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112 Test Bank for Managerial Accounting 2nd
Canadian Edition by Braun Multiple Choice Questions Page 1
Which of the following groups are most likely to use a company's
budget information?
1.

A) Managers

2.

B) Customers

3.

C) Creditors

4.

D) Suppliers

Which person is hired directly by the board of directors to run the
company?
1.

A) The Treasurer

2.

B) The CEO

3.

C) The CFO

4.

D) The COO

Which of the following certifications is issued by the Society of
Management Accountants?
1.

A) CPA

2.

B) CMA

3.

C) CIA

4.

D) CFP

Who typically provides oversight for large corporations?
1.

A) Stockholders

2.

B) The CEO

3.

C) The Board of Directors


4.

D) The company president

Which of the following is TRUE?
1.

A) Managerial accounting reports are audited by professional accountants.

2.

B) Managerial accounting reports provide detailed internal information.

3.

C) Managerial accounting reports aid potential investors.

4.

D) Managerial accounting reports must follow GAAP.

Who is primarily responsible for raising capital and investing funds?
1.

A) The CEO

2.

B) The CFO

3.

C) The COO

4.

D) The Treasurer

A company's Board of Directors meets
1.

A) annually.

2.

B) monthly.

3.

C) periodically, as needs dictate.

4.

D) quarterly.

Which of the following are the internal decision-makers of a
company?
1.

A) Vendors

2.

B) Customers

3.

C) Managers

4.

D) Shareholders

A company ships out pre-ordered merchandise the last week of
December, instead of in mid-January as originally scheduled, to


ensure a profit for the year. This action could be seen as a violation
of what ethical standard?
1.

A) Competence

2.

B) Confidentiality

3.

C) Integrity

4.

D) Independence

Who requires companies listed on the New York Stock Exchange to
have an internal audit function?
1.

A) The Board of Directors

2.

B) The NYSE

3.

C) The internal revenue service (IRS)

4.

D) The stockholders

To resolve ethical dilemmas management accountants should
FIRST
1.

A) follow their company's established policies for Reporting unethical
behavior.

2.

B) discuss the unethical situation with their immediate supervisor.

3.

C) consult an attorney.

4.

D) call the Society of Management Accountants "Ethics Hotline."

Who typically manages the daily operations of a company?
1.

A) Stockholders

2.

B) The controller

3.

C) The company's board of directors

4.

D) The CEO

Which would be a subgroup of the Board of Directors?


1.

A) Audit committee

2.

B) Financial committee

3.

C) Managerial committee

4.

D) Stockholders' committee

Which of the following statements is TRUE about managerial
accounting information?
1.

A) It is prepared annually and quarterly.

2.

B) It is audited.

3.

C) It emphasizes relevance.

4.

D) It must be prepared in conformity with generally accepted accounting
principles (GAAP).

The primary goal of managerial accounting is to provide information
to
1.

A) shareholders.

2.

B) creditors.

3.

C) internal decision-makers.

4.

D) both shareholders and creditors.

The person MOST likely to use ONLY financial accounting
information would be the
1.

A) bank loan officer.

2.

B) plant manager.

3.

C) vice president of plant operations.

4.

D) product manager.

Preparing financial statements in accordance with GAAP is an
example of
1.

A) competence.


2.

B) integrity.

3.

C) objectivity.

4.

D) credibility.

The standards of the Society of Management Accountants Code of
Professional Ethics include which of the following?
1.

A) Integrity

2.

B) Honesty

3.

C) Fairness

4.

D) Objectivity

You tell your sister that the company you work for is going to report

higher than expected earnings. What ethical standard is being
violated?
1.

A) Competence

2.

B) Confidentiality

3.

C) Credibility

4.

D) Integrity

Which of the following statements is FALSE?
1.

A) Financial accounting provides sufficient information for managers to
effectively plan and control operations.

2.

B) Financial accounting reports help creditors make decisions.

3.

C) Financial accounting helps investors make decisions.

4.

D) Financial accounting provides external reports.

Managerial accountants often work on teams called
1.

A) audit teams.

