Chapter 1—Introduction to Cost Management Key
1. An accounting information system collects, records, summarizes, analyzes, and manages data to transform
inputs into information that is provided to users.
2. The two major subsystems of the accounting information system are the financial accounting information
system and the cost management accounting information system.
3. The cost management information system is primarily concerned with producing outputs for external users.
4. The three broad objectives of financial accounting information systems are to provide information for costing
out services and products, planning and control, and decision making.
5. Preparing reports for division managers is an activity associated with the cost management information
system.
6. The cost management information system has two major subsystems: the cost accounting information system
and the operational control information system.
7. Changes in the way business is conducted worldwide have broadened the focus of cost management
accounting systems.
8. One of the major advances in information technology that affects firms is the emergence of electronic
commerce.
9. The service sector of the U. S. economy has decreased in importance as traditional industries have declined in
importance.
10. Enterprise resource planning (ERP) software has the objective of providing an integrated system capability
and is able to run all the operations of a company.
11. In just-in-time (JIT) manufacturing, each operation produces only what is necessary for the succeeding
operations.
12. JIT is a critical part of a more comprehensive approach referred to as Lean Manufacturing.
13. The focus of Lean Manufacturing is to eliminate waste, which is anything that does not add value to the end
user (customer).
14. The role of cost and management accountants is one of support and teamwork and assistance of those who
are responsible for achieving a company’s basic objectives.
15. Positions that have direct responsibility for basic objectives are referred to as staff positions, and those
indirectly responsible are called line positions.
16. The Controller of a company supervises all the accounting departments and is often viewed as a member of
the top management team.
17. The Treasurer of a company is responsible for all taxation activities, including dealing with the IRS.
18. Evaluating the performance of a segment of the company is an example of planning.
19. The process of choosing among competing alternatives is called decision making.
20. Business ethics is learning what is right or wrong in the work environment and choosing what is right.
21. Employee and customer loyalty are NOT a result of strong codes of ethics.
22. Firms subject to the Sarbanes-Oxley Act of 2002 do not have to disclose whether they have a code of ethics
for senior financial officers, nor why.
23. The Institute of Management accountants has established ethical standards for management accountants.
24. In resolving an ethical conflict, it would be appropriate to take the matter to the press where there’s no legal
requirement.
25. Divulging company information when not legally obligated to do so violates the confidentiality part of the
IMA Code of Conduct.
26. Three of the major certifications available to management accountants are Certificates in Management
Accounting, Public Accounting, and Internal Auditing.
27. For each certification, all an applicant has to do is meet specific educational and experience requirements.
28. The examination for obtaining the Certificate in Management Accounting consists of two parts: (1)
Financial Planning, Performance and Control, and (2) Financial Decision Making.
29. The Certificate of Public Accounting does not include the right to serve as external auditors.
30. The Certified Internal Auditor must pass a comprehensive examination designed to ensure technical
competence and have two years’ work experience.
31. The __________ information system is primarily concerned with producing outputs for internal users using
inputs and processes needed to satisfy management objectives.
32. The cost management subsystem designed to assign costs to individual products and services is called the
__________ information system.
33. __________ is the persistent pursuit and elimination of waste which results in the decrease of lead time.
34. The __________ is a method used to continuously improve manufacturing and nonmanufacturing activities.
35. The role of __________ accountants is to assist and support those responsible for carrying out an
organization’s basic objectives.
36. Positions in a company that have direct responsibility for its basic objectives are called __________
positions, and the positions indirectly responsible for the company’s objectives are called __________
positions.
37. The standards of ethical conduct for management accountants include competence, confidentiality, integrity,
resolution of ethical conflict, and __________ .
38. Companies with a strong __________ can benefit from strong customer and employee loyalty.
39. The IMA’s program to recognize professional competence in the field of management accounting yields a
designation as a __________ Accountant.
40. Only Certified Public Accountants are permitted by law to serve as __________ .
41. In an accounting information system, the inputs are usually
42. In an accounting information system, which of the following is NOT a transformational process?
43. Which of the following is NOT a process associated with an accounting information system?
44. _______________ is devoted to providing information for external users.
45. Financial accounting information is used for
46. Which of the following does NOT describe cost management system?
47. Which of the following is NOT part of the financial accounting information system?
48. Cost management reports are prepared
49. Which of the following is NOT provided by cost accountants?
50. The primary objective of the cost management information system is to provide
51. The cost management information system is concerned with
52. Cost accounting
53. Cost management is the branch of accounting concerned with reporting to
54. _______________ broadens the focus of accounting because it is concerned with factors that drive costs,
such as cycle time and process productivity.
55. Which of the following activities is NOT associated with the cost management information system?
56. Which of the following costing activities is associated with the financial accounting system?
57. Which of the following activities is associated with the cost management information system?
58. The operational control system is concerned with
59. Which of the following activities is NOT associated with the financial accounting information system?
60. Which of the following is a cost management subsystem designed to assign costs to individual products and
services and other objects, as specified by management
62. Any form of commerce that is executed using information and communications technology is called:
63. Factors that have led to a global market for manufacturing and service firms are
64. Which of the following cost management tools supports the firm’s concentration on the delivery of value to
the customer?
65. A computerized information system that strives to input data once and make it available to people across the
company for different purposes is called a(n):
66. Which of the following is NOT an advance in information technology that affects firms?
67. Software that has integrated system capability using real time data is
68. The increased importance of costing activities in the value chain and determining the cost of different
suppliers and customers has led to the emergence of
69. Which of the following activities is NOT significant to the advancement of information technology?
70. Manufacturing environment automation is associated with increases in
71. Which of the following approaches have led to advancements in the manufacturing environment?
72. In JIT manufacturing, each operation produces
73. JIT is a critical part of a more comprehensive approach referred to as:
74. Which of the following are results of Lean Manufacturing?
75. Which of the following emerging trends in cost accounting deals with managers striving to create an
environment that will enable workers to manufacture perfect (zero-defect) products?
76. Competitive advantage is established by providing
77. Which of the following activities is NOT associated with new product development?
78. Total quality management emphasizes
79. Cost management information systems further competitive advantage by supporting three fundamental
organizational goals. Which of the following is NOT one of these fundamental organizational goals that further
competitive advantage?
81. Improvement in time performance is most likely NOT enhanced by
82. A critical measure of efficiency is
83. Today’s cost managers must assemble cost information and determine how to value things. Which methods
would NOT be critical to achieving this?
84. A person in a staff position
85. The internal auditor performs a
86. Which of the following is a staff position?
87. Which of the following positions would most likely be a line manager?
88. Which of the following job positions is a line function?
89. All of the following would be considered staff functions EXCEPT the