Introduction to Managerial Accounting

PRIA - Laguna State Polytechnic University

Prof. John Michael Angelo Z. Lopo, CPA, RCA, MBA

1) 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

2) Managers use management accounting information to ________ strategy.

A) choose
B) communicate
C) implement
D) All of these answers are correct.

3. Financial accounting:
A) focuses on the future and includes activities such as preparing next year's operating
budget
B) must comply with GAAP (generally accepted accounting principles)
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

4. The person most likely to use ONLY financial accounting information is a:

A) factory shift supervisor
B) vice president of operations
C) current shareholder
D) department manager

5.Which of the following people is LEAST likely to use management accounting

information?
A) the controller
B) a shareholder evaluating a stock investment
C) the treasurer
D) an assembly department supervisor

6. Financial accounting provides the primary source of information for:

A) decision making in the finishing department
B) improving customer service
C) preparing the income statement for shareholders
D) planning next year's operating budget

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 for shareholders.
D) It provides reasonable and timely estimates.

8. Which of the following statements refers to management accounting information?

A) There are no regulations governing the reports.
B) The reports are generally delayed and historical.
C) The audience tends to be stockholders, creditors, and tax authorities.
D) It primarily measures and records business transactions.

9. Which of the following groups would be LEAST likely to receive detailed

management accounting
reports?
A) stockholders
B) sales representatives
C) production supervisors
D) managers

10) Management accounting information includes:

A) tabulated results of customer satisfaction surveys
B) the cost of producing a product
C) the percentage of units produced that are defective
D) All of these answers are correct.

11) Cost accounting:

A) provides information on the efficiency of factory labor
B) provides information on the cost of servicing commercial customers
C) provides information on the performance of an operating division
D) All of these answers are correct.

12. Which of the following types of information are used in management accounting?
A) financial information
B) nonfinancial information
C) information focused on the long term
D) All of these answers are correct.

13. Modern cost accounting plays a role in:

A) planning new products
B) evaluating operational processes
C) controlling costs
D) All of these answers are correct.

14. 15) Cost accounting provides all of the following EXCEPT:

A) information for management accounting and financial accounting
B) pricing information from marketing studies
C) financial information regarding the cost of acquiring resources
D) nonfinancial information regarding the cost of operational efficiencies

15. Management accounting includes all of the following EXCEPT

A) implementing strategies
B) developing budgets
C) preparing special studies and forecasts
D) preparing the statement of cash flows

16. Financial accounting is concerned primarily with:

A) external reporting to investors, creditors, and government authorities
B) cost planning and cost controls
C) profitability analysis
D) providing information for strategic and tactical decisions

17. Financial accounting provides a historical perspective, whereas management

accounting
emphasizes:
A) the future
B) past transactions
C) a current perspective
D) reports to shareholders

18. Management accounting is considered most likely to be successful when it:

A) helps creditors evaluate the company's performance
B) helps investors improve their decisions
C) is timely
D) is relevant and reported annually

19. Control measures should:

A) be set and not changed until the next budget cycle
B) be flexible to allow for employees who are slackers
C) be kept confidential from employees so that competitors don't have an opportunity to
gain a competitive advantage
D) be linked by feedback to planning

20. Planning includes all of the following EXCEPT

A) identifying the problem and uncertainties.
B) obtaining information.
C) providing feedback to help with future decision making.
D) making predictions about the future.

21.A detailed financial plan for the future is known as a:

A) budget.
B) performance report.
C) organization chart.
D) segment.

22. A performance report is:

A) a detailed report comparing budgeted data to actual data for a specific time period.
B) a formal statement of plans for the upcoming period.
C) required to be filed monthly by the Securities and Exchange Commission.
D) not used in decentralized organizations.

23. Samantha Galloway is a managerial accountant in the accounting department of

Mustang Industries, Inc. Samantha has just discovered evidence that some of the
corporation's marketing managers have been wrongfully inflating their expense reports
in order to obtain higher reimbursements from the firm. According to the Institute of
Management Accountants' Standards of Ethical Conduct, what should Samantha do
upon discovering this evidence?
A) notify the controller.
B) notify the marketing managers involved.
C) notify the president of the corporation.
D) ignore the evidence because she is not part of the Marketing Department.

24. Some raw materials cannot be easily associated with the finished product and cannot
be traced because their physical association with the finished products is too small
in terms of cost. These are considered:
a. Raw Materials
b. Direct Materials
c. Indirect Materials
d. Supplies

25. Prime cost and conversion cost share what common element of total cost?
A) Direct materials.
B) Direct labor.
C) Variable overhead.
D) Fixed overhead.

26. Manufacturing Cost typically consist of:

A. Direct Materials, Direct Labor, and Manufacturing Overhead
B. Direct Materials, Direct Labor, and Selling Cost
C. Production Cost and Marketing Cost
D. Direct Materials, Direct Labor, and Marketing Expenses

27. It is also called Inventoriable Cost which include each of the manufacturing cost and
they are the costs that are necessary and integral part of producing the finished
product
A. Period Cost
B. Product Cost
C. Selling Cost
D. Marketing Cost
28. It is the cost that are identifiable with specific time period rather than salable product
and are deducted outright from revenues under accrual basis of Accounting:
A. Period Cost
B. Product Cost
C. Materials used in Production
D. Indirect Labor

29. It is part of Accounting which involves measuring, recording and reporting of Product
Costs in the company.
A. Cost Accounting
B. Management Accounting
C. Financial Accounting
D. Basic Accounting

30. Prime cost consists of:

A) direct labor and manufacturing overhead.
B) direct materials and manufacturing overhead.
C) direct materials and direct labor.
D) direct materials, direct labor and manufacturing overhead.

31. Depreciation on a personal computer used in the marketing department of a

manufacturing firm would be classified as:
A) a product cost that is fixed with respect to the company's output.
B) a period cost that is fixed with respect to the company's output.
C) a product cost that is variable with respect to the company's output.
D) a period cost that is fixed with respect to the company's output.

32. Ross Corporation shipped finished goods to a customer on credit, but the sale was not
recorded and the costs of the finished goods were incorrectly included on the period's
balance sheet as part of the finished goods inventory. Which one of the following
statements is correct concerning the effects of this error?
A) Accounts receivable was not affected, inventory was overstated, sales were
understated, and cost of goods sold was understated.
B) Accounts receivable was understated, inventory was not affected, sales were
understated, and cost of goods sold was understated.
C) Accounts receivable was understated, inventory was overstated, sales were
understated, and cost of goods sold was overstated.
D) Accounts receivable was understated, inventory was overstated, sales were
understated, and cost of goods sold was understated.

33. A cost incurred in the past that is not relevant to any current decision is classified as
a(n):
A) period cost.
B) opportunity cost.
C) sunk cost.
D) differential cost.

34. Lathe operators at KF Manufacturing are hourly employees who are paid time and a
half for hours worked in excess of 40 hours per week. Lester is a lathe operator who
worked 45 hours during the current week and had no idle time. The correct accounting
for the amounts paid to Lester would be:
A) charge only the overtime premium earned to the overhead account.
B) charge the hourly wage earned plus the overtime premium earned to the overhead
account.
C) charge only the overtime premium earned to the direct labor cost for the project
Lester was working on when the overtime was incurred.
D) charge the hourly wage earned plus the overtime premium earned to the direct
labor cost for the project Lester was working on when the overtime was incurred.

35. Compared to financial accounting, managerial accounting places more emphasis on:
A) the flexibility of information.
B) the precision of information.
C) the timeliness of information.
D) both A and C above.