Test bank for management accounting 7th edition

Reliance on creating mutually strategic business alliances Which of the following statement/s about management accounting is/are true?. The management accounting system needs to accumula

Test Bank for Management Accounting 7th Edition

True - False Questions

When a firm adopts a strategy of being a low-cost producer and sells its products at a price lower than its competitors, the firm is be using a strategy

of cost leadership

1 True

2 False

There is no overlap between the two accounting streams management and financial accounting

1 True

2 False

Budgets provide information to help manage resources and are supported by the financial accounting function

1 True

2 False

Accountants with a CPA qualification are only able to work as financial

accountants

1 True

2 False

The systems and procedures implemented to provide regular information to assist with control are called control systems

1 True

2 False

Value creation is a central focus for managers and only refers to shareholder value

1 True

2 False

Senior accountants are also known as the finance manager or financial

controller

1 True

2 False

The increased information needs of modern organisations have meant that management accounting has had to change its focus over years

1 True

2 False

Behavioural issues are not taken into consideration when developing

management accounting systems

1 True

2 False

The costing system is the part of the accounting information system that is common to both financial and management accounting

1 True

2 False

Staff management and line management both have indirect responsibilities to the operations of an organisation

1 True

2 False

The theory that suggests that a firm's management accounting system is influenced by factors such as the external environment an technology is called contingency theory

1 True

2 False

Organisations prepare a mission statement that describes the desired future position and/or goals of the organisation

1 True

2 False

Multiple Choice Questions

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.

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.

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

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

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.

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 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

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 non-financial information; iii It can

provide information useful for making decisions

1 i

2 i and ii

3 ii and iii

4 ii

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 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.

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

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

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-to-date.

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

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 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

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?

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

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

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.

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.

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

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

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 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?

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

1 strategy.

2 mission.

3 goals.

4 decisions.

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

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

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 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

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

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.

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

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 are management accounting responses to the changing business environment?

1 Activity-based costing.

2 E-commerce.

3 Supplier cost analysis.

4 A and C.

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 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 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 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.

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 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.

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

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

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 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

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.

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.