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Principles of Accounting, Volume 2: Managerial Accounting

Multiple Choice

Principles of Accounting, Volume 2: Managerial AccountingMultiple Choice
Table of contents
  1. Preface
  2. 1 Accounting as a Tool for Managers
    1. Why It Matters
    2. 1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
    3. 1.2 Distinguish between Financial and Managerial Accounting
    4. 1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
    5. 1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
    6. 1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Thought Provokers
  3. 2 Building Blocks of Managerial Accounting
    1. Why It Matters
    2. 2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
    3. 2.2 Identify and Apply Basic Cost Behavior Patterns
    4. 2.3 Estimate a Variable and Fixed Cost Equation and Predict Future Costs
    5. Key Terms
    6. Summary
    7. Multiple Choice
    8. Questions
    9. Exercise Set A
    10. Exercise Set B
    11. Problem Set A
    12. Problem Set B
    13. Thought Provokers
  4. 3 Cost-Volume-Profit Analysis
    1. Why It Matters
    2. 3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
    3. 3.2 Calculate a Break-Even Point in Units and Dollars
    4. 3.3 Perform Break-Even Sensitivity Analysis for a Single Product Under Changing Business Situations
    5. 3.4 Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
    6. 3.5 Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  5. 4 Job Order Costing
    1. Why It Matters
    2. 4.1 Distinguish between Job Order Costing and Process Costing
    3. 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
    4. 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
    5. 4.4 Compute a Predetermined Overhead Rate and Apply Overhead to Production
    6. 4.5 Compute the Cost of a Job Using Job Order Costing
    7. 4.6 Determine and Dispose of Underapplied or Overapplied Overhead
    8. 4.7 Prepare Journal Entries for a Job Order Cost System
    9. 4.8 Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
    10. Key Terms
    11. Summary
    12. Multiple Choice
    13. Questions
    14. Exercise Set A
    15. Exercise Set B
    16. Problem Set A
    17. Problem Set B
    18. Thought Provokers
  6. 5 Process Costing
    1. Why It Matters
    2. 5.1 Compare and Contrast Job Order Costing and Process Costing
    3. 5.2 Explain and Identify Conversion Costs
    4. 5.3 Explain and Compute Equivalent Units and Total Cost of Production in an Initial Processing Stage
    5. 5.4 Explain and Compute Equivalent Units and Total Cost of Production in a Subsequent Processing Stage
    6. 5.5 Prepare Journal Entries for a Process Costing System
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  7. 6 Activity-Based, Variable, and Absorption Costing
    1. Why It Matters
    2. 6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
    3. 6.2 Describe and Identify Cost Drivers
    4. 6.3 Calculate Activity-Based Product Costs
    5. 6.4 Compare and Contrast Traditional and Activity-Based Costing Systems
    6. 6.5 Compare and Contrast Variable and Absorption Costing
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  8. 7 Budgeting
    1. Why It Matters
    2. 7.1 Describe How and Why Managers Use Budgets
    3. 7.2 Prepare Operating Budgets
    4. 7.3 Prepare Financial Budgets
    5. 7.4 Prepare Flexible Budgets
    6. 7.5 Explain How Budgets Are Used to Evaluate Goals
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  9. 8 Standard Costs and Variances
    1. Why It Matters
    2. 8.1 Explain How and Why a Standard Cost Is Developed
    3. 8.2 Compute and Evaluate Materials Variances
    4. 8.3 Compute and Evaluate Labor Variances
    5. 8.4 Compute and Evaluate Overhead Variances
    6. 8.5 Describe How Companies Use Variance Analysis
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  10. 9 Responsibility Accounting and Decentralization
    1. Why It Matters
    2. 9.1 Differentiate between Centralized and Decentralized Management
    3. 9.2 Describe How Decision-Making Differs between Centralized and Decentralized Environments
    4. 9.3 Describe the Types of Responsibility Centers
    5. 9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  11. 10 Short-Term Decision Making
    1. Why It Matters
    2. 10.1 Identify Relevant Information for Decision-Making
    3. 10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
    4. 10.3 Evaluate and Determine Whether to Make or Buy a Component
    5. 10.4 Evaluate and Determine Whether to Keep or Discontinue a Segment or Product
    6. 10.5 Evaluate and Determine Whether to Sell or Process Further
    7. 10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
    8. Key Terms
    9. Summary
    10. Multiple Choice
    11. Questions
    12. Exercise Set A
    13. Exercise Set B
    14. Problem Set A
    15. Problem Set B
    16. Thought Provokers
  12. 11 Capital Budgeting Decisions
    1. Why It Matters
    2. 11.1 Describe Capital Investment Decisions and How They Are Applied
    3. 11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
    4. 11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
    5. 11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions
    6. 11.5 Compare and Contrast Non-Time Value-Based Methods and Time Value-Based Methods in Capital Investment Decisions
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  13. 12 Balanced Scorecard and Other Performance Measures
    1. Why It Matters
    2. 12.1 Explain the Importance of Performance Measurement
    3. 12.2 Identify the Characteristics of an Effective Performance Measure
    4. 12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
    5. 12.4 Describe the Balanced Scorecard and Explain How It Is Used
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  14. 13 Sustainability Reporting
    1. Why It Matters
    2. 13.1 Describe Sustainability and the Way It Creates Business Value
    3. 13.2 Identify User Needs for Information
    4. 13.3 Discuss Examples of Major Sustainability Initiatives
    5. 13.4 Future Issues in Sustainability
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Thought Provokers
  15. A | Financial Statement Analysis
  16. B | Time Value of Money
  17. C | Suggested Resources
  18. Answer Key
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
    12. Chapter 12
    13. Chapter 13
  19. Index
1.