2.

B) cross-functional teams.


3.

C) multi-functional teams.

4.

D) work groups.

Which of the following reports must be audited by an outside
agency?
1.

A) Annual financial statements

2.

B) Monthly financial statements

3.

C) Annual financial budgets

4.

D) Budgets

The COO is responsible for managing which of the following
aspect(s) of the company?
1.

A) Internal controls

2.

B) The annual audit

3.

C) Financial, managerial, and tax accounting

4.

D) Research and development, production, and distribution

The vice-president of operations directly reports to which
person(s)?
1.

A) The CFO

2.

B) The COO

3.

C) The CEO

4.

D) The Board of Directors

The person or position who is directly responsible for all financial
concerns is the
1.

A) CEO.

2.

B) CFO.

3.

C) COO.


4.

D) Treasurer.

Communicating information fairly and objectively represents what
ethical standard?
1.

A) Competence

2.

B) Confidentiality

3.

C) Credibility

4.

D) Integrity

Owners of a company are its
1.

A) creditors.

2.

B) customers.

3.

C) managers.

4.

D) shareholders.

Management accounting focuses on
1.

A) external reporting.

2.

B) internal reporting.

3.

C) tax preparation.

4.

D) auditing.

Which of following is TRUE?

1.

A) Management accounting focuses on historical transactions.

2.

B) Financial accounting uses the cash basis for recording transactions.

3.

C) Financial accounting focuses on future data.

4.

D) Management accounting focuses on relevant data.

What has been the determining factor in the way that we now view
managerial accountants?


1.

A) Stricter audit standards

2.

B) Stricter GAAP standards

3.

C) Technology

4.

D) Government licensing

You "pad" your expenses on a company sponsored conference.
You are in violation of what ethical standard?
1.

A) Competence

2.

B) Confidentiality

3.

C) Credibility

4.

D) Integrity

Which of the following persons or groups would be LEAST likely to
receive detailed managerial accounting reports?
1.

A) Plant managers

2.

B) Current shareholders

3.

C) Sales territory managers

4.

D) CEO

Performing duties in accordance with relevant laws, regulations,
and technical standards make up which SMA professional ethics
standard?
1.

A) Competence

2.

B) Confidentiality

3.

C) Credibility

4.

D) Integrity

Which of the following report to the audit committee of the Board of
Directors?


1.

A) The treasurer and controller

2.

B) The CFO and internal audit department

3.

C) The internal audit department and the independent CPA firm

4.

D) The CFO and the independent CPA firm

Which of the following types of accounting is designed to meet the
needs of decision-makers inside a company?
1.

A) Audit accounting

2.

B) Financial accounting

3.

C) Managerial accounting

4.

D) Tax accounting

Information for external parties about past performance is provided
by
1.

A) budget reports.

2.

B) financial accounting reports.

3.

C) managerial accounting reports.

4.

D) planning reports.

112 Free Test Bank for Managerial Accounting 2nd
Canadian Edition by Braun Multiple Choice Questions Page 2
Which of the following is one of the four cost categories typically

found on a cost of quality report?
1.

A) Development costs

2.

B) Inventory failure costs

3.

C) Marketing costs

4.

D) Prevention costs


The philosophy and a business strategy of manufacturing without
waste is referred to as
1.

A) lean production.

2.

B) thin manufacturing.

3.

C) TQM.

4.

D) ISO 900.

Wonder Company is considering installing an ERP system. To
make a good decision, Wonder needs to conduct a(n)
1.

A) JIT survey.

2.

B) TQM survey.

3.

C) ISO 9001:2000 survey.

4.

D) cost-benefit analysis.

The cost of training quality control supervisors would be classified
as a(n)
1.

A) prevention cost.

2.

B) appraisal cost.

3.

C) internal failure cost.

4.

D) external failure cost.

If a company were to increase its appraisal costs by inspecting
more units as the units are completed, the company's external
failure costs
1.

A) would usually increase.

2.

B) would usually decrease.

3.

C) would usually remain the same.

4.

D) could not be predicted.

