Basic Concepts MODULE 1 financial accounting? BASIC CONCEPTS IN MANAGEMENT ACCOUNTING A. Managerial accounting places more emphasis on precision tha
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  Basic Concepts 1 MODULE 1 BASIC CONCEPTS IN MANAGEMENT ACCOUNTING 1. The major functions of management is (are):  A. strategic management and long-range planning. B. planning and decision making. C. identifying threats and opportunities for the firm. D. all of the above. Bobadilla 2. The process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization's goals is called  A. managerial accounting C. management B. financial accounting D. promotional activities Bobadilla 3. The primary objective of management accounting is  A. to provide stockholders and potential investors with useful information for decision making. B. to provide banks and other creditors with information useful in making credit decisions. C. to provide management with information useful for planning and control of operations. D. to provide supervising government agencies with information about the company’s management affairs. Bobadilla 4. Management accounting information  A. uses historical cost as the basis for reports to managers who are making decisions about future courses of action. B. should be developed and provided only if its benefits exceed its costs. C. does not reflect the financial criteria of verifiability or consistency. D. should serve the basic needs of investors and creditors. Bobadilla 5. Which of the following is included in the day-to-day work of the management team?  A. decision making C. controlling B. planning D. all of the above Bobadilla 6. Paying rent, purchasing supplies, and purchasing inventory are which of the day-to-day work activities of the management team?  A. decision making C. directing operational activities B. planning D. only A and B Bobadilla 7. Which of the following statements is true when comparing managerial accounting to financial accounting?  A. Managerial accounting places more emphasis on precision than financial accounting. B. Both are highly dependent on timely information. C. Both rely on the same accounting information system. D. Managerial accounting is concerned with external decision makers. Bobadilla 8. Which of the following is true of managerial accounting rather than financial accounting?  A. The outputs of this accounting system are the primary financial statements. B. The methods of this accounting system are established by an overseeing board. C. The accounting methods are standardized to allow comparisons among companies. D. The accounting system would be unique to each company. Bobadilla 9. Management accounting’s role in the control processe s is to provide  A. managers with information that can be used to determine customer satisfaction levels. B. investors and creditors information on the financial stability of the company. C. managers with relevant information to compare with expectations. D. input to managers on the best ways to achieve continuous improvement in the production process. Bobadilla 10. Which of the following statements are true regarding financial and managerial accounting? I. Both are mandatory. II. Both rely on the same underlying financial data. III. Both emphasize the segments of an organization, rather than just looking at the organization as a whole. IV. Both are geared to the future, rather than to the past.  A. I, II, III, and IV C. Only II and III B. Only II, III and IV D. Only II Bobadilla 11. Managerial accounting activity adds value to an organization by pursuing five major objectives, which include  A. providing information for decision making and planning. B. measuring the performance of activities within an organization. C. assisting managers in directing and controlling operational activities. D. all of them Bobadilla 12. Managerial accounting places considerable weight on:  A. generally accepted accounting principles. B. the financial history of the entity. C. ensuring that all transactions are properly recorded.  Basic Concept 2 D. detailed segment reports about departments, products, and customers. Bobadilla 13. Which of the following statement is FALSE?  A. Managerial accounting need not conform to GAAP. B. Financial accounting reports focus on subunits of the organization. C. Managerial accounting is not required D. Managerial accounting focuses on the needs of internal users. Bobadilla 14. For internal uses, managers are more concerned with receiving information that is:  A. completely objective and verifiable. B. completely accurate and precise. C. relevant, flexible, and immediately available. D. relevant, completely accurate, and precise. Bobadilla 15. Which of the following statements is correct?  A. A certified public accountant can readily render management advisory services to the public. B. A CPA with MBA and DBM degrees is automatically qualified to render management advisory services. C. Competence as a standard in the rendition of management advisory services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate degree, an MBA and other post graduate studies. D. Adequate training and experience in both the analytical approach and process in a particular undertaking are requisites for the CPA to be involved in a management advisory service engagement. (RPCPA) 16. The following characterize management advisory services except  A. It involves decision for the future B. It broader in scope and varied in nature C. It utilizes more junior staff than senior members of the firm D. It relates to specific problems where expert help is required Bobadilla 17. Which of the following statements is incorrect?  A. CPAs provide management advisory services to go around the ethical constraints as mandated by the Accountancy Law. B. Businesses hire management consultants to help define specific problems and develop solutions. C. CPAs who are performing management advisory services may be considered to be in the practice of management consulting. D. Included in the practice of consulting is the provision of confidential service in which the identity of the client is concealed. (RPCPA) 18. The primary purpose of management advisory services is  A. To conduct special studies, preparation of recommendations, development of plans and programs, and provision of advice and assistance in their implementation. B. To provide services or to fulfill some social needs. C. To improve the client’s use of its capabilities and resources to achieve the objectives of the organization. D. To earn the best rate of return on resources entrusted to its care with safety of investment being taken into account and consistent with firm’s social and legal responsibilities. Bobadilla 19. Managerial accounting information:  A. pertains to the entity as a whole and is highly aggregated. B. pertains to subunits of the entity and may be very detailed. C. is prepared only once a year. Bobadilla D. is constrained by the requirements of generally accepted accounting principles. 20. Managerial accounting is primarily concerned with:  A. segments of a company rather than the company as a whole. B. the data needs of stockholders and creditors. C. meeting the requirements of generally accepted accounting principles. D. the company as a whole rather than a segment of the organization. Bobadilla 21. The major reporting standard for presenting managerial accounting information is  A. relevance B. generally accepted accounting principles C. the cost principle D. the current tax law Bobadilla 22. With respect to the time dimension, how does managerial decision compare with external performance evaluation? Bobadilla A. B. C. D. Managerial Decision Making Past Past Future Future External Performance Past Future Past Future 23. Managerial accounting differs from financial accounting in that it is  A. more concerned with segments of a company.  