,
,
,
,1-5
TRUE-FALSE STATEMENTS
1. Management accounting is the generation of relevant information and analysis provided to external
users.
Ans: False – Management accounting is the generation of relevant information and analysis to support managers’
decision- making activities, LO: 1, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA
PC: None,IMA: Reporting
2. The American Institute of Certified Public Accountants is the leading organization for management
accountants in the United States.
Ans: False – The Institute of Management Accountants (IMA) is the leading organization for management accountants in the
United States, LO: 1, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
3. The primary users of managerial accounting information are managers and other internal decision-
makers.
Ans: True, LO: 2, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
4. Managerial accounting provides reports and information for a range of decision makers outside an
organization.
Ans: False – Managerial accounting provides reports and information for a range of decision makers within an organization,
LO:2, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
5. Managerial accounting differs from financial accounting in that managerial accounting has no
comparable set of rules governing what information must be provided to decision-makers or how
that information is presented.
Ans: True, LO: 2, Bloom: C, Unit: 1-1, Difficulty: Easy Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
6. Managerial accounting uses historical information, often with the purpose of comparing actual
results to budgeted results.
Ans: True, LO: 2, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
7. Decision makers might have a long list of information they would find helpful, and they are generally
not willing to sacrifice accuracy for having the information quickly.
Ans: False – Decision makers might have a long list of information they would find helpful. But sometimes they might need to
sacrifice precision for timeliness, LO: 2, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA
PC: None, IMA: Business Operations
8. Managerial accounting is designed to assist managers with four general activities: planning,
controlling, evaluating, and decision making.
Ans: True, LO: 3, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
9. Long-term planning is often referred to as reporting.
Ans: True, LO: 3, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
,1-6
10. One purpose of planning activities is to monitor day-to-day operations to ensure that processes are
operating as expected.
Ans: False – One purpose of controlling activities is to monitor day-to-day operations to ensure that processes are operating as
expected, LO: 3, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
11. All other things held equal, the more frequent the controlling activity, the faster an out-of-control
process can be corrected.
Ans: True, LO: 3, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
12. The task of assessing how well employees have performed relative to expectations is a controlling
activity.
Ans: False – The task of accessing how well employees have performed relative to expectations is considered an evaluation
activity, LO: 3, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic AICPA FN: Reporting, AICPA PC: None, IMA: Business
Operations
13. Preparers of managerial accounting information are generally not active participants in the decision-
making process.
Ans: False – Preparers of managerial accounting information are no longer solely number crunchers, but active participants in
the decision-making process, LO: 3, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC:
None, IMA: Business Operations
14. Managerial accounting information is always prepared by the controller or cost accountant.
Ans: False – Managerial accounting information can be provided by a controller, a plant accountant, a cost accountant, a
financial analyst, a budget or cost analyst, a general accountant, or even a chief financial officer, LO: 3, Bloom: C, Unit 1-1,
Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Business Operations
15. Managerial accounting information provides feedback about how well the organization is
implementing its strategy and achieving its goals.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
16. For the product differentiation strategy, companies will want information on quality, such as defect
rates, percentage of on-time deliveries, and customer satisfaction.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
17. If a company follows a strategy of product differentiation, it will seek ways to set its products apart
from competitors’ in terms of quality, design or service.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
18. A company that focuses on product differentiation does not need to monitor product costs because
if the quality is sufficient, customers will pay the price.
Ans: False – A company that focuses on product differentiation must monitor product costs because if too much cost is incurred
for quality, the sales price will be too high to be competitive, LO: 4, Bloom: C, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic,
AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
,1-7
19. The four strategies based on a firm’s approach to market share growth are build, hold, harvest and
divest.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
20. Under a build strategy, a company aims to increase its market share and competitive position
relative to others in the industry, maximizing its short-term earnings and positive cash flow.
Ans: False – Under a build strategy, a company aims to increase its market share and competitive position relative to others in
the industry, even at the expense of short-term earnings and cash flows, LO: 4, Bloom: C, Unit 1-2, Difficulty: Easy, Min: 1,
AACSB: Analytic AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
21. A harvest strategy focuses on short-term profits and cash, even at the expense of market share.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
22. A divest strategy is appropriate when a company desires to enter a particular market.
Ans: False – A divest strategy is appropriate when a company desires to exit a particular market, LO: 4, Bloom: K, Unit 1-2,
Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
23. A tool that managerial accountants have developed to assist in monitoring organizational
performance is the balanced scorecard.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
24. The balanced scorecard uses only nonfinancial information such as customer satisfaction or
employee turnover to measure performance.
