Objective 1.5
1) Which of the following is a guideline used by management accountants to assist in strategic and
operational decision making?
A) employing a cost-benefit approach
B) employing a supply chain approach
C) employing a six sigma approach
D) employing a regression approach
2) The scenario that resources should be spent if the expected benefits to the company exceed the
expected costs describes ________.
A) cost-benefit approach
B) behavioral and technical considerations
C) balanced scorecard
D) different costs for different purposes
3) Which of the following is true of a budgeting system?
A) It compels managers to plan ahead.
B) It increases agency costs.
C) It is easy to measure the exact benefits of a budgeting system.
D) It leads to operational inefficiency.
4) In a cost-benefit approach, managers should spend resources if the ________.
A) marginal costs to the company exceed the marginal benefits
B) expected benefits to the company exceed the expected costs
C) marginal costs to the company equal the marginal benefits
D) expected benefits to the company equal the expected costs
5) Technical consideration ________.
A) help managers make wise economic decisions by providing them with the desired information
B) focus on encouraging individuals to do their jobs better
C) focus on compensating the managers for good performance
D) emphasize on different costs for different purposes
6) Which of the following statements about the cost-benefit approach is true?
A) Resources should be spent if the expected costs exceed the expected benefits of the company.
B) In a cost-benefit analysis, both costs and benefits are not easy to measure.
C) Resources should be spent if the costs of a decision outweigh the benefits of the decision.
D) A cost-benefit approach would not be appropriate for a decision to install a budgeting system.
7) Management is primarily a human activity that should focus on encouraging individuals to do their
jobs better.
8) The technical considerations of budgeting encourage managers and other employees to strive for
achieving the goals of the organization.
9) The same cost concept used for external and internal reporting purposes.
10) Accounting methods for internal reporting purposes are specified by Generally Accepted Accounting
Principles (GAAP).
11) Discuss the cost-benefit approach guideline management accountants use to provide value in strategic
decision making.
12) Discuss the behavioral considerations that provide value to strategic decision making.
1) Which of the following is true of line management?
A) It is directly responsible for achieving the goals of the organization.
B) It is responsible of management accounting functions.
C) It provides advice, support, and assistance to staff management.
D) It only includes the top level management.
2) Which of the following is true of staff management?
A) It plans income taxes, sales taxes, and international taxes.
B) It is directly responsible for achieving the goals of the organization.
C) It provides advice, support, and assistance to line management.
D) It controls the main business functions such as production and marketing.
3) ________ includes providing financial information for reports to managers and shareholders, and
overseeing the overall operations of the accounting system.
A) Risk management
B) Treasury management
C) Controllership
D) Strategic planning
4) ________ includes banking and short- and long-term financing, investments, and cash management.
A) Risk management
B) Strategic planning
C) Controllership
D) Treasury management
5) Line management includes ________.
A) distribution managers
B) human-resource managers
C) information-technology managers
D) management-accounting managers
6) Staff management includes ________.
A) manufacturing managers
B) management accountants
C) purchasing managers
D) distribution managers
7) Which of the following is a responsibility of the CFO?
A) preparing financial statements
B) managing short-term and long-term financing
C) investing in new equipment
D) conducting internal audit
8) The ________ is primarily responsible for management accounting and financial accounting.
A) COO (Chief Operating Officer)
B) CIO (Chief Information Officer)
C) treasurer
D) controller
9) Which of the following reports to the CFO?
A) external auditor
B) distribution manager
C) production manager
D) treasurer
10) Which of the following is a function of a controller?
A) operations administration
B) controlling the stock price
C) communication with the shareholders
D) interest-rate risk management
11) Long-term financing is an integral part of the ________ function in an organization.
A) CFO’s
B) controller’s
C) auditor’s
D) president’s
12) Line management is directly responsible for attaining the goals of the organization.
13) Staff management, such as management accountants and information technology and human-
resources management, provides advice, support, and assistance to line management.
14) Treasury includes banking and short- and long-term financing, investments, and cash management.
15) The controller is usually responsible for budgeting.
16) The treasurer (also called the chief accounting officer) is the financial executive primarily responsible
for both management accounting and financial accounting.
17) Management accountants must work well in cross-functional teams and as a business partner.
18) A company’s CFO oversees banking and short- and long-term financing, investments, and cash
management.
19) Management accountants must promote fact-based analysis and make tough-minded, critical
judgments
without being adversarial.
20) What areas of responsibility does a chief financial officer have in a typical organization?
21) The successful management accountant possesses several skills and characteristics that reach well
beyond
basic analytical abilities. Discuss.
Objective 1.7
1) Which of the following issues is addressed by the Sarbanes-Oxley legislation?
