(Test Bank) Managerial Accounting

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Chapter 01 -Managerial Accounting and the Business Environment 1-1Chapter 01 Managerial Accounting and the Business Environment Multiple Choice Questions 1.Day-to-day decision making is most common to which of the following activities managers are expected to carry on in organizations? A.Strategy formulation. B.Directing and motivating. C.Planning. D.Controlling. Bloom's Level: Understand Difficulty: Medium Learning Objective: 1 2.Identify ing alternatives and selecting the best among them is part of which of the following activities which managers carr y on in organizations? A.Controlling. B.Directing. C.Planning. D.Motivating. Bloom's Level: Understand Difficulty: Medium Learning Objective: 1 3.Budgeting is part of which of the following activities managers perform in organizations? A.Contr olling. B.Directing. C.Planning. D.Motivating. Bloom's Level: Understand Difficulty: Easy Learning Objective: 1hzzledChapter 01 -Managerial Accounting and the Business Environment 1-24.Obtaining feedback is generally identified most directl y with which of these functions of management? A.Planning B.Directing and motivating C.Controlling D.Decision making Bloom's Level: Understand Difficulty: Easy Learning Objective: 1 5.Which of the following best describes the role of a staff position in an organization? A.It relates directl y to the carrying out of the basic objectives of the organization. B.It is supportive in nature, providing service and assistance to other parts of the organization. C.It is superior in authority to a line position. D.Both A and C. Bloom's Level: Remember Difficulty: Easy Learni ng Objective: 3 6.Which of the following positions does the controller occup y in an organization? A.A line position. B.A staff position. C.Neither a line nor a staff position, since the accounting department must be independent. D.Both a line and a staff position. Bloom's Level: Remember Difficulty: Easy Learning Objective: 3hzzledChapter 01 -Managerial Accounting and the Business Environment 1-37.Which of the following best describes the function of managerial accounting within an organization? A.It has its primary emphasis on the future. B.It is required b yregulatory bodies such as the Ontario Securities Commission. C.It focuses on the organization as a whole, rather than on the organization's segments. D.It places more emphasis on precision of data than financial accounting does. Bloom's Level: Rememb er Difficulty: Easy Learning Objective: 2 8.Upon which of the following does managerial accounting place considerable weight? A.Generall y accepted accounting principles. B.The financial history of the entity . C.Ensuring that all transactions are pro perly recorded. D.Detailed segment reports about departments, products, and customers. Bloom's Level: Understand Difficulty: Easy Learning Objective: 2 9.For internal uses, managers are more concerned with receiving information that achieves which o f the following standards? A.Completely objective and verifiable. B.Completely accurate and precise. C.Relevant, flexible, and timely . D.Relevant, completel y accurate, and precise. Bloom's Level: Understand Difficulty: Easy Learning Objective: 2hzzledChapter 01 -Managerial Accounting and the Business Environment 1-410.What would be an example of a performance report? A.An income statement reporting actual results for the past month. B.An income statement showing the amounts budgeted for the past month. C.A balance sheet showing the actual financial position at the end of the past month. D.A production report showing budgeted and actual production for the past month. Bloom's Level: Understand Difficulty: Hard Learning Objective: 1 11.Which of the following is NOT one of the three major customer value propo sitions discussed in the text? A.customer intimacy B.discount pricing C.operational excellence D.product leadership Bloom's Level: Understand Difficulty: Medium Learning Objective: 1 12.Which of the following is NOT one of the five steps in the lean thinking model discussed in the text? A.Continuously pursue perfection in the business process. B.Identify value in specific products/services. C.Implement an enterprise sy stem. D.Create a pull sy stem that responds to customer orders. Bloom's Level: Understand Difficulty: Easy Learning Objective: 5hzzledChapter 01 -Managerial Accounting and the Business Environment 1-513.One consequence of a change from a push to a properl y implemented pull production system can be which of the following? A.an increase in work in process inventories. B.an extremely difficul t cultural change due to enforced idleness when demand falls below production capacit y. C.an increased mismatch between what is produced and what is demanded by customers. D.an increase in raw materials inventories. Bloom's Level: Understand Difficult y: Hard Learning Objective: 5 14.Which one of the following is NOT a characteristic of a pull production sy stem? A.Inventories are reduced to a minimum by purchasing raw materials and producing units only as needed to meet consumer demand. B.Raw mate rials are released to production far in advance of being needed to ensure no interruptions in work flows due to shortages of raw materials. C.Products are completed just in time to be shipped to