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Chapter 01 Test Bank – Static Key
Multiple Choice Questions
1. The firm's information system:
A. is always a single integrated system
B. includes only financial information
C. may include other information such as customer satisfaction surveys, in addition to financial information
D. is less important as a firm grows in size
E. none of the above
The firm's information system includes many kinds of financial and non-financial information.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Leveraging Technology
Blooms: Remember
Difficulty: 1 Easy
Topic: Managerial Accounting: Decision Making and Control
2. Identify all the correct statements:
A. Managers naturally seek to maximize shareholders' wealth
B. Managers act in their own interests, and so there is no way to align their interests with those of the owners
C. To motivate managers in non-profit firms, no employee incentives are needed
D. To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that
increases the firm's profits
E. none of the above
To minimize conflicts between the economic interests of managers and owners, the owners need both systems to monitor the
manager's performance and systems of rewards or incentives.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
Topic: Management Accountant's Role in the Organization
Topic: Managerial Accounting: Decision Making and Control
3-1
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3. An internal accounting system should:
A. provide information to enable costs to be minimized
B. provide financial accounting data for external reporting purposes
C. provide management accounting information for decision-making
D. provide data for tax purposes
E. all of the above
A well designed internal accounting system should provide data for external purposes, such as financial reporting and tax, as
well as internal purposes such as cost control, assessing performance and determining rewards. It is economically inefficient to
maintain multiple accounting systems.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Remember
Difficulty: 1 Easy
Topic: Design and Use of Cost Systems
4. Economic Darwinism:
A. explains why firms persist in inefficient behavior
B. explains why some inefficient accounting practices persist
C. explains why marmots eat bears
D. explains why bears eat marmots
E. none of the above
Inefficient accounting systems may continue to exist either because they have proved better than other systems or because better
systems have not been yet discovered.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Marketing
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
Topic: Marmots and Grizzly Bears
3-2
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
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5. Management accountants mainly are:
A. Internal consultants
B. Scorekeepers
C. Focused on calculating product costs
D. Corporate cops
E. Internal consultants and corporate cops.
While score-keeping and product costing are tasks performed by today's management accountants, these usually are considered
minor. The major roles they perform are internal consultant in terms of providing information to aid other's decision making and
corporate cop in terms of providing control systems to prevent fraud and performance measures for incentive systems.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 2 Medium
Topic: Management Accountant's Role in the Organization
6. Internal control systems:
A. are the responsibility of the external auditor
B. include anti-fraud measures
C. are designed to allow financial misrepresentation
D. require that one person perform all aspects of a task
E. all of the above
The internal control system is designed to safeguard assets, protect the integrity of the accounting information system, and to
prevent fraud. A key practice is the separation of duties to ensure that critical tasks are performed by two or more people.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 2 Medium
Topic: Management Accountant's Role in the Organization
3-3
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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Chapter 01 Test Bank – Static Key
Multiple Choice Questions
1. The firm's information system:
A. is always a single integrated system
B. includes only financial information
C. may include other information such as customer satisfaction surveys, in addition to financial information
D. is less important as a firm grows in size
E. none of the above
The firm's information system includes many kinds of financial and non-financial information.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Leveraging Technology
Blooms: Remember
Difficulty: 1 Easy
Topic: Managerial Accounting: Decision Making and Control
2. Identify all the correct statements:
A. Managers naturally seek to maximize shareholders' wealth
B. Managers act in their own interests, and so there is no way to align their interests with those of the owners
C. To motivate managers in non-profit firms, no employee incentives are needed
D. To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that
increases the firm's profits
E. none of the above
To minimize conflicts between the economic interests of managers and owners, the owners need both systems to monitor the
manager's performance and systems of rewards or incentives.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
Topic: Management Accountant's Role in the Organization
Topic: Managerial Accounting: Decision Making and Control
3-1
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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3. An internal accounting system should:
A. provide information to enable costs to be minimized
B. provide financial accounting data for external reporting purposes
C. provide management accounting information for decision-making
D. provide data for tax purposes
E. all of the above
A well designed internal accounting system should provide data for external purposes, such as financial reporting and tax, as
well as internal purposes such as cost control, assessing performance and determining rewards. It is economically inefficient to
maintain multiple accounting systems.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Remember
Difficulty: 1 Easy
Topic: Design and Use of Cost Systems
4. Economic Darwinism:
A. explains why firms persist in inefficient behavior
B. explains why some inefficient accounting practices persist
C. explains why marmots eat bears
D. explains why bears eat marmots
E. none of the above
Inefficient accounting systems may continue to exist either because they have proved better than other systems or because better
systems have not been yet discovered.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Marketing
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
Topic: Marmots and Grizzly Bears
3-2
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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5. Management accountants mainly are:
A. Internal consultants
B. Scorekeepers
C. Focused on calculating product costs
D. Corporate cops
E. Internal consultants and corporate cops.
While score-keeping and product costing are tasks performed by today's management accountants, these usually are considered
minor. The major roles they perform are internal consultant in terms of providing information to aid other's decision making and
corporate cop in terms of providing control systems to prevent fraud and performance measures for incentive systems.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 2 Medium
Topic: Management Accountant's Role in the Organization
6. Internal control systems:
A. are the responsibility of the external auditor
B. include anti-fraud measures
C. are designed to allow financial misrepresentation
D. require that one person perform all aspects of a task
E. all of the above
The internal control system is designed to safeguard assets, protect the integrity of the accounting information system, and to
prevent fraud. A key practice is the separation of duties to ensure that critical tasks are performed by two or more people.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 2 Medium
Topic: Management Accountant's Role in the Organization
3-3
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Downloaded by: Masterminds001 | Want to earn $1.236
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