Multiple Choice Answers

Management accounting information can be used for all of the following except:
calculate the cost of a product or service.
evaluate the performance of a company.
project materials needs.
evaluate the market price of the stock.

2. Management accounting:
focuses on estimating future revenues, costs, and other measures to forecast activities and their results.
provides information about the company as a whole.
reports information that has occurred in the past that is verifiable and reliable.
provides information that is generally available only on a quarterly or annual basis.

3. Management accounting reports might include information about:
customer complaints.
net income for the year on budgeted income statement.
total assets on budgeted balance sheet.
All of the above are correct.

4. Financial accounting:
focuses on the future and includes activities such as preparing next year’s operating budget
does not need to comply with GAAP (generally accepted accounting principles)
reports include detailed information on the various operating segments of the business such as product lines or departments
is prepared for the use of department heads and other employees

5. Historically, management accounting innovations have been developed by:
the International Accounting Standards Board.
the Cost Accounting Standards Board.
Academic accountants.
Managers.

6. What an organization tries to deliver to customers is called its value proposition, which includes the elements of:
price and quality.
price, quality, and functionality and features.
price, quality, functionality and features, and service.
price, quality, functionality and features, service, and industry standards.

7. Management accounting can play a critical role in the service industry because of all the following reasons EXCEPT:
firms must be especially sensitive to the timeliness and quality of customer service
many employees have very little contact with customers
customers immediately notice defects and a delay in service
dissatisfied customers may never return

8. Historically, service companies have
operated in less competitive environments than manufacturing companies.
enjoyed global customer demand.
used management accounting information in much the same way as manufacturing companies.
competed by managing costs to provide the best service at the lowest price.

9. Currently, management accounting information within government and nonprofit organizations is in greater demand because:
public and private donors are demanding accountability
citizens are requesting responsive and efficient performance from their governing units
more nonprofit organizations are competing for limited funds
All of the above are correct.

10. Financial accounting information:
provides a signal that something is wrong
identifies what is wrong
explains what is wrong
simply summarizes information but gives no indication that anything is wrong

11. Cost accounting standards for federal government agencies are mandated by:
the Financial Accounting Standards Board.
the Cost Accounting Standards Board.
the Federal Accounting Standards Advisory Board.
the Government Reports and Results Act.

12.
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 12, 13 AND 14.
The following information pertains to three divisions of Marine Industrial Coatings, Inc (amounts in millions): Chemical Retail Paint Industrial
Sales $16,000 $30,000 $120,000
Operating income $4,000 $6,000 $40,000
Investment $320,000 $660,000 $2,000,000
What is the return on investment for the Chemical Division?
1.25%
2.25%
25.0%
50.00%

13. Which division is more profitable based on ROI?
Chemical
Retail paint
Industrial
Both Chemical and Retail paint are more profitable than Industrial.

14. What is the Return on Sales for the Retail paint division?
2%
4.5%
20%
45%

15. For improving operational efficiencies and customer satisfaction, nonfinancial information is:
critical
moderate
infrequently used
unnecessary

16. The act of simply measuring and reporting information on certain processes:
focuses the attention of employees on those processes that are being measured
diverts the employee’s attention to other activities that are not being measured
disproves the saying “What gets measured gets managed.”
has no effect on employee behavior

17. When a change is introduced, employees tend to:
embrace the change
be indifferent to the change
exhibit no change in behavior
resist the change

18. The introduction of a new management accounting system is MOST likely to motivate UNWANTED employee behavior when it is used for:
evaluation
planning
decision making
coordinating individual efforts

19. Fostering a culture of high ethical standards includes all of the following EXCEPT:
following the good example set by senior management
communicating to employees a belief system that inspires and promotes commitment to the organization’s core values
following the general examples set by front-line employees
communicating to all employees a boundary system that states what actions will not be tolerated
20. The Institute of Management Accountants (IMA): (Points: 2)
is a professional organization of management accountants
is a professional organization of financial accountants
issues standards for management accounting
Both a and c are correct.
Management accounting information can be used for all of the following except
Both a and c are correct.