Ans: False – While the balanced scorecard uses some financial performance measures, it places equal emphasis on nonfinancial
performance measures, LO: 4, Bloom: C, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC:
None, IMA: Strategy
25. A supply chain is a network of facilities that procure raw materials, transform them into
intermediate goods and then into final products, and deliver the final products to customers
through a distribution system.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
26. The supply chain’s goal is to reduce or eliminate defects.
Ans: False – The supply chain’s goal is to get the right product to the right location in the right quantities, at the right time,
and at the right cost, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None,
IMA:Business Operations
27. Just-in-time inventory management is an inventory strategy that focuses on reducing waste and
inefficiency by ordering inventory items so that they arrive just when they are needed.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
28. Just-in-time implementations are simple and take little or no effort to implement and will work for
most companies.
Ans: False – Just-in-time implementations take time and effort to implement and will not work for everyone, LO: 4, Bloom: C,
Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
,1-8
29. The goal of an ERP system is to integrate all data from the company’s many business processes into
a single information system.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Technology, AICPA FN: Reporting, AICPA PC: None, IMA:
Technology
30. Ethical behavior is knowing right from wrong and conducting yourself accordingly, so that your
decisions are consistent with your own value system and the values of those affected by your
decisions.
Ans: True, LO: 5, Bloom: K, Unit 1-3, Difficulty: Easy, Min: 1, AACSB: Ethics, AICPA FN: Reporting, AICPA PC: Ethics, IMA: Ethics
31. Ethical business behavior is compliance with the law.
Ans: False – Ethical business behavior is not the same as mere compliance with the law, LO: 5, Bloom: C, Unit 1-3, Difficulty:
Easy, Min: 1, AACSB: Ethics, AICPA FN: Reporting, AICPA PC: Ethics, IMA: Ethics
32. A firm’s code of conduct is based on a set of core values that are meant to guide employees’
behavior.
Ans: True, LO: 5, Bloom: K, Unit 1-3, Difficulty: Easy, Min: 1, AACSB: Ethics, AICPA FN: Reporting, AICPA PC: Ethics, IMA: Ethics
and Values
Answers to True-False Statements
Item Ans. Item Ans. Item Ans. Item Ans.
1. F 9. T 17. T 25. T
2. F 10. F 18. F 26. F
3. T 11. T 19. T 27. T
4. F 12. F 20. F 28. F
5. T 13. F 21. T 29. T
6. T 14. F 22. F 30. T
7. F 15. T 23. T 31. F
8. T 16. T 24. F 32. T
, 1-9
MULTIPLE-CHOICE QUESTIONS
33. The leading professional organization for management accountants is the
a. American Association of Management Accountants.
b. Institute of Management Accountants.
c. National Association of Accountants.
d. Society of Management Accountants.
Ans: B, LO: 1, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Business
Operations
34. In the context of managerial accounting, relevant information
a. is information that will make a difference in the decision.
b. is information that has been provided by the controller.
c. must be provided in quantitative terms.
d. must be reviewed by the chief financial officer before being provided to managers.
Ans: A, LO: 1, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
35. Good managerial accounting information helps
a. creditors decide on good credit risks.
b. managers to do their jobs.
c. stockholders make informed investment decisions.
d. creditors assess liquidity.
Ans: B, LO: 1, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
36. Managerial accounting is used by managers to
a. partner with management decision-making, devise planning and performance management
systems, and provide expertise to assist management in an organization’s strategy.
b. assure accountability for an organization’s resources, and provides information used in planning,
evaluation and controlling functions.
c. provide information used in planning, evaluation and controlling functions, and provide
expertise to assist management in an organization’s strategy.
d. assure appropriate use of an organization’s resources, accountability for an organization’s
resources, and provides information used in planning, evaluation and controlling functions
within an organization.
Ans: A, LO: 1, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
37. Which of the following is not a way managers use managerial accounting?
a. Provide information used in planning, evaluation and controlling functions
b. Partner with management decision-making
c. Assure accountability for an organization’s resources
d. Communicate information to stockholders
Ans: D, LO: 1, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
, 1-10
38. Managerial accounting is used by managers to
a. plan, evaluate, and control financial statements and to assure appropriate use of and
accountability for organizational resources.
b. generate and analyze relevant information to support managers’ strategic decision making.
c. focus on past results to aid in decision-making for managers.
d. decide the long-term direction of a company and comply with GAAP.
Ans: B, LO: 2, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Business
Operations
39. The purpose of financial statements contained in annual reports is to
a. aid in monitoring day-to-day decisions of operations to ensure the company’s strategy is
followed.
b. aid external financial users in analyzing product costs for the company’s segments and perform
short-term planning.
c. provide information to external users for decision making.
d. communicate a company’s strategic direction and controlling activities to external users.