The production system designed to eliminate waste is called a(n)
1.

A) traditional system.

2.

B) lean production system.

3.

C) activity-based system.

4.

D) full costing system.

The philosophy that centers on production as needed is known as
1.

A) ERP.

2.

B) JIT.

3.

C) Supply-chain management.

4.

D) TQM.

Which of the following cost items should be classified as an internal
failure cost on a cost of quality report?
1.

A) Net cost of scrap

2.

B) Customer returns of defective products

3.

C) Training for quality control employees

4.

D) Patent cost for a new product

What is the abbreviation of the name given to software systems that
can integrate all departments?
1.

A) TQM

2.

B) ERP

3.

C) Total Integrated Software

4.

D) JIT

Refusing gifts or favors that would influence actions is an example
of which ethical standard?
1.

A) Competence


2.

B) Confidentiality

3.

C) Credibility

4.

D) Independence

Which of the following cost items should be classified as an external
failure cost on a cost of quality report?
1.

A) Net cost of scrap

2.

B) Customer returns of defective products

3.

C) Technical support provided to suppliers

4.

D) Supplies used in the quality inspection program

The cost of maintaining testing equipment would be classified as
a(n)
1.

A) prevention cost.

2.

B) appraisal cost.

3.

C) internal failure cost.

4.

D) external failure cost.

The philosophy of providing superior goods and services is
1.

A) ERP.

2.

B) JIT.

3.

C) Supply-chain management.

4.

D) TQM.

Under Sarbanes-Oxley, what is the maximum number of years of
imprisonment for knowingly destroying or creating documents to
obstruct any federal investigation?
1.

A) 5 years

2.

B) 10 years


3.

C) 15 years

4.

D) 20 years

Which of the following describes a system in which suppliers deliver
materials at the time they are needed?
1.

A) ERP

2.

B) JIT

3.

C) TQM

4.

D) ISO

What is the name of the professional association for managerial
accountants?
1.

A) Association of Management Accountants

2.

B) Society of Management Accountants

3.

C) Society of Professional Accountants

4.

D) Professional Accountants Association

Which of the following pertains to a lean production system?
1.
2.

A) It will have like machines grouped together.
B) It will produce goods in smaller batches than a traditional production
system.

3.

C) It will require higher inventory levels than a traditional production system.

4.

D) It will require longer set-up times than a traditional system.

The cost of downtime caused by quality problems with the raw
materials would be classified as a(n)
1.

A) prevention cost.

2.

B) appraisal cost.

3.

C) internal failure cost.


4.

D) external failure cost.

Not disclosing confidential information is an example of which
ethical standard?
1.

A) Competence

2.

B) Confidentiality

3.

C) Credibility

4.

D) Integrity

ISO 9001:2008 is a(n)
1.

A) certification that a company complies with international quality standards.

2.

B) software system which integrates all departments.

3.

C) system where production occurs only when needed.

4.

D) effective exchange of information between vendors and customers.

E-commerce refers to the
1.

A) conduct of business on the internet.

2.

B) exchange of information with customers and suppliers.

3.

C) production of superior goods and services.

4.

D) quick delivery of goods and services.

Which reflects a philosophy of providing customers with superior
products and services?
1.

A) ERP

2.

B) XBRL

3.

C) TQM

4.

D) IFRS

The cost of fixing defective units found during the quality
inspections would be classified as a(n)


1.

A) prevention cost.

2.

B) appraisal cost.

3.

C) internal failure cost.

4.

D) external failure cost.

Which term listed below describes a system where companies
purchase raw materials when needed in production and complete
finished goods when needed by customers?
1.

A) Internal failure costs

2.

B) Backflush costing

3.

C) Just-in-time

4.

D) External failure costs

Which of the following cost items should be classified as a
prevention cost on a cost of quality report?
1.

A) Warranty expenses on defective products

2.

B) Technical support provided to employees

3.

C) Supervision of quality inspections

4.

D) Net cost of spoiled units

If a company were to increase its appraisal costs by inspecting
more units as the units are completed, the company's internal
failure costs
1.

