117 test bank for introduction to management accounting 15th edition

117 Test Bank for Introduction to Management
Accounting 15th Edition
True-False Questions
Management by exception is the practice of ignoring areas that deviate from
the plan.
1.

True

2.

False

Specialization by individuals in organizations is being replaced by decisionmaking by cross-functional teams.
1.

True

2.

False

One of a controller's responsibilities is risk management.
1.

True

2.

False

Behavioral considerations are of primary importance in financial accounting.
1.

True

2.

False

The value chain refers to the various stages through which a product passes.
1.

True

2.

False


Generally Accepted Accounting Principles play an important role in
management accounting.
1.

True

2.

False

One of a treasurer's responsibilities is tax administration.

1.

True

2.

False

The behavioral implications of an accounting system refers to the system's
effects on the firm's customers.
1.

True

2.

False

Financial accounting reports are usually prepared for a period of one year or
less.
1.

True

2.

False

Management accountants are exposed to only a few functional areas in an
organization.

1.

True

2.

False


In the IMA's Statement of Ethical Professional Practice, integrity is one of the
standards explained.
1.

True

2.

False

XBRL is an integrated information system that supports all functional areas of
a business.
1.

True

2.

False

A manager using information to decide whether to add or drop a product is an

example of problem solving.
1.

True

2.

False

The service sector accounts for approximately 40 percent of the employment
in the United States at the present time.
1.

True

2.

False

The majority of accountants work for government entities and nonprofit firms.
1.

True

2.

False

A budget is a qualitative expression of a plan of action.
1.

True


2.

False

Feedback is usually not critical to the cycle of planning and control.
1.

True

2.

False

According to the Financial Executive, an emphasis on long-term results by
top executives in a company creates pressures for unethical behavior.
1.

True

2.

False

Additional costly information should be acquired when the expected benefit of
an improved decision exceeds the cost of the information.
1.

True

2.

False

The Certified Management Accountant (CMA. designation refers to
independent auditors.
1.

True

2.

False

Over 80 percent of companies in the United States have a code of conduct.
1.

True

2.

False


The same information may serve the attention-directing function and the
problem-solving function.
1.

True

2.

False

Most scorecard and attention-directing information is produced on a
nonroutine basis.
1.

True

2.

False

The cost-benefit balance is the primary consideration in choosing among
accounting systems and methods.
1.

True

2.

False

Line managers are directly involved with making and selling the
organization's products or services.
1.

True

2.

False

Scorekeeping allows managers to evaluate organizational performance.
1.

True

2.

False

Accountants support only some of the value-chain functions.
1.

True


2.

False

Product life cycles may range from a few months to many years.
1.

True

2.

False

Variances are deviations from planned results.
1.

True

2.

False

Companies that have a fully installed computer-integrated manufacturing
system are usually labor intensive.
1.

True

2.

False

The controller is primarily concerned with a company's financial matters and
the treasurer is concerned with a company's operating matters.
1.

True

2.

False

The essence of the just-in-time philosophy is to eliminate waste.
1.

True

2.

False

The maintenance department provides line support to the welding department
in a factory.
1.

True


2.

False

The only function in the value chain where accountants are of any importance
is the production function.
1.

True

2.

False

Staff managers give advice to line managers and have authority over line
managers.
1.

True

2.

False

In English-speaking countries outside the United States, management
accountants are called chartered accountants.
1.

True

2.

False

Reports prepared by managerial accountants have a past orientation.
1.

True

2.

False

The product life cycle for a refrigerator is usually a few months.
1.

True

2.

False


True False Questions - Free Text Questions Multiple Choice Questions-Page 1
One advantage of the management-by-exception approach is that it ________.
1.

A. frees managers from needless concern over operations that adhere to plans

2.

B. allows managers to ignore aspects of the business outside their area of expertise

3.

C. allows managers to ignore day-to-day operations

4.

D. allows managers to ignore problem situations

A budget ________.
1.

A. is a quantitative expression of a plan of action

2.

B. provides feedback by comparing actual results with planned results

3.

C. includes deviations from planned results

4.

D. ignores areas that are presumed to be running smoothly

Product life cycles ________.
1.

A. do not pertain to services offered to customers

2.

B. are the same length for all products

3.

C. are not important when predicting revenues from a product

4.

D. must be considered to effectively plan and control production of goods or services


Which of the following statements is FALSE?
1.

A. Management accounting allows accountants to plan and control operations.

2.

B. Management accountants play a role in supporting all the functions of the value
chain.

3.

