Test bank for cost and management accounting 7th edition

Test Bank for Cost and Management Accounting 7th Edition
____ is devoted to providing information for external users.

1. a. Management accounting
2. b. Financial accounting
3. c. Internal accounting
4. d. Cost accounting
Financial accounting is primarily concerned with providing financial reports to
all of the following EXCEPT

1. a. creditors such as banks and other financial institutions.
2. b. creditors such as suppliers.
3. c. shareholders of the company.
4. d. management of the firm.
Management accounting and financial accounting differ in that management
accounting information is prepared

1. a. following prescribed rules.
2. b. using whatever methods the company finds beneficial.
3. c. for shareholders.
4. d. to summarize the whole company with little detail.


The primary objective of management accounting is

1. a. to provide shareholders and potential investors with useful information for
decision making.
2. b. to provide banks and other creditors with information useful in making
credit decisions.
3. c. to provide management with information useful for planning and control of
operations.

4. d. to provide the relevant taxation authorities with information about taxable
income.
Management accounting is the branch of accounting concerned with reporting
to

1. a. internal managers.
2. b. shareholders.
3. c. the government.
4. d. bankers.
Which of the following characteristics does NOT pertain to management
accounting?

1. a. provides information and estimates about future activity
2. b. generates specific-purpose financial statements and reports
3. c. provides financial and operating data multidisciplinary in scope
4. d. has externally imposed standards


Which of the following does NOT describe management accounting?

1. a. evaluation of segments or products within the firm
2. b. emphasis on the future
3. c. externally focused
4. d. detailed information
Management accounting reports are prepared

1. a. to meet the needs of decision makers within the firm.
2. b. whenever shareholders request them.
3. c. according to guidelines prepared by the shares and Financial Services
Authority.

4. d. according to financial accounting standards.
Cost accounting

1. a. is concerned with assigning costs to various cost objects.
2. b. attempts to satisfy the costing objectives of both financial accounting and
management accounting.
3. c. provides cost information that supports planning, controlling, and decision
making.
4. d. All of the above descriptions are true.
Which of the following costing activities is associated with the financial
accounting system?

1. a. determining the cost of a department


2. b. determining the cost of goods sold for financial statements
3. c. preparing budgets
4. d. determining the cost of a customer
Which of the following activities is NOT associated with the financial
accounting information system?

1. a. reporting on the cost of quality
2. b. reporting to the shareholders
3. c. preparing reports for the tax authorities
4. d. preparing a statement of cash flows
Which of the following cost management tools supports the firm's
concentration on the delivery of value to the customer?

1. a. service industry growth
2. b. global competition

3. c. preparing an earnings report for external reporting
4. d. value-chain analysis
Factors that have led to a global market for manufacturing and service firms
are

1. a. improved transportation and communications systems.
2. b. improved telemarketing and communications.
3. c. improved distribution and transportation systems.
4. d. None of these factors have contributed.


Which of the following activities is NOT significant to the advancement of
information technology?

1. a. enterprise resource planning software
2. b. emergence of electronic commerce
3. c. theory of constraints
4. d. decision support systems
Software that has integrated system capability using real time data is

1. a. enterprise resource planning software.
2. b. on-line analytic programs.
3. c. computer-assisted engineering software.
4. d. none of the above.
Automation of the manufacturing environment is associated with increases
in

1. a. inventory.
2. b. capacity.
3. c. processing time.

4. d. none of these.
Total quality management emphasizes

1. a. zero defects.
2. b. continual improvement.


3. c. elimination of waste.
4. d. all of the above.
Which of the following emerging themes in cost accounting deals with
managers striving to create an environment that will enable workers to
manufacture perfect (zero-defect) products?

1. a. advances in information technology
2. b. time as a competitive element
3. c. global competition
4. d. total quality management
Competitive advantage is established by

1. a. providing more customer products than competitors.
2. b. providing better quality than competitors.
3. c. providing greater customer value for less cost than competitors.
4. d. providing greater efficiencies than competitors.
Improvement in time performance is most likely NOT enhanced by

1. a. redesign of products.
2. b. adding processes in production.
3. c. eliminating waste.
4. d. eliminating nonvalue-added activities.