customers. D.Manufactured parts are completed just in time to be assembled into products. Bloom's Level: Understand Difficulty: Medium Learning Objective: 5 15.Which of the following is NOT one of the five steps in the framework used to guide Six Sigma improvement efforts? A.Anal yze. B.Control. C.Digitiz e. D.Measure. Bloom's Level: Understand Difficulty: Medium Learning Objective: 5hzzledChapter 01 -Managerial Accounting and the Business Environment 1-616.All three major professional accounting groups in Canada require their members to undertake professional development and/or continuing education. This practice is i ntended to directl y satisfy which of these rules of ethical conduct? A.Integrit y. B.Objectivity . C.Competence. D.Confidentiality . Bloom's Level: Understand Difficulty: Medium Learning Objective: 4 17.Samantha Galloway is a managerial accountant in the accounting department of Mustang Industries, Inc. Samantha has just discovered evidence that some of the corporation's marketing managers have been wrongfull y inflating their expense reports in order to obtain higher reimbursements from the firm. Ac cording to the Institute of Management Accountants' Standards of Ethical Conduct, what should Samantha do upon discovering this evidence? A.Notify the controller. B.Notify the marketing managers involved. C.Notify the president of the corporation. D.Ignore the evidence because she is not part of the Marketing Department. Bloom's Level: Apply Difficulty: Hard Learning Objective: 4 18.Both financial and managerial accounting rel y on the same underl ying financial data but there are major differences . Managerial Accounting: A.Emphasizes financial consequences of past activities. B.Emphasizes precision. C.Emphasizes relevance. D.Must follow GAAP. Bloom's Level: Understand Difficulty: Medium Learning Objective: 2hzzledChapter 01 -Managerial Accounting and the Business Environment 1-719.After careful planning, J ammu Manufacturing Corporation has decided to switch to a just-in-time inventory system as a component of the lean thinking model. At the beginning of this switch, Jammu has 30 units of product in inventory . Jammu has 2,000 labour hours available in the fi rst month of this switch. These hours could produce 500 units of product. Customer demand for this first month is 400 units. If just -in-time principles are correctl y followed, how man y units should Jammu plan to produce in the first month of the switch? A.370 B.400 C.430 D.470 Bloom's Level: Analyze Difficulty: Hard Learning Objective: 5 20.Which of the following facets of the lean thinking model is often called just -in-time production? A.Identify value in specific products/services B.Identify the business process that delivers value C.Create a pull sy stem that responds to customer orders D.Organize work arrangements around the flow of the business process Bloom's Level: Understand Difficulty: Medium Learning Objective: 5 21.Which of th e following groups should be the focal point of a compan y's strategy ? A.Employ ees B.Board of directors C.Shareholders D.Target customers Bloom's Level: Understand Difficulty: Hard Learning Objective: 1hzzledChapter 01 -Managerial Accounting and the Business Environment 1-822.A business plan is usually formalized b y means of which of the following management activities? A.Strategic planning B.Directing C.Motivating D.Controlling Bloom's Level: Remember Difficulty: Easy Learning Objective: 1 23.Which of the following t ypes of information contained in a bus iness plan is L EAST likely to be found in the accounting records of a ty pical company ? A.Financial B.Competitors C.Internal D.Non-financial Bloom's Level: Understand Difficulty: Medium Learning Objective: 1 24.Which of the following is the stake holder group whose interests are to be directl y and formally protected by effective corporate governance? A.Customers B.Creditors C.Shareholders D.Suppliers Bloom's Level: Remember Difficulty: Medium Learning Objective: 4hzzledChapter 01 -Managerial Accounting and the Business Environment 1-9True / False Question s 25.An important part of planning is to identify alternatives and then to select from among the alternatives the one that best meets the organization's objectives. TRUE Bloom's Level: Remember Difficulty: Medium Learning Objective: 1 26.The cont roller occupies a staff position in an organization. TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 3 27.Persons occup ying staff positions provide support and assistance to other parts of the organization. TRUE Bloom's Level: Remember Difficulty: Medium Learning Objective: 3 28.Informal relationships and channels of communication often develop that do not appear on the organization chart. TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 3hzzledChapter 01 -Managerial Accounting and the Business Environment 1-1029.Manageri al accounting places less emphasis on precision and more emphasis on timeliness of data than financial accounting does. TRUE Bloom's Level: Remember Difficulty: Medium Learning Objective: 2 30.Managerial accounting is notgoverned b y generall y accep ted accounting principles (GAAP). TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 2 31.In general, accounting data serve both financial accounting and managerial accounting purposes. TRUE Bloom's Level: Understand Difficulty: E asy