(Test Bank) Introduction To Management Accounting

Sundem,Burgstahler, 16

Business

Test Bank

16th Edition

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Test Bank for Introduction To Management Accounting, The downloadable file consists of 887 pages, and the total size of the file is 4.31 MB. Purchase now only for highly discounted price.

Author(s): Sundem, Burgstahler

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1 Copyright © 2014 Pearson Ed ucation, Inc. Introduction to Management Accounting, 16e (Horngren) Chapter 1 Managerial Accounting, the Business Organization, and Professional Ethics 1.1 Questions 1) Which credential is associated with management accountants? A) CPA B) CMA C) CFP D) IMA Answer: B Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 2) The largest U.S. association of professional accountants whose major interest is management accounting is the ________. A) American Institute of Certified Public Accountants B) American Institute of Certified Management Accountants C) Institute of Management Accountants D) American Institute of Management Accountants Answer: C Diff: 1 LO: 1 - 1 A ACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 3) ________ is the field that produces information used primarily by managers within an organization. A) Financial ac counting B) Management accounting C) Internal auditing D) External auditing Answer: B Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 2 Copyright © 2014 Pearson Ed ucation, Inc. 4) The prim ary users of management accounting information are ________. A) bankers B) governmental regulatory bodies C) managers in organizations D) managerial accountants Answer: C Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 5) ________ is the field of accounting that develops information for external parties such as stockholders, suppliers, banks and governmental regulatory bodies. A) Auditing B) Internal auditing C) Management accounting D) Financial accounting Answer: D Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 6) Which of the following sta tements about management accounting is FALSE? A) Management accounting is the process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information. B) Management accounting helps managers fulfill organizational objectives. C) Management accounting is used by managerial accountants to make strategic and operational decisions. D) Management accounting produces information for managers in an organization. Answer: C Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skill s Learning Outcome: Describe the basics of managerial accounting and its function within an organization 3 Copyright © 2014 Pearson Ed ucation, Inc. 7) When comparing management accounting and financial accounting, which of the following statements is FALSE? A) Management accounting has a future orientation whereas financial accounting has a past orientation. B) Management accounting prepares detailed reports whereas financial accounting prepares summary reports. 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. D) Behavioral considerations are of primary importance in management accounting, but not in financial accounting. Answer: C Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 8) Generally Accepted Accounting Principles are most closely connected to ________. A) managemen t accounting B) financial accounting C) internal auditing D) management auditing Answer: B Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 9) Who p rovides assurance to external users about the reliability of a company's financial statements? A) Certified Management Accountants and Certified Public Accountants B) Chartered Management Accountants and Certified Management Accountants C) Certified Public Accountants and Chartered Management Accountants D) Certified Public Accountants and Chartered Accountants Answer: D Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function with in an organization 4 Copyright © 2014 Pearson Ed ucation, Inc. 10) Financial reports prepared by financial accountants focus on ________. Financial reports prepared by management accountants focus on ________. A) segments of the organization such as departments and divisions; segments of the organ ization such as departments and divisions B) the organization as a whole; the organization as a whole C) the organization as a whole; segments of the organization such as departments and divisions D) segments of the organization such as departments and div isions; the organization as a whole Answer: C Diff: 2 LO: 1 - 1 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 11) Which of the following organizations oversees th e CMA Exam? A) American Institute of Certified Public Accountants B) Chartered Accountants Institute C) Institute of Management Accountants D) American Institute of Certified Management Accountants Answer: C Diff: 1 LO: 1 - 1 AACSB: Reflective thinking sk ills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 12) Generally Accepted Accounting Principles play an important role in management accounting. Answer: FALSE Diff: 1 LO: 1 - 1 AACSB: Reflective t hinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 13) Behavioral considerations are of primary importance in financial accounting. Answer: FALSE Diff: 1 LO: 1 - 1 AACSB: Reflective thin king skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 14) Financial accounting reports are usually prepared for a period of one year or less. Answer: TRUE Diff: 1 LO: 1 - 1 AACSB: Reflective th inking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 5 Copyright © 2014 Pearson Ed ucation, Inc. 15) Reports prepared by managerial accountants have a past orientation. Answer: FALSE Diff: 1 LO: 1 - 1 AACSB: Reflective thinking skil ls Learning Outcome: Describe the basics of managerial accounting and its function within an organization 16) In some countries outside the United States, independent auditors are called chartered accountants. Answer: TRUE Diff: 1 LO: 1 - 1 AACSB: Refle ctive thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 1.2 Questions 1) ________ information helps managers focus on operating problems, imperfections, inefficiencies and opportunit ies. A) Scorekeeping