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Chapter 18 Managerial Accounting Concepts and Principles
MULTIPLE CHOICE QUESTIONS
1)
Managerial accounting is an activity that helps managers determine costs of products and services,
plan future activities, and compare actual to planned results.
A)
True
B)
False
2)
Control is the process of setting goals and determining ways to achieve them.
A)
True
B)
False
3)
Control is the process of monitoring planning decisions and evaluating an organization's activities
and employees.
A)
True
B)
False
4)
Managerial accounting provides financial and nonfinancial information to an organization's
managers and other internal decision makers.
A)
True
B)
False
5)
One of the usual differences between financial and managerial accounting is the timeliness of the
information reported.
A)
True
B)
False
6)
Managerial accounting information can be forwarded to the managers of a company quickly since
external auditors do not have to review it, and estimates and projections are acceptable.
A)
True
B)
False
7)
Costs are important to managers because they impact both the financial position and profitability of
a business.
A)
True
B)
False
8)
Managerial accounting reports and information are used by external users and financial accounting
by internal users.
A)
True
B)
False
9)
Both financial and managerial accounting rely on accepted principles that are enforced through an
extensive set of rules and guidelines.
A)
True
B)
False
10)
Both financial and managerial accounting report monetary information; managerial accounting also
reports considerable nonmonetary information.
A)
True
B)
False
11)
Both financial and managerial accounting affect user's decisions and actions.
A)
True
B)
False
12)
The focus of managerial accounting information is on the organization as a whole.
A)
True
B)
False
13)
Planning is the process of setting goals and making plans to achieve them.
A)
True
B)
False
14)
Feedback provided by the control function allows managers to revise their plans.
A)
True
B)
False
15)
Enterprise risk management (ERM) includes the systems and process companies use to maximize
the effect of risk.
A)
True
B)
False
16)
The concept of total quality management focuses on continuous improvement.
A)
True
B)
False
17)
Just-in-time manufacturing is a system that acquires inventory and produces product only when
needed for an order.
A)
True
B)
False
18)
When the attitude of continuous improvement exists throughout an organization, every manager
and employee is challenged to continuously experiment with new and improved business practices.
A)
True
B)
False
19)
The main goal of the lean business model is the elimination of waste while satisfying the customer
and providing a positive return to the company.
A)
True
B)
False
20)
The management concept of customer orientation motivates a company to spend large amounts on
advertising to convince customers to buy the company's standard products.
A)
True
B)
False
21)
The management concept of customer orientation encourages a company to set up its production
system to produce large quantities of the same product for all customers.
A)
True
B)
False
22)
Total quality management and just-in-time manufacturing focus on quality improvement as well as
on time customer deliveries.
A)
True
B)
False
23)
Under a just-in-time manufacturing system, large quantities of inventory are accumulated
throughout the factory to be certain that components are available each time that they are needed.
A)
True
B)
False
24)
The balanced scorecard aids in continuous improvement by augmenting financial measures with
information on the drivers or indicators of future financial performance.
A)
True
B)
False
25)
Adopting a lean business model should have no effect on cost in a modern manufacturing
environment.
A)
True
B)
False
26)
The Institute of Management Accountants (IMA) Statement of Ethical Professional Practice
requires that management accountants be competent and act with integrity.
A)
True
B)
False
27)
An employee overstates his reimbursable expenses in one period in order to receive needed
additional cash. Since he intends to reduce his expenses the next period by the current
overstatement, this act is not considered fraudulent.
A)
True
B)
False
28)
Direct materials are not easily traced to a product.
A)
True
B)
False
29)
Costs may be classified by many different cost classifications.
A)
True
B)
False
30)
Straight-line depreciation, rent, and manager salaries are examples of variable costs.
A)
True
B)
False
31)
Cost concepts such as variable, fixed, mixed, direct, and indirect apply only to manufacturers and
not to service companies.
A)
True
B)
False
32)
Total variable costs change in proportion to changes in the volume of activity.
A)
True
B)
False
33)
Variable costs per unit change in proportion to changes in the volume of activity.
A)
True
B)
False
34)
Direct costs are incurred for the benefit of more than one cost object.
A)
True
B)
False
35)
Indirect costs cannot be easily and cost-beneficially traced to a single cost object.
A)
True
B)
False
36)
Product costs can refer to expenditures necessary to finish products and to the administrative
support during the time period.
A)
True
B)
False
37)
Period costs can refer to expenditures necessary to finish products during the time period.
A)
True
B)
False
38)
Product costs are capitalized as inventory on the balance sheet and period costs are expensed on the
income statement.
A)
True
B)
False
39)
The sales commission incurred based on units of product sold during the month is an example of a
product cost.
A)
True
B)
False
40)
Period costs are incurred by purchasing merchandise or manufacturing finished goods.
A)
True
B)
False
41)
Product costs can be classified as one of three types: direct materials, direct labor, or overhead.
A)
True
B)
False
42)
Product costs are expenditures necessary and integral to finished products.
A)
True
B)
False
43)
Selling and administrative expenses are normally period costs.
A)
True
B)
False
44)
The cost of partially completed products is included in the balance of the Work in Process
Inventory account.
A)
True
B)
False
45)
Manufacturers usually have three inventories: raw materials, work in process, and finished goods.
A)
True
B)
False
46)
The main difference between the cost of goods sold of a manufacturer and a merchandiser is that
the merchandiser includes cost of goods manufactured rather than cost of goods purchased.
A)
True
B)
False
47)
The main difference between the cost of goods sold of a manufacturer and a merchandiser is that
the manufacturer includes cost of goods manufactured rather than cost of goods purchased.
A)
True
B)
False
48)
Raw materials that become part of a product and are identified with specific units or batches of a
product are called direct materials.
A)
True
B)
False
49)
Raw materials inventory should not include indirect materials.
A)
True
B)
False
50)
The Work in Process Inventory account is found only in the ledgers of merchandising companies.
A)
True
B)
False
51)
The Work in Process Inventory account is found only in the ledgers of manufacturing companies.
A)
True
B)
False
52)
Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw
materials inventory.
A)
True
B)
False
53)
Four factors come together in production activity: beginning work in process inventory, raw
materials, direct labor, and factory overhead.
A)
True
B)
False
54)
Newly completed units are combined with beginning finished goods inventory to make up total
ending work in process inventory.
A)
True
B)
False
55)
Beginning finished goods inventory plus cost of goods manufactured equals cost of goods sold.
A)
True
B)
False
56)
Beginning finished goods inventory plus cost of goods manufactured equals cost of goods available
for sale.
A)
True
B)
False
57)
Beginning finished goods inventory plus cost of goods manufactured minus ending finished goods
inventory equals cost of goods sold.
A)
True
B)
False
58)
The series of activities that add value to a company's products or services is called a value chain.
A)
True
B)
False
59)
To be certified under ISO 9000 standards, companies must use a quality control system and
document that it achieves the desired quality level.
A)
True
B)
False
60)
A lean business model aims to eliminate waste while satisfying the customer and providing a
positive return to the company.
A)
True
B)
False