Basic Concept 3 B. less constrained by rules and regulations. C. more concerned with the future. D. all of the above. Bobadilla 24. The distinction between traditional accounting and cost management is  A. the focus of the former on accounting matters and the latter in support to management in making the right decisions for staying on a competitive position B. the emphasis of former on record keeping and the latter on reporting C. the focus of the former on cost cutting and the latter on product differentiation D. the focus of the former on efficiency and the latter on quality. Bobadilla 25. Which of the following activities is not usually performed by a management accountant?  A. Assisting managers to interpret data in managerial accounting reports. B. Designing systems to provide information for internal and external reports. C. Gathering data from sources other than the accounting system. D. Deciding the best level of inventory to be maintained. Bobadilla 26. Which of the following statements correctly distinguishes financial and managerial accounting?  A. managerial accounting reports on the whole organization B. financial accounting is oriented toward the future C. financial accounting is primarily concerned with providing information for internal users D. managerial accounting is oriented more toward the planning and control aspects of management Bobadilla 27. How does managerial decision making compare with external performance evaluation? Managerial Decision Making External Performance Evaluation  A. Detailed Detailed B. Detailed More aggregated C. More aggregated Detailed D. More aggregated More aggregated Bobadilla 28. Management accountants would not  A. assist in budget planning. B. prepare reports primarily for external users. C. determine cost behavior. D. be concerned with the impact of cost and volume on profits. Bobadilla 29. In the contemporary business environment, cost management focus is on  A. financial reporting and cost analysis. B. common emphasis on standardization and standard costs. C. development and implementation of the business strategy. D. all of the above. Bobadilla 30. Management accounting is similar to financial accounting in that  A. both are governed by generally accepted accounting principles. B. both deal with economic events. C. both concentrate on historical data. D. both classify reported information in the same manner. Bobadilla 31. How frequent is management accounting report when compared to report to external users? Management Accounting Report External Report  A. More frequent Less frequent B. More frequent More frequent C. Less frequent Less frequent D. Less frequent More frequent Bobadilla 32. Managerial accounting differs from financial accounting in that financial accounting is  A. more oriented toward the future. B. primarily concerned with external financial reporting. C. concerned with nonquantative information. D. heavily involved with decision analysis and implementation of decisions. Bobadilla 33. Managerial accounting provides data for all of the following major objectives except:  A. planning and control of costs B. supporting management planning C. compliance with SEC reporting requirements D. determining the costs of products Bobadilla 34. Which statement is false? Managerial accounting information:  A. involves planning for the future B. should be requested and used by management even if it is very costly to gather and analyze C. helps managers make financing decisions D. need not comply with generally accepted accounting principles Bobadilla  Basic Concept 4 35. Internal reports must be communicated  A. daily C. annually B. monthly D. as needed Bobadilla 36. Which of the following does not apply to the content of managerial reports?  A. Reporting standard is relevant to the decision to be made. B. May extend beyond double-entry accounting system. C. Pertain to subunits of the entity and may be very detailed. D. Pertains to the entity as a whole and is highly aggregated. Bobadilla 37. Which consideration influences the frequency of an internal report?  A. The wishes of the managers receiving the report. B. The frequency with which decisions are made that require the information in the report. C. The cost of preparing the report. D. All of the above. Bobadilla 38. Which of the following statements about internal reports is not true?  A. The content of internal reports may extend beyond the double-entry accounting system. B. Internal reports may show all amounts at market values. C. Internal reports may discuss prospective events. D. Most internal reports are summarized rather than detailed. Bobadilla 39. Management accountants help develop and maintain reporting systems that are aligned with organizational structures and that provide useful information on an organization’s performance. Management decision processes fall into three categories that consist of  A. Nonrepetitive, nonprogrammed, and nonstrategic. B. Repetitive, nonprogrammed, and strategic. C. Repetitive, programmed, and strategic. D. Nonrepetitive, nonprogrammed, and strategic. Bobadilla 40. Internal reports are generally  A. aggregated C. regulated B. detailed D. unreliable Bobadilla 41. Managerial accounting reports can be described as:  A. general-purpose C. classified financial statements B. special purpose D. macro-report Bobadilla 42. The informational needs of internal users/management:  A. are historical in nature B. emphasize the company as a whole C. emphasize accuracy over timeliness D. may require more customized reports than external financial statements Bobadilla 43. The role of the managerial accountant in today’s corporate world includes all of the following except:  A. interpreting financial information C. financial modeling B. financial planning D. bookkeeping Bobadilla 44. Which of the following is most associated with managerial accounting?  A. Must follow generally accepted accounting principles. B. May rely on estimates and forecasts. C. Is prepared for users outside the organization. D. Always reports on the entire entity. Bobadilla 45. Which statement about the extent of detail in a management accounting report is true?  A. It may depend on the frequency of the report. B. It depends on the type of manager receiving the report. C. It depends on the level of the manager receiving the report. D. All of the above. Bobadilla 46. Managerial accounting information  A. pertains to the entity as a whole and is highly aggregated. B. pertains to subunits of the entity and may be very detailed. C. is prepared only once a year. Bobadilla D. is constrained by the requirements of generally accepted accounting principles. 47. Which of the following characteristics is inherent to management accounting?  A. Reporting of historical information B. Compliance to generally accepted accounting principles C. Contribution approach income statement D. External users of financial report Bobadilla 48. In order to be useful to managers, management accounting reports should possess all of the following characteristics except:  A. Provide objective measures of past operations and subjective estimates about future decisions. B. Be prepared in accordance with generally accepted accounting principles.
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