LO 1.1The managers of an organization are responsible for performing several broad functions. They are ________.

  1. planning, controlling, and selling
  2. directing, controlling, and evaluating
  3. planning, evaluating, and manufacturing
  4. planning, controlling, and evaluating
2.

LO 1.1Management accountants help the management of an organization in their planning function through ________.

  1. monitoring anti-theft systems
  2. strategic planning
  3. evaluating costs
  4. analyzing profits
3.

LO 1.1Which of the following is a primary aspect of the evaluating function within an organization?

  1. comparing actual results against expected results for products, departments, divisions, or the company as a whole
  2. reviewing only the quantitative or financial results of the company
  3. setting goals
  4. putting controls in place for the upcoming year
4.

LO 1.1During the control function, the measurements taken of the performance must be accurate enough to see ________.

  1. only positive results
  2. deviations and variances
  3. the primary focus
  4. only the negative results
5.

LO 1.1Which of the following is false regarding strategic planning?

  1. It is the sole responsibility of supervisors.
  2. It will span many years.
  3. It should include both short-term and long-term goals.
  4. Strategic objectives will be diverse and vary from company to company.
6.

LO 1.2Managerial accounting produces information:

  1. to meet the needs of external users
  2. that is often focused on the future
  3. to meet the needs of investors
  4. that follows the rules of GAAP
7.

LO 1.2Management accounting:

  1. emphasizes special-purpose information
  2. relates to the company as a whole
  3. is limited to strictly cost figures
  4. is controlled by GAAP
8.

LO 1.2Internal users of accounting information would not include ________.

  1. managers
  2. employees
  3. creditors
  4. officers
9.

LO 1.2External users of accounting information would include ________.

  1. employees
  2. managers
  3. investors
  4. supervisors
10.

LO 1.2Which of the following statements is incorrect?

  1. The practice of management accounting is fairly flexible.
  2. The information gathered from management accounting is not required by law.
  3. Management accounting focuses mainly on the internal user.
  4. Reports produced using management accounting must follow GAAP.
11.

LO 1.3The stockholders of a company are:

  1. the owners
  2. policy setters
  3. responsible and liable for the financial well-being of the company
  4. operating within the company as independent shareholders
12.

LO 1.3The controller of a corporation:

  1. reports to the CFO and is in charge of the finance side of the business
  2. reports to the CFO and is in charge of the accounting side of the business
  3. reports to the CEO and implements all cash policies
  4. reports to the board of directors
13.

LO 1.3The Chartered Financial Analyst (CFA) certification:

  1. only requires a high school diploma
  2. is administered by the AICPA
  3. consists of three separate exams that must be taken in succession
  4. is the most popular certification among accountants in the United States
14.

LO 1.3The Certified Management Accountant (CMA) certification:

  1. signifies someone specializing in tax accounting
  2. requires an associate’s degree and four years of work experience
  3. includes a two-part exam, education requirements, and a work experience requirement
  4. is offered to managers who take special courses in accounting
15.

LO 1.3Which of the following terms means the ability to work in cross-functional teams in order to complete a task?

  1. supervisory skills
  2. conceptualization
  3. collaboration
  4. resource planning
16.

LO 1.3Which of the following terms means knowing how a business is run and how it is influenced by external forces, and knowing and understanding the overall industry?

  1. commercial awareness
  2. conceptualization
  3. collaboration
  4. imagination
17.

LO 1.4What is the law that protects investors from fraudulent financial accounting activity?

  1. FASB
  2. SACS
  3. SOX
  4. CPAS
18.

LO 1.4What year was the Sarbanes-Oxley Act enacted?

  1. 2007
  2. 1992
  3. 1997
  4. 2002
19.

LO 1.4When a representative of an organization gives money to another business official in order to gain favor and/or manipulate a business decision, this is known as ________.

  1. whistleblowing
  2. bribery
  3. buyer debits
  4. face value
20.

LO 1.4The law that specifically prohibits payments to foreign officials in order to attain business is known as ________.

  1. FCPA
  2. AICPA
  3. SOX
  4. IFRS
21.

LO 1.4Which of the following is not a step in the outline for examining ethical issues?

  1. Establish the facts of the situation.
  2. Evaluate each course of action.
  3. Make a decision.
  4. Confirm decision with FASB.
22.

LO 1.5Which of the following is not an objective used in the balanced scorecard approach?

  1. Customer
  2. Financial
  3. Vendor
  4. Learning and growth
23.

LO 1.5Which of the following is not true regarding continuous improvement?

  1. It applies to both service and manufacturing companies.
  2. It is used to reduce performance costs.
  3. It rejects the idea of “good enough.”
  4. It can be applied only to improve processes and products but not services and practices.
24.

LO 1.5A company’s attempts to utilize sustainable business practices with regard to its employees, the environment, and society are known as ________.

  1. a balanced scorecard
  2. corporate social responsibility
  3. total quality management
  4. value chain
25.

LO 1.5A process that is often linked to Six Sigma and is designed toward continuous improvement by eliminating waste is ________.

  1. kamikaze
  2. value chain
  3. total quality management
  4. kaizen
26.

LO 1.5An inventory system that organizations use to increase efficiency and decrease waste is ________.

  1. corporate social responsibility
  2. just-in-time manufacturing
  3. total quality management
  4. Lean Six Sigma
27.

LO 1.5A quality control program that depends on multiple team members for removing waste and diminishing defects within products is ________.

  1. kaizen
  2. total quality management
  3. Lean Six Sigma
  4. a balanced scorecard
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