evaluate performance, and providing
feedback and learning to help future decision making.
1.

A) Ethics

2.

B) Control

3.

C) Planning

4.

D) Financial accounting


5.

E) Management accounting

When workers underperform, behavioral considerations suggest:
1.

A) managers write up the workers immediately.

2.

B) managers send written reports that highlight their underperformance.

3.

C) managers discuss with workers ways to improve performance actions.

4.

D) managers should terminate the employee without taking other actions.

5.

E) managers should ignore the underperformance and go on with business.

Which of the following is not a standard of ethical professional
practice as outlined by the Institute of Management Accountants?
1.

A) Principles.

2.

B) Standards.

3.

C) Competence.

4.

D) Confidence.

5.

E) Illegal acts.

________ is primarily a human activity that should focus on
encouraging individuals to do their jobs better.
1.

A) Reporting

2.

B) Management

3.

C) Functioning

4.

D) Doing

5.

E) Learning

A recent Performance Report from Baker's Chocolate Factory
revealed the budgeted amount of chocolate crisps was 1,000; and,
they actually sold 900 chocolate crisps. Compute the difference.
Was the difference favorable or unfavorable?


1.

A) 100; favorable

2.

B) 100; unfavorable

3.

C) 110; favorable

4.

D) 110; unfavorable

5.

E) 111; favorable

The cost-benefit approach helps managers make certain economic
decisions about purchasing new software, or the decision to keep
an old software package. In making such decisions, senior
managers keep ________ and ________ considerations in mind.
1.

A) technical; behavioral

2.

B) vacation; benefit

3.

C) non-cost; non-technical

4.

D) technical; non-behavioral

5.

E) none of these are true

Which of the following is an example of an accountant that does not
adhere to special ethical obligation?
1.

A) Ensure tough ethical standards at the organization.

2.

B) Criminal penalties to managers that do not follow ethical standards.

3.

C) Criminal penalties to employees that do not follow ethical standards.

4.

D) Failure to provide a process for employees to report violations of illegal
acts.

5.

E) Ensures that the CFO certifies that the financial statements fairly represent
the results of operations.

Organization charts:
1.

A) do not show reporting relationships.

2.

B) show informal reporting relationships.


3.

C) are never understood, and they are never written.

4.

D) show formal reporting relationships.

5.

E) are understood, but never written.

The term used to describe the oversight in banking and short- and
long-term financing, investments, and cash management is:
1.

A) risk management.

2.

B) internal audit.

3.

C) controllership.

4.

D) treasury.

5.

E) funding.

The comparison of ________ performance to ________
performance, this is known as the control or postdecision role of
information.
1.

A) low; high

2.

B) actual; budgeted

3.

C) real; superficial

4.

D) known; unknown

5.

E) new; existing

The Sarbanes-Oxley Act authorizes the Public Company
Accounting Oversight Board to:
1.

A) permit audit firms to provide tax services to audit clients.

2.

B) permit audit firms to provide consulting services to audit clients.

3.

C) oversee, review, and investigate the work of the auditors.

4.

D) permit audit firms to provide other advisory services to audit clients.

5.

E) avoid the oversight, review, and investigation of auditors.

How do managers calculate a target cost for the selling price of a
product?
1.

A) Add net sales to gross sales.

2.

B) Subtract net sales from the cost.

3.

C) Subtract the operating cost per unit of the product.

4.

D) Subtract the operating income per unit of target product.

5.

E) Add the net sales to the operating income per unit and subtract costs.

Total Points: 0 correct out of 58