A) would usually increase.

2.

B) would usually decrease.

3.

C) would usually remain the same.

4.

D) could not be predicted.

Failure to mitigate conflicts of interest would violate the ethical
conduct standard of


1.

A) competency.

2.

B) confidentiality.

3.

C) credibility.

4.

D) independence.

IFRS stands for
1.

A) International and Foreign Reporting Systems.

2.

B) International Financial Reporting Standards.

3.

C) Important Foreign Registering Systems.

4.

D) International and Foreign Registering Standards.

SOX requires that the company's financial statements be certified
by the company's

1.

A) CFO.

2.

B) CEO.

3.

C) CFO and CEO.

4.

D) Controller.

Throughput time is cut when which of the following methods is
used?
1.

A) IFRS

2.

B) JIT

3.

C) ISO

4.

D) XBRL

You take printer paper home from work for personal use. You have
violated which ethical standard?
1.

A) Competence

2.

B) Confidentiality


3.

C) Credibility

4.

D) Integrity

Taking on a responsibility you know can be better completed by
someone else would violate the ethical conduct standard of
1.

A) competency.

2.

B) confidentiality.

3.

C) credibility.

4.

D) integrity.

Attending class to maintain professional knowledge is an example
of which ethical standard?
1.

A) Competence

2.

B) Confidentiality

3.

C) Credibility

4.

D) Integrity

Not disclosing relevant information would violate the ethical conduct

standard of
1.

A) competency.

2.

B) confidentiality.

3.

C) credibility.

4.

D) integrity.

Companies that wish to demonstrate their commitment to
international quality standards may become certified by what
organization?
1.

A) SEC

2.

B) IFRS


3.

C) IMA

4.

D) ISO

Exchanging information to reduce costs, speed delivery, and
improve quality is best described as
1.

A) ERP.

2.

B) JIT.

3.

C) Supply-chain management.

4.

D) TQM.

Which of the following refers to costs incurred in detecting poor
quality goods or services?
1.

A) Appraisal costs

2.

B) External failure costs

3.

C) Internal failure costs

4.

D) Prevention costs

Which of the following is TRUE about a lean production system?
1.

A) Customer orders drive the production process.

2.

B) Inventory levels are maintained at high levels.

3.

C) Raw materials are purchased in large quantities.

4.

D) Finished goods are produced ahead of customers' orders to protect against
running out of finished goods inventory.

The cost of supplier evaluation from a supplier would be classified
as a(n)
1.

A) prevention cost.

2.

B) appraisal cost.

3.

C) internal failure cost.


4.

D) external failure cost.

XBRL stands for
1.

A) eXtensible Business Reporting Language.

2.

B) eXisting Business Responsibility Language.

3.

C) eXtensive Business Registering Location.

4.

D) eXtractable Business Reporting Location.

An accountant who does not understand how "accrual accounting"
works has failed which standard?
1.

A) Competence

2.

B) Confidentiality

3.

C) Credibility

4.

D) Integrity

The Society of Management Accountants issues what certification?
1.

A) CMA

2.

B) CPA

3.

C) CISA

4.

D) CFP

A system in which companies purchase raw materials only when
needed is called
1.

A) ABC.

2.

B) external failure costs.

3.

C) internal failure costs.

4.

D) JIT production.

XBRL is essentially a


1.

A) new set of accounting standards.

2.

B) new set of auditing standards.

3.

4.

C) a tagging system which allows computer programs to extract information
from financial reports.
D) new set of ethical standards.

112 Free Test Bank for Managerial Accounting 2nd
Canadian Edition by Braun Multiple Choice Questions Page 3
The costs incurred when poor quality goods or services are
detected and corrected before delivery to customers are called
1.

A) appraisal costs.

2.

B) external failure costs.

3.

C) internal failure costs.

4.

D) prevention costs.

Which of the following management responsibilities are being
fulfilled when management uses feedback to take corrective action
on the budgets?
1.

A) Directing and planning

2.

B) Planning and decision-making

3.

C) Controlling and decision-making

4.

