(Test Bank) Horngren's Cost Accounting A Managerial Emphasis, Canadian Edition

Datar,Rajan,Beaubien,Janz, 9

Business

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9th Edition

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Test Bank for Horngren's Cost Accounting A Managerial Emphasis, Canadian Edition, The downloadable file consists of 2258 pages, and the total size of the file is 13.25 MB. Purchase now only for highly discounted price.

Author(s): Datar, Rajan, Beaubien, Janz

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Test Bank for Horngren's Cost Accounting A Managerial Emphasis, 9th Canadian Edition, 9e Srikant Datar, Madhav Rajan, Louis Beaubien, Steve Janz Cost Accounting: A Managerial Emphasis - Cdn. Ed., 9e (Datar) Chapter 1 The Accountant's Vital Role in Decision Making 1.1 Explain how management accounting data are essential to the process of rational operating and strategic decision making. 1) Cost accounting is guided by generally accepted accounting principles. Answer: FALSE Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technol ogy Skill: Remembering Objective: LO 1 -1 2) Managerial accounting and financial accounting both measure and report financial and non -financial information related to the cost of acquiring or utilizing resources. Answer: FALSE Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to info rmation technology Skill: Remembering Objective: LO 1 -1 3) Cost accounting provides information only for financial accounting. Answer: FALSE Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Object ive: LO 1 -1 4) Financial accountants are required to follow the generally accepted accounting principles that are used for external financial reporting when preparing reports for internal users. Answer: TRUE Diff: 2 Type: TF CPA Competencies: Chapt er 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Rememberin g Objective: LO 1 -1 5) Managers typically receive reports on cost planning and controls that should be considered for external use only. Answer: FALSE Diff: 2 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirem ents, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 6) There are three (3) basic business strategies: low cost, premium products, and customer satisfaction. Answer: FALSE Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 7) Companies with a strategy of low prices compete on their ability to offer unique new products o r services that are priced higher than their competition. Answer: FALSE Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 8) Cost management only involves short -term decisions that attempt to increase value for customers and lower the cos ts of products or services. Answer: FALSE Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 I dentifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 9) The key to a company's success is always to be the low cost producer in a particular industry. Answer: FALSE Explanation: The low cost producer in a particular industry will not necessarily be successful. Diff: 2 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Understanding Objective: LO 1 -1 10) Companies generally follow one str ategy: providing a quality product or service at low prices. Answer: FALSE Diff: 2 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they p lay in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 11) The Global Reporting Initiative (GRI) is a nonprofit organization established to develop guidelines so that r eporting on economic, environmental and social performance by all organizations is as routine and comparable as financial reporting. Answer: TRUE Diff: 2 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 12) Corporate social responsibility is n ow mandatory for all publicly traded companies in Canada. Answer: FALSE Explanation: Corporate social responsibility (CSR) is the voluntary integration of social and environmental concerns into business decisions. Diff: 2 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remem bering Objective: LO 1 -1 13) In what way do managers benefit from the use of a management information system? A) Data can be entered at numerous input terminals within the organization. B) The managers would not be completely responsible for the information that is entered into the database system. C) The managers could combine or adjust data to answer the questions from particular internal and external users. D) The managers do not benefit, as the information requires technical expertise to retri eve. E) Managers can store old documents in hard copy. Answer: C Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Understanding Objective: LO 1 -1 14) Financial accounting is concerned primarily with A) cost planning and cost controls. B) external reporting to investors, government authorities, etc. C) profitability analysis. D) providing information for strategic and tactical decisions. E) providing analysis to facilitate long term decision making. Answer: B Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objec tive: LO 1 -1 15) The text identifies six ways to classify the major differences between management and financial accounting. The "managers of the organization" is an example of which of the following classes of differences? A) purpose of information B) primary users C) focus and emphasis D) rules of measurement and reporting E) time span and type of reports Answer: B Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of inf ormation systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 16) The text identifies six ways to classify the major differences between Management and Financial Accounting. The statement "Varies from hourly to 15 to 20 years" is an example of which of the following classes of differences? A) purpose of information B) primary users C) focus and emphasis D) rules of measu rement and reporting E) time span and type of reports Answer: E Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an o rganization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 17) The text identifies six ways to classify the major differences between Management and Financial Accounting. The statemen t "Past oriented (reports on 2011 performance prepared in 2012)" is an example of which of the following classes? A) purpose of information B) primary users C) focus and emphasis D) rules of measurement and reporting E) time span and type of reports Answer : C Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 18) The text identifies six ways to clas sify the major differences between Management and Financial Accounting. The statement "Communicate organization's financial position to external users" is an example of which of the following classes? A) purpose of information B) primary users C) focus and emphasis D) rules of measurement and reporting E) time span and type of reports Answer: A Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 19) Which of the following is something management accountants should do to satisfy their users? A) provide specialized information that given users can use B) consider only financial measures C) focus exclusively on internal users D) follow generally accepted accounting principles E) focus on p lanning more than control Answer: A Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Understanding Objective: LO 1 -1 20) "Cost management" describes A) the actions by managers to increase value for customers while continuously reducing and controlling costs. B) the identification of excessive costs in the production process. C) the satisfaction of customers' needs. D) actions by managers to satisfy customers while maintaining current cost levels. E) ensuring all costs remains constant. Answer: A Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 21) Do you agree that prior management decisions affect cost management? A) Yes. Managers should a lways follow prior management decisions, for example, in the determination of the EOQ. B) No. Managers should ignore prior management decisions. C) Yes. Managers should always strive to lower the costs incurred last year, as their number 1 priority. D) Yes. The only prior management decisions that can affect cost management going forward, are concerned with employee wages. All other decisions can be changed. E) Yes. Prior management decisions can affect any area of the business operations, a nd commit the organization to the subsequent or continued incurrence of costs in such areas as material handling, and plant construction, for example. Answer: E Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Understanding Obje ctive: LO 1 -1 22) Management accounting A) helps creditors evaluate the company's performance. B) helps managers make decisions. C) is useful for external and internal users. D) creates technical reports that require external audit for verification. E) is the same as cost accounting. Answer: B Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 23) Enterprise Resource Planning software (ERP) A) integrates data and provide managers with reports that highlight the interdependence of diffe rent business activities. B) facilitates "Easy Reporting for Proposals." C) provides financial reports for each separate enterprise in a conglomerate. D) is used only by plant managers to create "Exceptional Reports for Production." E) is free software downloaded over the Internet. Answer: A Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 24) Management accounting A) measures, analyzes, and reports financial and nonfinancial information to internal managers. B) provides information about the company as a whole. C) reports information that has occurred in the past that is verifiable and reliable. D) provides information that is generally available only on a quarterly or annual basis. E) must follow generally accepted accounting principles. Answer: A Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the typ es of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 25) Financial accounting A) focuses on the future and include s activities such as preparing next year's operating budget. B) must comply with IFRS/ASPE. C) reports include detailed information on the various operating segments of the business such as product lines or departments. D) is prepared for the use of department heads and other employees. E) is primarily concerned with profitability analysis. Answer: B Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information syst ems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Understanding Objective: LO 1 -1 26) An Enterprise Resource Planning System can best be described as A) a collectio n of programs that use a variety of unconnected databases. B) a single database that collects data and feeds it into applications that support each of the company's business activities, such as purchases, production, distribution, and sales. C) a database that is primarily used by a purchasing department to determine the correct amount of a particular supply item to purchase. D) a sophisticated means of linking two or more companies to facilitate their planning processes. E) exception reporting sys tem for plant managers. Answer: B Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Understanding Objective: LO 1 -1 27) The approaches and activities of managers in short -run and long -run planning and control decisions that increase value for customers and lower costs of products and services are known as A) value chain management. B) enterprise resource planning. C) cost management. D) customer value management. E) management information system. Answer: C Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information techn ology Skill: Remembering Objective: LO 1 -1 28) Strategy specifies A) how an organization matches its own capabilities with the opportunities in the marketplace. B) standard procedures to ensure quality products. C) incremental changes for improved pe rformance. D) the demand created for products and services. E) that a company's financial procedures are in compliance with IFRS/ASPE. Answer: A Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 29) In designing strategy, a company must match the opportunities and threats in the marketplace with A) those of the CFO (Chief Financial Officer). B) its resources and capabilities. C) branding opportunities. D) capabilities of current suppliers. E) its competitors. Answer: B Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 30) Which of the following statements refers to management accounting information? A) There are no regulations governing the reports. B) The reports are generally delayed and historical. C) The audience tends to be stockholders, creditors, and tax authorities. D) It primarily measures and records business transactions. E) The reports are audited so can be used in confidence by potential investors. Answer: A Diff: 2 Type: MC CPA Compete ncies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill : Understanding Objective: LO 1 -1 31) The people who rely most exclusively on the information in a company's audited financial statements are A) senior management. B) the accounting staff. C) auditors. D) operating managers. E) shareholders. Answer: E Diff: 2 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical a nd privacy issues related to information technology Skill: Understanding Objective: LO 1 -1 32) Management accounting ________. A) focuses on estimating future revenues, costs, and other measures to forecast activities and their results B) provides in formation about the company as a whole C) reports information from the past that is verifiable and reliable D) provides information that is generally available only on a quarterly or annual basis Answer: A Explanation: Management accounting has a forwa