Which of the following statements is NOT true about world-class firms?

1. a. World-class firms are firms that are poor in customer support.
2. b. World-class firms know their market and their products.
3. c. World-class firms strive continually to improve product design,
manufacture, and
4. delivery.
5. d. World-class firms can compete with the best of the best in a global
environment.
Accounting

1. a. always has an external orientation.
2. b. always has an internal orientation.
3. c. information assists in planning and controlling.
4. d. terms serve as a model of the organization.
Monitoring the number of defects produced is an example of the management
function of

1. a. planning.
2. b. control.
3. c. decision making.
4. d. both a and c.


The setting of objectives and the identification of methods to achieve those
objectives is called

1. a. planning.
2. b. controlling.

3. c. performance evaluation.
4. d. decision making.
Comparing actual quality costs with planned quality costs is an example
of

1. a. planning.
2. b. controlling.
3. c. performance evaluation.
4. d. both b and c.
Performance reports are accounting reports that compare

1. a. planned data with actual data.
2. b. audited data with actual data.
3. c. managers` bonuses with performance ratings by supervisors.
4. d. actual data with industry standards.
Which of the following statements correctly distinguishes between financial
and management accounting?

1. a. Management accounting reports on the whole organization.
2. b. Financial accounting is oriented toward the future.


3. c. Financial accounting is primarily concerned with providing information for
internal users.
4. d. Management accounting is oriented more toward the planning and control
aspects of management.
Setting the company's profit targets for the upcoming year is an example of
the management function of

1. a. planning.

2. b. control.
3. c. variance analysis.
4. d. internal auditing.
Setting the selling price of a company's product is an example of

1. a. planning.
2. b. control.
3. c. decision making.
4. d. all of the above.
Developing a company strategy for responding to anticipated new markets is
an example of

1. a. planning.
2. b. control.
3. c. decision making.
4. d. all of the above.


The planning process includes

1. a. setting objectives.
2. b. identifying means of achieving the objectives.
3. c. making decisions.
4. d. all of the above.
Investigating production variances and adjusting the production process is an
example of

1. a. planning.
2. b. control.
3. c. internal auditing.

4. d. both a and c.
Evaluating the performance of a segment of the company is an example
of

1. a. planning.
2. b. control.
3. c. internal auditing.
4. d. both a and c.
Determining the bid your company should submit on a construction contract
is an example of

1. a. planning.
2. b. control.


3. c. decision making.
4. d. both a and b.
The formulation of a scheme or program for the accomplishment of a specific
purpose or goal is referred to as

1. a. controlling.
2. b. motivating.
3. c. organizing.
4. d. planning.
In a performance report,

1. a. differences between actual costs and allowed costs are always undesirable.
2. b. expenditures of less than allowed amounts are undesirable.
3. c. expenditures of more than allowed amounts are not permitted to occur.
4. d. expenditures of less than allowed amounts are desirable.

The monitoring of a plan's implementation is called

1. a. planning.
2. b. controlling.
3. c. decision making.
4. d. budgeting.


Inspecting units produced to determine if they meet specifications is an
example of

1. a. planning.
2. b. control.
3. c. decision making.
4. d. both a and c.
Continuous improvement is NOT

1. a. critical in a dynamic environment.
2. b. important to finding and maintaining a competitive advantage.
3. c. an effort to find ways to increase overall efficiency, improve quality, and
reduce costs.
4. d. a responsibility of managers in world-class organizations.
Principles of personal ethical behaviour that are essential to an ethical life
include

1. a. integrity.
2. b. respect for others.
3. c. accountability.
4. d. all of the above.
Which one of the following statements about ethical behaviour is true?

1. a. Ethical behaviour is not guided by well-defined rules and is often
subjective.