A) safety aspects of products
B) environmental damages caused by industries
C) disclosure practices of public corporations
D) disclosure practices of private companies
2) The Standards of Ethical Conduct for management accountants include concepts related to ________.
A) competence, performance, diligence, and reporting
B) competence, confidentiality, integrity, and credibility
C) experience, diligence, reporting, and objectivity
D) diligence, objectivity, conflicts of interest, and credibility
3) Which item is an indication of competence under the Standards of Ethical Conduct?
A) Maintain an appropriate level of professional expertise by continually developing knowledge and
skills.
B) Keep information confidential except when disclosure is authorized or legally required.
C) Abstain from engaging in or supporting any activity that might discredit the profession.
D) Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
4) Which of the following differentiates confidentiality and credibility under the Standards of Ethical
Conduct?
A) Credibility deals with refraining from activities that would prejudice carrying duties ethically, while
confidentiality deals with communicating information fairly and objectively.
B) Confidentiality deals with refraining from the usage of critical information for unethical or illegal
advantage, while credibility ensures disclosing the relevant information that would help the intended
user’s understanding.
C) Credibility deals with refraining from the usage of critical information for unethical or illegal
advantage, while confidentiality ensures disclosing the relevant information that would help the user’s
understanding.
D) Credibility ensures appropriate level of professional expertise by continually developing knowledge
and skills, while confidentiality encourages mitigation of actual conflicts of interest.
5) Which item is an indication of integrity under the Standards of Ethical Conduct?
A) Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
B) Communicate information fairly and objectively.
C) Keep information confidential except when disclosure is authorized or legally required.
D) Recognize and communicate professional limitations or other constraints that would preclude
responsible judgment or successful performance of an activity.
6) Which item is an indication of credibility under the Standards of Ethical Conduct?
A) Maintain an appropriate level of professional expertise by continually developing knowledge and
skills.
B) Refrain from using confidential information for unethical or illegal advantage.
C) Abstain from engaging in or supporting any activity that might discredit the profession.
D) Disclose delays or deficiencies in information, timeliness, processing, or internal controls in
conformance with organization policy and/or applicable law.
7) Ethical challenges for management accountants include ________.
A) whether to accept gifts from suppliers, knowing it is an effort to indirectly influence decisions
B) adhering to the principles of accounting
C) whether to file a tax return this year
D) whether to accept gifts higher incentives from the company for their performance
8) Which of the following actions should a management accountant take first in confronting a potential
ethical conflict concerning your direct supervisor?
A) Inform the Board of Directors of the existence of a potential conflict.
B) Clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics Counselor.
C) Consult the attorney as to legal obligations and rights concerning the ethical conflict.
D) Follow the organization’s procedures concerning resolution of such a conflict.
9) If there is an ethical conflict concerning your direct supervisor, you may contact ________.
A) local media
B) IMA Ethics Counselor
C) attorney
D) board of directors
10) If there is an ethical conflict concerning your direct supervisor, when is it appropriate to contact
authorities or individuals not employed by the organization?
A) when there is a personal conflict
B) when your supervisor is about to be promoted
C) when there is a clear violation of the law
D) when you face injustice from your supervisor
11) Competence includes maintaining an appropriate level of professional expertise by continually
developing knowledge and skills.
12) As part of the Sarbanes-Oxley Act, internal auditors are solely responsible for the fair representation
of the business operations in the financial statements.
13) Management accountants have important ethical responsibilities that are related to competence,
confidentiality, integrity, and credibility.
14) As per IMA statement of ethical professional practice, integrity refers to disclosing all relevant
information that could reasonably be expected to influence an intended user’s understanding of the
reports, analyses, or recommendations is a responsibility.
15) Performing professional duties in accordance with relevant laws, regulations, and technical standards
is a competent responsibility.
16) If a managerial accountant suspected his or her immediate superior of unethical behavior, who
happens to be a chief executive officer or equivalent, the managerial accountant should request an
immediate meeting with the executive committee or the audit committee.
17) The Institute of Management Accountants provides a hotline to discuss ethical issues.
18) When faced with a potential ethical conflict, the managerial accountant should first consult IMA
ethics counselor.
19) IMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility.
20) Integrity is to abstain from engaging in or supporting any activity that might discredit the profession.
21) List the four standards of ethical conduct for management accountants. For each standard, give an
example that demonstrates compliance with that standard.
22) You have been employed as an entry-level management accountant for a little under a year. You
suspect that your immediate supervisor is involved in a significant fraud involving diverting of company
assets to personal use. Briefly describe the steps you might take to resolve this dilemma.