D) Planning and controlling

What costs are incurred to avoid poor quality goods or services in
the first place?

1.

A) Appraisal costs

2.

B) External costs

3.

C) Internal failure costs


4.

D) Prevention costs

Production loss caused by downtime is an example of what type of
cost?
1.

A) External failure cost

2.

B) Internal failure cost

3.

C) Prevention cost

4.

D) Appraisal cost

Comparing actual results to budgets is an example of the
management function of
1.

A) controlling.

2.

B) decision-making.

3.

C) directing.

4.

D) planning.

Which term below best describes the quality cost category for
"preventive maintenance on machinery"?
1.

A) Prevention costs

2.

B) Appraisal costs

3.

C) Internal failure costs

4.

D) External failure costs

Planning involves which of the following activities?
1.

A) Setting goals and objectives for the company

2.

B) Overseeing the company's day-to-day operations

3.

C) Evaluating the results of operations

4.

D) Getting feedback on results


Which of the following terms best describes costs incurred to detect

poor quality goods or services?
1.

A) Appraisal costs

2.

B) Activity-based costing

3.

C) Value engineering

4.

D) Prevention costs

Costs incurred to avoid poor quality goods or services are
considered
1.

A) appraisal costs.

2.

B) activity-based costing.

3.

C) value engineering.

4.

D) prevention costs.

Using hourly sales reports to determine the level of staffing needed
to service customers fulfills which of management's four primary
responsibilities?
1.

A) Directing, planning, and decision-making

2.

B) Directing, controlling, and planning

3.

C) Controlling, planning, and decision-making

4.

D) Analyzing, directing, and planning

Which term below best describes the quality cost category for "lost
profits from lost sales"?
1.

A) Prevention costs

2.

B) Appraisal costs

3.

C) Internal failure costs

4.

D) External failure costs


Which term listed below describes costs incurred when the
company detects poor quality goods or services before delivery to
the customer?
1.

A) Internal failure costs

2.

B) Value added activity

3.

C) Lean production

4.

D) External failure costs

The cost of evaluating potential raw material suppliers is an
example of a(n)
1.

A) internal failure cost.

2.

B) prevention cost.

3.

C) external failure cost.

4.

D) appraisal cost.

When management compares the budget to actual results, which of
the following is being fulfilled?
1.

A) Directing

2.

B) Controlling

3.

C) Decision-making

4.

D) Planning

Which of the following terms best describes costs incurred to avoid
poor quality goods or services?
1.

A) Appraisal costs

2.

B) Activity-based costing

3.

C) Value engineering

4.

D) Prevention costs


Preparing budgets is an example of the management function of
1.

A) controlling.

2.

B) decision-making.

3.

C) directing.

4.

D) planning.

Budgets are the way that managers can express their
1.

A) plans.

2.

B) decision-making.

3.

C) control.

4.

D) hiring practices.

The cost of improved production equipment and production
processes is a(n)
1.

A) external failure cost.

2.

B) internal failure cost.

3.

C) prevention cost.

4.

D) appraisal cost.

The cost of warranty work is an example of a(n)
1.

A) prevention cost.

2.

B) appraisal cost.

3.

C) internal failure cost.

4.

D) external failure cost.

Evaluating results against the plan is an example of the
management function of
1.

A) controlling.


2.

B) decision-making.

3.

C) directing.

4.

D) planning.

Using product cost information to determine sales prices is an
example of
1.

A) controlling, planning, and decision-making.

2.

B) directing, controlling, and planning.

3.

C) directing, planning, and decision-making.

4.

D) controlling, directing, and planning.

Which term below best describes the quality cost category for "cost
of testing food processors before sale"?
1.

A) Prevention costs

2.

B) Appraisal costs

3.

C) Internal failure costs

4.

D) External failure costs

The cost of product liability claims is an example of a(n)
1.

A) appraisal cost.

2.

B) external failure cost.

3.

C) internal failure cost.

4.

D) prevention cost.

Which one of the following manager responsibilities encompasses
the other three?
1.

A) Decision-making

2.

B) Feedback

3.

C) Planning