B) Attention directing C) Problem solving D) Performance Answer: B Diff: 1 LO: 1 - 2 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 2) Problem solving information would NOT be used in which of the following situations? A) decision to make or buy parts for a manufactured product B) decision to replace equipment C) decision to add or drop a division D) evaluating the operating performance of a seg ment in the current year Answer: D Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 6 Copyright © 2014 Pearson Ed ucation, Inc. 3) Investigating the reasons for the variances on a department's performan ce report is an example of ________. A) scorekeeping B) attention directing C) problem solving D) auditing Answer: B Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organi zation 4) ________ is the classification, accumulation, and reporting of data that help users understand and evaluate organizational performance. A) Scorekeeping B) Attention directing C) Problem solving D) Cost accounting Answer: A Diff: 1 LO: 1 - 2 AACS B: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 5) What type of information is used in making nonroutine decisions, such as the decision to replace a traditional assemb ly line with fully automated robots? A) scorekeeping information B) attention directing information C) problem solving information D) auditing information Answer: C Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of manager ial accounting and its function within an organization 6) How is accounting information prepared by management accountants used within an organization? A) to help operating managers make decisions B) to plan an organization's operations C) to control an o rganization's operations D) all of the above Answer: D Diff: 1 LO: 1 - 2 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 7 Copyright © 2014 Pearson Ed ucation, Inc. 7) What are accounting systems? A) The proc ess used to streamline production processes B) The process used to generate performance measures C) Formal mechanisms for gathering, organizing and communicating information about an organization's activities D) none of the above Answer: C Diff: 1 LO: 1 - 2 AACSB: Reflective thinking skills, Use of information technology Learning Outcome: Describe the basics of managerial accounting and its function within an organization 8) ________ involves an analysis of alternative courses of action and the identific ation of the best course of action to follow. A) Scorekeeping B) Attention directing C) Problem - solving D) Internal auditing Answer: C Diff: 1 LO: 1 - 2 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 9) Starbucks generates many financial reports to evaluate the operating performance of each store at the end of each quarter. The financial reports are an example of ________. A) scorekeeping B) attention directing C) p roblem - solving D) management auditing Answer: A Diff: 1 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 8 Copyright © 2014 Pearson Ed ucation, Inc. 10) Starbucks experiments with adding ice cream sundaes to i ts menu at several stores in the state of Washington Financial reports are prepared showing revenues and costs for the new menu item. Based on the reports, management at the corporate office will then decide whether to permanently add or remove the new men u item. The financial reports are an example of ________ information. A) scorekeeping B) attention directing C) problem - solving D) management auditing Answer: C Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 11) Companies produce most ________ and ________ information on a routine basis such as every day, every month or every quarter. A) scorekeeping; problem - solving B) scorekeeping; attention directing C) pro blem - solving; attention directing D) interim reports; problem - solving Answer: B Diff: 1 LO: 1 - 2 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 12) A company is s etting the price on a special order of a manufactured product routinely made. What type of information is needed to set the price? A) scorekeeping B) attention directing C) problem - solving D) interim reports Answer: C Diff: 2 LO: 1 - 2 AACSB: Analytic ski lls Learning Outcome: Describe the basics of managerial accounting and its function within an organization 9 Copyright © 2014 Pearson Ed ucation, Inc. 13) A company is unsure whether it is more cost efficient to make or buy a component used in a manufactured product that is mass produced. What ty pe of information is needed to make this decision? A) scorekeeping B) attention directing C) problem - solving D) management auditing Answer: C Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 14) A company is considering whether to change the mix of products sold. They think it would be more profitable to emphasize the products with the highest profit per unit. What type of information is needed to answer this q uestion? A) scorekeeping B) attention directing C) problem - solving D) internal auditing Answer: C Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 15) Planning refers to ________. A) the implementation of organizational plans B) the use of performance reports to evaluate the attainment of organizational objectives C) setting organizational objectives and establishing the path to attain them D) an analysis of alt ernative courses of action Answer: C Diff: 1 LO: 1 - 2 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 16) Taco Bell wants to increase profitability of stores in th e Midwest by adding new menu items and increasing advertising. This is an experiment and the company is unsure if these actions will be fruitful. On the part of management, this is an example of ________. A) control B) scorekeeping C) feedback D) planning Answer: D Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 10 Copyright © 2014 Pearson Ed ucation, Inc. 17) Southern Chicken is expanding the menu items offered in order to increase profitability. Manage ment will evaluate the profitability of each new menu item after six months. Menu items that are profitable will be retained and the others will be discontinued. On the part of management, the evaluation and subsequent actions after six months is an