C. Management accounting allows an accountant to learn about interrelationships
between different functional areas.

4.

D. Management accounting helps an accountant understand how information can
improve decisions in different functional areas.

________ is the field that produces information for managers within an
organization.
1.

A. Financial accounting

2.

B. Management accounting

3.

C. Financial auditing

4.

D. External auditing

Research and development is the function of a value chain that involves
________.
1.

A. the detailed design and engineering of products, services or processes

2.

B. the generation of ideas related to new products, services or processes

3.

C. the generation of ideas related to new products or services

4.

D. the detailed design and engineering of new processes


The Foreign Corrupt Practices Act requires ________.
1.

A. companies to accept bribes from officials in foreign countries

2.

B. all publicly held companies to follow the act only if they conduct business outside the
United States

3.

C. companies to maintain their accounting records in reasonable detail and accuracy

4.

D. companies to prepare a separate report on their system of internal control

The function of the value chain that provides support activities to the
customer is called ________.
1.

A. marketing

2.

B. distribution

3.

C. customer service

4.

D. consumer relations

Which of the following items should be considered by managers when
designing accounting systems?
1.

A. cost-benefit balances

2.

B. behavioral implications

3.

C. cost-benefit balances and behavioral implications

4.

D. none of the above

When does a company earn the majority of revenue for a product that goes
through the product life cycle?
1.

A. phase-out of product and introduction to market stages


2.

B. introduction to market and mature market stages

3.

C. product development and mature market stages

4.

D. mature market and phase-out of product stages

Which of the following is NOT a government regulation that influences
accounting systems?
1.

A. Sarbanes-Oxley Act

2.

B. Foreign Corrupt Practices Act

3.

C. tax rules promulgated by the Internal Revenue Service

4.

D. International Financial Reporting Standards

________ is the field of accounting that develops information for external
parties such as stockholders, suppliers, banks and governmental regulatory
bodies.
1.

A. Auditing

2.

B. Internal auditing

3.

C. Management accounting

4.

D. Financial accounting

Marketing is the function of the value chain that involves ________.
1.

A. the mechanism by which a company delivers products or services to the customer

2.

B. the manner by which individuals or groups learn about the value and features of
products or services

3.

C. selling activities and delivery activities


4.

D. selling activities and customer service

________ is (are. the accounting system's effect on the behavior and the
decisions of managers.
1.

A. Simplicity

2.

B. Behavioral implications

3.

C. The cost-benefit balance

4.

D. The code of ethics

The various stages through which a product passes are called the ________.
1.

A. value chain

2.

B. product life cycle

3.

C. performance plan

4.

D. product performance plan

Performance reports ________.
1.

A. are quantitative expressions of plans for action

2.

B. provide feedback by comparing actual results with planned results

3.

C. ignore areas that are presumed to be running smoothly

4.

D. provide information to enable managers to select a value chain function to
emphasize

Distribution is the function of the value chain that involves ________.
1.

A. the mechanism by which a company delivers products or services to the customer


2.

B. the manner by which individuals or groups learn about the value and features of
products or services

3.

C. the support activities provided to the customer

4.

D. none of the above

The detailed design and engineering of products, services or processes is
called the ________ function in the value chain.
1.

A. research and development

2.

B. design of products, services or processes

3.

C. engineering of products, services or processes

4.

D. production

The primary users of management accounting information are ________.
1.

A. bankers

2.

B. governmental regulatory bodies

3.

C. managers in organizations

4.

D. managerial accountants

What statement about management accounting is FALSE?

1.

A. Management accounting is the process of identifying, measuring, accumulating,
analyzing, preparing, interpreting and communicating information.

2.

B. Management accounting helps managers fulfill organizational objectives.

3.

C. Management accounting is used by managerial accountants to make strategic and
operational decisions.


4.

D. Management accounting produces information for managers in an organization.

________ information helps managers focus on operating problems,
imperfections, inefficiencies and opportunities.
1.

A. Scorekeeping

2.

B. Attention directing

3.

C. Problem solving

4.

D. Performance

During the product development stage of the product life cycle, companies
typically experience ________.
1.

A. revenues and no costs

2.

B. costs and no revenues

3.

C. both costs and revenues

4.

D. neither costs nor revenues

A(n. ________ is a review to determine whether the policies and procedures
specified by top management have been implemented.
1.

A. management audit

2.

B. internal audit

3.

C. internal control

4.

D. internal accounting control


Investigating the reasons for the variances on a department's performance
report is an example of ________.
1.

A. scorekeeping

2.

