MANAGEMENT ACCOUNTING 1 BSA4

NAME: _______________________________________ DATE: __________

Part I: Multiple Choice Encircle the correct answer.

1. Which of the following statement is true?

a. Management accounting information focuses on external reporting.
b. The statement of financial position, income statement and statement of cash flows are used for
financial accounting but not for management accounting.
c. Financial accounting is broader in scope than management accounting.
d. Modern cost accounting plays a significant role in management decision making.

2. Which of the following statement is false?

a. Cost accounting measures and reports short-term, long-term financial, and nonfinancial
information.
b. Cost management provides information that helps increase value for customers.
c. All strategies should be evaluated regarding the resources and capabilities of the company.
d. A good cost accounting system is narrowly focused on a continuous reduction of costs.

3. Which of the following statement is correct?

a. The best-designed strategies are valuable whether or not they are effectively implemented.
b. To take advantage of changing market opportunities, the annual budget should be strictly enforced.
c. Linking rewards to performance is a major deterrent to good management performance.
d. An important strategic decision is making the correct investments in productive assets.

4. All of the following statement are true except,

a. A budget is a tool used to plan and express strategy.
b. Financial accounting reports financial and non-financial information that helps managers implement
company strategies.
c. Feedback links planning and control.
d. Control includes deciding what feedback to provide that will help with future decision making.

5. Management accounting
a. Focuses on estimating future revenues, costs, and other measures to forecast activities and their
results.
b. Provides information about the company as a whole.
c. Reports information that has occurred in the past that is verifiable and reliable.
d. Provides information that is generally available only on a quarterly or annual basis.

6. Financial accounting
a. Focuses on the future and includes activities such as preparing next year’s operating budget.
b. Must comply with Philippine Financial Reporting Standards
c. Reports include detailed information on the various operating segments of the business such as
product lines or departments.
d. Is prepared for the use of department heads and other employees.

7. Which of the following descriptors refers to management accounting information?

a. It is verifiable and reliable.
b. It is driven by rules.
c. It is prepared by shareholders.
d. It provides reasonable and timely estimates.

8. Which ethical standard is most clearly violated if a Management Accountant knows of a problem that could
mislead users but does nothing about it?
a. Competence b. Integrity c. Creditability d. Confidentiality

9. If financial manager/management accountant discovers unethical conduct in his/her organization and fails
to act, he/she will be in violation of which ethical standard(s)?
a. “Actively or passively subvert the attainment of the organization’s legitimate and ethical objectives.”
b. “Communicate unfavorable as well as favorable information.”
c. “Condone the commission of such acts by others within their organizations.”
d. All of the above.

10. Integrity is an ethical requirement for all management accountants. One aspect of integrity requires
a. Performance of professional duties in accordance with applicable laws.
b. Avoidance of conflict of interest.
c. Refraining from improper use of inside information.
d. Maintenance of an appropriate level of professional competence.
MANAGEMENT ACCOUNTING 1 BSA4

Part II: Decision-Making Please write at the provided lines.

As a manager, resolve the following cases and cite your decisions in five (5) to ten (10) sentences only.

 Case 1

Mr. Campos, an employee of BSA Corporation is caught stealing from the company’s petty cash fund. What are
your possible courses of action and how do your proceed?

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 Case 2

You have just discovered that Anna Maria, a manager of your Socorro branch has made up fictitious revenues and
booked some of them in this period. Due to this, it has also deferred some to the next period. Anna Maria has
been able to achieve a very large net income number for their branch this period and more than likely the next
period. This also made the company issue them a certain incentive. What are the terms used for Anna Maria’s
methods? Are they illegal?

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 Case 3

Sunnyville Inc., operates a chain of department stores located in the eastwest. The first store began operations in
1965 and the company has steadily grown to its present size of 44 stores. Two years ago, the board of directors
approved a large-scale remodeling of its stores to attract more upscale clientele.

Before finalizing these plans, two stores were remodeled as a test. Clarisse Mendoza, assistant controller, was
asked to oversee the financial reporting for these test stores, and she and other management personnel were
offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports,
Mendoza discovered a sizable inventory of outdated goods that should have been discounted for sale or returned
to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore
reporting this inventory as a obsolete, since reporting it would diminish the financial result and their bonuses.

A) According to the IMA Standards of Ethical Conduct, would it be ethical for Mendoza not to report the inventory
as obsolete?

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B) Would it be easy for her to take the ethical action in this situation?

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