Learning Objective: 2 32.Top management make most of the decisions in decentralized organizations. FALSE Bloom's Level: Remember Difficulty: Easy Learning Objective: 3hzzledChapter 01 -Managerial Accounting and the Business Environment 1-1133.Codes of professional ethics regarding competence, confidentialit y, integrit y, and objectivity are more important for CAs and CGAs than CMAs. FALSE Bloom's Level: Remember Difficulty: Easy Learning Objective: 4 34.Business codes of ethics prescribe minimum acceptable behaviours for all employ ees except employ ees belon ging to one of the three major professional accounting groups in Canada. FALSE Bloom's Level: Understand Difficulty: Medium Learning Objective: 4 35.Monetary data are given equal weight b y both managerial accounting and financial accounting. FALSE Bloom's Level: Remember Difficulty: Easy Learning Objective: 2 36.A strategy is a game plan that enables a company to attract customers by distinguishing itself from competitors. TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 1hzzledChapter 01 -Managerial Accounting and the Business Environment 1-1237.A strategy requires effective use of Six Sigma improvement techniques. FALSE Bloom's Level: Understand Difficulty: Medium Learning Objective: 1 Learning Objective: 5 38.A customer value proposition is essentially a reason for customers to ch oose a compan y's products over its competitors' products. TRUE Bloom's Level: Understand Difficulty: Medium Learning Objective: 1 39.Customer value propositions tend to fall into three broad categories --customer intimacy , operational excellence, and product leadership. TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 1 40.Companies that adopt a customer intimacy strategy are in essence say ing to their target customers, "The reason you should choose us is because we understand and respond to y our individual needs better than our competitors." TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 1hzzledChapter 01 -Managerial Accounting and the Business Environment 1-1341.Companies that choose an operational excellence strategy are in essence say ing to their customers, "Choose us rather than our competitors because we strive for zero defects." FALSE Bloom's Level: Remember Difficulty: Medium Learning Objective: 1 42.Corporate governance is the legal framework that allows managers to control and direct lower -level workers on the job. FALSE Bloom's Level: Understand Difficulty: Medium Learning Objective: 4 43.A value chain consists of the major business functions that add value to the company 's products and services. TRUE Bloom's Level: Remember Difficulty: Easy Lear ning Objective: 5 44.The answers to many of the questions raised by prospective providers of funds can be found in the business plan. TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 1hzzledChapter 01 -Managerial Accounting and the Business Environment 1-1445.The lean thinking model is a five step m anagement approach that organizes resources such as people and machines around the flow of business processes and that pulls units through these processes in response to customer orders. TRUE Bloom's Level: Remember Difficulty: Easy Learning Objective: 5 46.Supply chain management involves acquiring and bringing inside the company all of the processes that bring value to customers. FALSE Bloom's Level: Understand Difficulty: Medium Learning Objective: 5hzzledChapter 01 -Managerial Accounting and the Business Environment 1-15Essay Questions 47.You have recentl y been hired b y a manufacturing compan y. Two day s ago, you met with the top management of the compan y to discuss future strategies for the firm. During the meeting, the president of the company expressed concern about the profitability of the compan y and t he compan y's ability to compete effectivel y in the future. You responded to the president's concerns by mentioning some articles y ou had read in professional accounting journals regarding the lean thinking model. The president responded to your comments by saying that although the lean thinking model sounded interesting, no one in the company was knowledgeable about it. The president then requested that y ou prepare a brief summary of the lean thinking model for the next strategic planning meeting. Required : a. Define the lean thinking model. b. List the five major steps in the lean thinking model. c. List some of the benefits of the lean thinking model. a. The lean thinking model is a management approach that organizes resources around the flow of busines s processes and pulls units through in response to customer orders. The model includes the popular just -in-time production. b. The five major steps in the lean thinking model are as follows: 1) Identify value in specific products/services. 2) Identify thebusiness process that delivers value. 3) Organize work arrangements around the flow of the business process. 4) Create a pull sy stem that responds to customer orders. 5) Continuously pursue perfection in the business process. c. Some of the benefits that accrue from adoption of the lean thinking model are as follows: 1) Lower inventories of raw materials, work in process, and finished goods. 2) Fewer defects 3) Less wasted efforts 5) Quicker customer response times. Bloom's Level: Apply Difficulty: Me dium Learning Objective: 5hzzled