B. attention directing

3.

C. problem solving

4.

D. auditing

Variances ________.
1.

A. are quantitative expressions of plans of action

2.

B. ignore areas that are problem areas

3.

C. are deviations from a plan

4.

D. ignore areas that are presumed to be running smoothly

When comparing management accounting and financial accounting, which of
the following statements is FALSE?
1.

A. Management accounting has a future orientation whereas financial accounting has a
past orientation.

2.

B. Management accounting prepares detailed reports whereas financial accounting
prepares summary reports.

3.

C. Management accountants are constrained by the principles of reporting
promulgated by the Institute of Management Accountants whereas financial accountants
are constrained by Generally Accepted Accounting Principles.

4.

D. Behavioral considerations are of primary importance in management accounting,
but not in financial accounting.


What type of information is used in making nonroutine decisions, such as the
decision to replace a traditional assembly line with fully automated robots?
1.

A. scorekeeping information

2.

B. attention directing information

3.

C. problem solving information

4.

D. auditing information

________ information involves routine reports that compare actual results to
predicted results.
1.

A. Budgets

2.

B. Attention directing

3.

C. Scorekeeping

4.

D. Problem solving

________ is the classification, accumulation, and reporting of data that help
users understand and evaluate organizational performance.
1.

A. Scorekeeping

2.

B. Attention directing

3.

C. Problem solving

4.

D. Cost accounting

Management-by-exception means that managers should ________.
1.

A. concentrate on areas that deviate from the plan


2.

B. in the absence of other evidence, presume that areas that conform with plans are
running smoothly

3.

C. A and B

4.

D. none of the above

Generally Accepted Accounting Principles are most closely connected to
________.
1.

A. management accounting

2.

B. financial accounting

3.

C. internal auditing

4.

D. management accounting

________ is (are. the primary consideration in choosing among accounting
systems and methods.
1.

A. Simplicity

2.

B. Behavioral implications

3.

C. The cost-benefit balance

4.

D. Simplicity and behavioral implications

Which of the following activities would NOT be called scorekeeping?
1.

A. estimating the cost of moving the corporate headquarters to another city

2.

B. preparing a schedule of depreciation expense for trucks for the current year

3.

C. preparing a schedule of sales for the current year

4.

D. preparing a schedule of plant assets at the end of the current year


Which stage of the product life cycle has a stable sales level?
1.

A. product development stage

2.

B. introduction to market stage

3.

C. mature market stage

4.

D. phase-out of product stage

Problem solving information would NOT be used in this situation.
1.

A. decision to make or buy parts for a manufactured product

2.

B. decision to replace equipment

3.

C. decision to add or drop a division

4.

D. evaluating the operating performance of a segment in the current year

Which of the following products have a product life cycle of a few months?
1.

A. fashion clothing

2.

B. automobiles

3.

C. airplanes

4.

D. refrigerators

69 Free Test Bank for Introduction to Management
Accounting 15th Edition by Horngren Multiple Choice
Questions-Page 2


According to the IMA's Statement of Ethical Professional Practice, the
standard of credibility requires ________.
1.

A. mitigating actual conflicts of interest

2.

B. maintaining an appropriate level of professional expertise by continually developing
knowledge and skills

3.

C. communicating information fairly and objectively

4.

D. performing professional duties in accordance with relevant laws, regulations and
technical standards

Scott is a management accountant in a large company. Scott observed
unethical behavior by a coworker who is also a management accountant. The
coworker is a relative of the company's president and he always receives
preferential treatment. Scott observed the coworker putting office supplies
and small pieces of electronic equipment in his briefcase. According to the
IMA, what course of action should Scott take?
1.

A. He should report the observation to the police. The coworker is stealing from the
company.

2.

B. He should report the observation to his immediate supervisor.

3.

C. He should report the observation to the Securities and Exchange Commission.

4.

D. He should do nothing.

A telephone hotline is established for customers to call with questions about

a new electronic device. This is an example of the ________ function in the
________.
1.

A. marketing; value chain

2.

B. distribution; value chain


3.

C. customer service; value chain

4.

D. marketing; product life cycle

According to the Financial Executives Institute, a function of the treasurer is
________.
1.

A. reporting and interpreting

2.

B. short-term financing

3.

C. protection of assets

4.

D. government reporting

You are the management accountant in Company ZZ. A supplier to Company
ZZ offers to let stay rent-free at the supplier's condominium in Florida for your
upcoming vacation. Accepting the supplier's offer violates the IMA's ethical
standard of ________.
1.