exampl e of ________. A) management auditing B) internal auditing C) planning D) control Answer: D Diff: 1 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 18) A manager usi ng information to decide whether to add or drop a product is an example of problem solving. Answer: TRUE Diff: 2 LO: 1 - 2 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 19) Most scorecard and attention - directing information is produced on a nonroutine basis. Answer: FALSE Diff: 2 LO: 1 - 2 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 1.3 Questions 1) A(n) ________ is a review to determine whether the policies and procedures specified by top management have been implemented by lower managers. A) management audit B) internal audit C) internal control D) internal accounting control An swer: A Diff: 1 LO: 1 - 3 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 11 Copyright © 2014 Pearson Ed ucation, Inc. 2) The Foreign Corrupt Practices Act requires ________. A) companies to cease conducting business with companies in some foreign countries B) companies to reject bribes from companies in foreign countries C) companies to have an appropriate system of internal controls D) companies to prepare a separate report on their accounting information sy stem Answer: C Diff: 2 LO: 1 - 3 AACSB: Dynamics of the global economy Learning Outcome: Discuss the legal, ethical and business concepts that affect managerial accounting 3) Performance reports compare actual results to ________. Performance reports al so report ________. A) budgeted results; bonuses awarded B) objectives; variances C) planned results; variances D) projected results; stock options granted Answer: C Diff: 1 LO: 1 - 3 AACSB: Reflective thinking skills Learning Outcome: Describe the basic s of managerial accounting and its function within an organization 4) To evaluate managers' decisions and the productivity of organizational units, organizations use ________. A) annual financial statements B) quarterly financial statements C) bimonthly f inancial statements D) performance reports Answer: D Diff: 1 LO: 1 - 3 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 5) An unfavorable variance occurs on a perform ance report when ________. A) the actual cost is less than the budgeted cost B) the actual revenue is greater than the budgeted revenue C) the actual profit is greater than the budgeted profit D) the actual revenue is less than the budgeted revenue Answer: D Diff: 2 LO: 1 - 3 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 12 Copyright © 2014 Pearson Ed ucation, Inc. 6) A favorable variance occurs on a performance report when ________. A) the actual cost is greater than the budgeted cost B) the actual revenue is less than the budgeted revenue C) the actual profit is less than the budgeted profit D) the actual profit is greater than the budgeted profit Answer: D Diff: 2 LO: 1 - 3 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 7) Who is the primary user of performance reports used to plan and control operations? A) management accountants B) CPAs C) operating managers D) chartered accountants An swer: C Diff: 1 LO: 1 - 3 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 8) When designing an accounting information system for management, which governmental regu lations are NOT important? A) Sarbanes - Oxley Act B) Foreign Corrupt Practices Act C) Tax rules promulgated by Internal Revenue Service D) Six Sigma Act Answer: D Diff: 1 LO: 1 - 3 AACSB: Reflective thinking skills, Use of information technology Learning O utcome: Describe the basics of managerial accounting and its function within an organization 9) What types of variances should be investigated when looking at performance reports? A) all variances B) only favorable and unfavorable variances that are large in size C) only unfavorable variances that are large in size D) only favorable variances that are large in size Answer: B Diff: 2 LO: 1 - 3 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 13 Copyright © 2014 Pearson Ed ucation, Inc. 10) A budget ________. A) is a quantitative expression of a plan of action B) provides feedback by comparing actual results with planned results C) includes deviations from planned results D) ignores areas that are presumed to be running smoothly Answer: A Diff: 1 LO: 1 - 3 AACSB: Reflective thinking skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 11) Management - by - exception means that managers should ________. A) con centrate on areas that deviate from the plan B) in the absence of other evidence, presume that areas that conform with plans are running smoothly C) A and B D) none of the above Answer: C Diff: 1 LO: 1 - 3 AACSB: Reflective thinking skills Learning Outcom e: Describe the basics of managerial accounting and its function within an organization 14 Copyright © 2014 Pearson Ed ucation, Inc. 12) The Helium Company held a Christmas party. The company expected attendance of 100 people and prepared the following budget: Hotel room rental $500 Food 500 Enter tainment 800 Decorations 300 Total Costs $2,100 One hundred people attended the party. The following costs were incurred: Hotel room rental $575 Food 640 Entertainment 750 Decorations 350 Total Costs $2,315 What is the variance for total costs? A) $215 Unfavorable B) $215 Favorable C) $25 Favorable D) $140 Unfavorable Answer: A Diff: 2 LO: 1 - 3 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization 15 Copyright © 2014 Pearson Ed ucation, Inc. 13) The Hermanski Company held a Christmas party. The company expected attendance of 100 people and prepared the following budget: Hotel room rental $600 Food 500 Entertainment 800 Decorations 300 Total Costs $2,200 One hundred people attended the party. The costs incurred were: Hotel room rental $575 Food 640 Entertainment 750 Decorations 350 Total Costs $2,315 What is the primary reason for the variance in total costs? A) Hotel room rent cost more than expected. B) Food cost more than expected. C) Entertainment cost more than expect ed. D) Decorations cost less than expected. Answer: B Diff: 2 LO: 1 - 3 AACSB: Analytic skills Learning Outcome: Describe the basics of managerial accounting and its function within an organization