2. b. Ethical behaviour is best described as doing actions that are permitted by
law.
3. c. Ethical behaviour always involves choosing between actions that are
clearly right or wrong.
4. d. Ethical behaviour is best guided by a policy of placing corporate
performance above individual ends.
The standards of ethical conduct for management accountants include

1. a. competence and performance.
2. b. integrity and respect for others.
3. c. confidentiality, confidence, integrity, and observance.
4. d. competence, confidentiality, integrity, and objectivity.
In resolving an ethical conflict, which of the following would never be
appropriate?

1. a. discussing the matter with the chief executive officer
2. b. discussing the matter with an external member of the board of directors
3. c. taking the matter to the press where there is no legal requirement
4. d. resigning from the position because of a conflict
Management accounting is concerned with which kind of decision?

1. a. product costing and pricing
2. b. continuous operational improvement
3. c. financial control
4. d. all of the above

One advantage of employee empowerment is

1. a. it frees up some of the time of upper management for more strategic
decision making.
2. b. workers can improve production processes in a timely manner.
3. c. employees closest to the work can provide valuable input in increasing
efficiency.
4. d. all of the above are advantages
The value chain includes which of the following activities?

1. a. designing and developing products and services
2. b. producing products and services
3. c. marketing and delivering products and services
4. d. all of the above
Relationships among activities that are performed within a firm's portion of
the industrial value chain are

1. a. internal linkages.
2. b. external linkages.
3. c. customer linkages.
4. d. none of the above
Breakthroughs in technology this century have given rise to which one of the
following effects?

1. a. Direct materials have GREATLY decreased as a percentage of total
manufacturing costs.

2. b. Manufacturing overhead has only SLIGHTLY decreased as a percentage of
total manufacturing costs.
3. c. Direct labour has GREATLY decreased as a percentage of total
manufacturing costs.
4. d. Manufacturing overhead has GREATLY decreased as a percentage of total
5. manufacturing costs.
The overall objective of accounting information systems is to

1. a. provide information to users.
2. b. manage the organization.
3. c. prepare financial reports.
4. d. report to the government.
The ____ is an accounting information subsystem that is primarily concerned
with producing outputs for external users.

1. a. cost management information system
2. b. computer system
3. c. internal accounting system
4. d. financial accounting information system
A(n) ____ is a computerized information system that strives to input data once
and make it available to people across the company for different
purposes.

1. a. cost management information system
2. b. enterprise resource planning system
3. c. internal accounting system


4. d. financial accounting information system
Which of the following costs would be included in value-chain product

costs?

1. a. research and development
2. b. production
3. c. customer service
4. d. all of the above
Classify the activity of handling raw materials according to its value-chain
category.

1. a. developing
2. b. designing
3. c. producing
4. d. distributing
Management accounting:

1. a. provides a framework to evaluate information in light of an organization`s
goals.
2. b. provides relevant information to managers.
3. c. provides relevant information to meet specific needs of persons inside the
organization.
4. d. all of the above


Financial accounting information is least useful in providing:

1. a. information for stating corporate wide goals.
2. b. information for internal decision makers.
3. c. periodic reports for shareholders.
4. d. aggregate information about an organization`s assets, obligations and
performance.

Management accounting is primarily concerned with:

1. a. providing investors with useful information for valuing securities.
2. b. providing creditors information on the status of their loans.
3. c. providing managers with relevant information to help achieve
organizational goals.
4. d. providing the relevant taxation authorities with information to determine
the amount of taxes owed.
To compete on the basis if price, the seller must carefully manage:

1. a. cost.
2. b. service.
3. c. quality.
4. d. none of the above.
World-class companies must continuously struggle to improve performance in
the dimensions of:

1. a. price/cost.


2. b. service.
3. c. quality.
4. d. all of the above.
Which of the following statements most accurately describes an effect of
employee empowerment?

1. a. Employee empowerment reduces the cost of implementing decisions.
2. b. Employee empowerment decreases the speed in which decisions are
made.
3. c. Employee empowerment leads to an increased number of corporate staff

positions
4. d. Employee empowerment places greater emphasis on decisions made by
upper management.