A. competence

2.

B. confidentiality

3.

C. credibility

4.

D. integrity

The largest U.S. association of professional accountants whose major interest
is management accounting is the ________.
1.

A. American Institute of Certified Public Accountants

2.

B. American Institute of Certified Management Accountants

3.

C. Institute of Management Accountants


4.

D. American Institute of Management Accountants

This is a statement from the IMA's Statement of Ethical Professional Practice:
"Each member has a responsibility to communicate information fairly and
objectively." This is an example of the ________ standard.
1.

A. competence

2.

B. confidentiality

3.

C. integrity

4.

D. credibility

The Institute of Management Accountants has adopted a set of standards for
ethical conduct which includes ________.
1.

A. competence, integrity, confidentiality and objectivity

2.

B. competence, confidentiality, credibility and objectivity

3.

C. competence, confidentiality, credibility and integrity

4.

D. competence, integrity, morality and confidentiality

According to the Financial Executive, which of the following situations create
pressures for unethical behavior?
1.

A. emphasis on long-term results

2.

B. upward trends in the economy

3.

C. ignoring small lapses in ethical behavior

4.

D. rising stock prices


Which is NOT a service organization?
1.

A. Rainbow Dry Cleaners

2.

B. Law Firm of Cannon and Dunfy

3.

C. Shoreeast Real Estate Company

4.

D. Irwin Publishing Company

According to the Financial Executives Institute, a function of the controller is

________.
1.

A. investments

2.

B. short-term financing

3.

C. provision of capital

4.

D. reporting and interpreting

Which statement is FALSE concerning Enterprise Resource Planning (ERP.
systems?
1.

A. Well known ERP system providers are SAP, Microsoft Dynamics and JD Edwards.

2.

B. Accountants are involved with ERP systems.

3.

C. ERP systems only support a few functional areas of a company.

4.

D. ERP systems are having a major effect on accounting systems.

According to the Statement of Ethical Professional Practice drafted by the
IMA, the standard of integrity states that each member has a responsibility to
________.
1.

A. communicate information fairly and objectively


2.

B. mitigate actual conflicts of interest

3.

C. recognize and communicate professional limitations or other constraints that would
preclude responsible judgment or successful performance of an activity

4.

D. disclose delays or deficiencies in information

An example of a staff department at a clothing manufacturer is the ________.
1.

A. pressing department

2.

B. cutting department

3.

C. sewing department

4.

D. maintenance department

The IMA's ethical standard of confidentiality does NOT require each member
to ________.
1.

A. keep information confidential except when disclosure is authorized or legally
required

2.

B. inform all relevant parties regarding appropriate use of confidential information

3.

C. refrain from using confidential information for unethical or illegal advantage

4.

D. provide confidential decision support information and recommendations that are
accurate, clear, concise and timely

All service organizations are similar in that ________.
1.

A. there is very little labor

2.

B. output is difficult to measure

3.

C. major inputs and outputs can be stored


4.

D. they are capital intensive

Dell Inc. buys electronic components for laptop computers from Intel using
the Internet. This is an example of a(n. ________.
1.

A. A2B transaction

2.

B. B2B transaction

3.

C. B2C transaction

4.

D. C2B transaction

Which of the following is a major factor causing changes in management
accounting today?
1.

A. decreased global competition

2.

B. advances in technology

3.

C. shift to manufacturing-based economy

4.

D. expansion of the value chain

Advertising is an example of the ________ function of the value chain.
1.

A. distribution

2.

B. selling

3.

C. marketing

4.

D. promotion

The IMA's ethical standard for integrity includes all of the following EXCEPT
________.
1.

A. each member has a responsibility to mitigate actual conflicts of interest


2.

B. each member has a responsibility to refrain from engaging in any conduct that would
prejudice carrying out duties ethically

3.

C. each member has a responsibility to abstain from engaging in or supporting any
activity that would discredit the profession

4.

D. each member has a responsibility to monitor subordinates' activities to ensure
compliance with the ethical standard

Which credential is associated with independent auditors?
1.

A. CMA

2.

B. CPA

3.

C. CFP

4.

D. IMA

Which of the following is NOT a new direction in business process
management?
1.

A. JIT philosophy

2.

B. XBRL

3.

C. Six Sigma

4.

D. TQM

You are a management accountant in a large company. You have observed
unethical behavior by your immediate supervisor. In accordance with the
guidelines offered by the IMA, which of the following courses of action should
NOT be taken?
1.

A. Follow the organization's established policies on the resolution of ethical conflict.