rd-looking orientation compared to financial accounting, which has a historical perspective. Diff: 1 Type: MC CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used an d the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 33) Describe management accounting and financial accounting. Answer: Management accounting provides information to internal decision makers of the business such as top executives, managers, sales representatives, and production supervisors. Its purpose i s to help managers predict and evaluate future results. Reports are generated often and usually broken down into smaller reporting divisions such as department or product line. There are no rules to be complied with since these reports are for internal use only. Management accounting embraces more extensively such topics as the development and implementation of strategies and policies, budgeting, special studies and forecasts, influence on employee behaviour, and nonfinancial as well as financial informatio n. Financial accounting, by contrast, provides information to external decision makers such as investors and creditors. Its purpose is to present a fair picture of the financial condition of the company. Reports are generated quarterly or annually and rep ort on the company as a whole. The financial statements must comply with IFRS/ASPE. A CPA audits, or verifies, that the IFRS/ASPE are being followed. Diff: 2 Type: ES CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -1 34) Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Assume you are opening a small food outlet across the street from your campus. How might that business be op erated under each of the two broad strategies? Consider the following specific operational areas: a. target customers b. products offered c. product pricing d. location choice e. advertising content f. advertising media Answer: The purpose of this question is to explore some of the differences in business operations as a result of a broad strategic choice. Answers will differ from student to student, but you should see some specific themes. Operational Area Low Price Strategy Differential Strategy Target customers Target customers might be students on a tight budget. Target customers might be more wealthy students, faculty, or perhaps neighbours who live nearby. Products offered Few products, heavy emphasis on tight cost control, probably set up as a high -volume operation. High quality products, probably a reasonable choice, restaurant might have a lot of ambience. Product pricing Priced at or lower than the competition in the area. Higher priced products. Location choice Convenient to the target customers. Not as convenient, perhaps in a higher -end shopping or entertainment area. Customers might seek out the high quality and be willing to travel a bit for it. Advertising content Advertising would emphasize the low price of the products offered. Advertising would emphasize quality or ambience. Advertising media Media that would be seen by the target customers, such as student newspapers. Media that would be seen by the target customer, local magazines and newspapers. Diff: 3 Type: ES CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to in formation technology Skill: Understanding Objective: LO 1 -1 35) Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Is it possible to follow a strategy that is "in the middle"? Answer: There is some dispute about the correct answer to this question. Some will argue that it is not good for companies to get "caught in the middle" because the customer might get confused as to whether or not the company is competing on price or is trying to make some other appeal. If the customer is confused about how the company is giving them value, they might perceive they are getting no value and abandon the product to a competitor with a clearer customer value proposition. The other side of the argument is th at cost management is a necessary part of any strategy and even if the company chooses to pursue a differential strategy, management of the company should always be seeking ways to manage costs and increase customer value simultaneously regardless of their strategy. The student should be able to articulate one or the other arguments coherently. Diff: 2 Type: ES CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Understanding Objective: LO 1 -1 36) What competitive advantage could a company obtain from a successful cost management program ? Answer: There are three broad outcomes from a successful cost management program: 1) costs are reduced with no loss in customer value. In this scenario, a company might gain a competitive advantage by lowering its price with no loss in profit, or maint ain the same price and increase profit; 2) customer value is increased with no change in costs. This scenario might increase customer satisfaction resulting in increased customer loyalty and perhaps increase the overall demand for the product; 3) customer value might be increased while costs are reduced simultaneously. This scenario would result in the benefits described in both 1) and 2). Also, a reduction in cost may outweigh the potential loss in revenue from delivering less value to the customer. Diff: 2 Type: ES CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to in formation technology Skill: Understanding Objective: LO 1 -1 1.2 Explain how business functions help management accountants organize accounting information. 1) In the value chain, research and development generates and experiments with new ideas rela ted to new products. Answer: TRUE Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -2 2) The value chain includes the followin g functions: research and development; design of products, services, or processes; production; marketing; distribution; customer service; and management satisfaction. Answer: FALSE Explanation: Does not include management satisfaction. Diff: 2 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information te chnology Skill: Remembering Objective: LO 1 -2 3) In the value chain, research and development is the detailed planning and engineering of products, services, or processes. Answer: FALSE Explanation: R & D involves generating and experimenting with ide as related to new products, services, or processes. Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -2 4) Value chain and supply chain are two terms describing the same set of business functions. Answer: FALSE Explanation: Supply chain refers to the flow of goods, services, and information. Value chain refers to value added activities. Diff: 1 Type: TF CPA Competencies: Chapter 1 - 3.1.1 Evaluates management information requirements, 3.1.2 Evaluates the types of information systems used and the role they play in an organization, 3.1.4 Identifies ethical and privacy issues related to information technology Skill: Remembering Objective: LO 1 -2