Ans: C, LO: 2, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
40. An example of an external user is a
a. company president.
b. plant manager.
c. payroll supervisor.
d. creditor.
Ans: D, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
41. An example of an external user is a
a. managerial accountant.
b. Vice-President of Marketing.
c. potential Investor.
d. Payroll Manager.
Ans: C, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
42. Which of the following is not a correct statement?
a. Managerial accounting benefits internal users.
b. Managerial accounting reports must comply with generally accepted accounting principles.
c. Managerial accounting includes reports and information prepared for a range of decision
makers within the organization.
d. Managerial accounting reports come in a variety of formats.
Ans: B, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
43. Which of the following is a characteristic of managerial accounting reports?
a. Managerial accounting reports are designed to provide the internal decision-makers with the
appropriate information.
b. Managerial accounting reports require compliance with a particular format.
c. Managerial accounting reports are distributed to the general public.
d. Managerial accounting reports are used by investors.
Ans: A, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
,
,
,1-5
TRUE-FALSE STATEMENTS
1. Management accounting is the generation of relevant information and analysis provided to external
users.
Ans: False – Management accounting is the generation of relevant information and analysis to support managers’
decision- making activities, LO: 1, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA
PC: None,IMA: Reporting
2. The American Institute of Certified Public Accountants is the leading organization for management
accountants in the United States.
Ans: False – The Institute of Management Accountants (IMA) is the leading organization for management accountants in the
United States, LO: 1, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
3. The primary users of managerial accounting information are managers and other internal decision-
makers.
Ans: True, LO: 2, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
4. Managerial accounting provides reports and information for a range of decision makers outside an
organization.
Ans: False – Managerial accounting provides reports and information for a range of decision makers within an organization,
LO:2, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
5. Managerial accounting differs from financial accounting in that managerial accounting has no
comparable set of rules governing what information must be provided to decision-makers or how
that information is presented.
Ans: True, LO: 2, Bloom: C, Unit: 1-1, Difficulty: Easy Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
6. Managerial accounting uses historical information, often with the purpose of comparing actual
results to budgeted results.
Ans: True, LO: 2, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
7. Decision makers might have a long list of information they would find helpful, and they are generally
not willing to sacrifice accuracy for having the information quickly.
Ans: False – Decision makers might have a long list of information they would find helpful. But sometimes they might need to
sacrifice precision for timeliness, LO: 2, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA
PC: None, IMA: Business Operations
8. Managerial accounting is designed to assist managers with four general activities: planning,
controlling, evaluating, and decision making.
Ans: True, LO: 3, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
9. Long-term planning is often referred to as reporting.
Ans: True, LO: 3, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
,1-6
10. One purpose of planning activities is to monitor day-to-day operations to ensure that processes are
operating as expected.
Ans: False – One purpose of controlling activities is to monitor day-to-day operations to ensure that processes are operating as
expected, LO: 3, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
11. All other things held equal, the more frequent the controlling activity, the faster an out-of-control
process can be corrected.
Ans: True, LO: 3, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
12. The task of assessing how well employees have performed relative to expectations is a controlling
activity.
Ans: False – The task of accessing how well employees have performed relative to expectations is considered an evaluation
activity, LO: 3, Bloom: K, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic AICPA FN: Reporting, AICPA PC: None, IMA: Business
Operations
13. Preparers of managerial accounting information are generally not active participants in the decision-
making process.
Ans: False – Preparers of managerial accounting information are no longer solely number crunchers, but active participants in
the decision-making process, LO: 3, Bloom: C, Unit: 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC:
None, IMA: Business Operations
14. Managerial accounting information is always prepared by the controller or cost accountant.
Ans: False – Managerial accounting information can be provided by a controller, a plant accountant, a cost accountant, a
financial analyst, a budget or cost analyst, a general accountant, or even a chief financial officer, LO: 3, Bloom: C, Unit 1-1,
Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Business Operations
15. Managerial accounting information provides feedback about how well the organization is
implementing its strategy and achieving its goals.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
16. For the product differentiation strategy, companies will want information on quality, such as defect
rates, percentage of on-time deliveries, and customer satisfaction.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
17. If a company follows a strategy of product differentiation, it will seek ways to set its products apart
from competitors’ in terms of quality, design or service.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
18. A company that focuses on product differentiation does not need to monitor product costs because
if the quality is sufficient, customers will pay the price.
Ans: False – A company that focuses on product differentiation must monitor product costs because if too much cost is incurred
for quality, the sales price will be too high to be competitive, LO: 4, Bloom: C, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic,
AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
,1-7
19. The four strategies based on a firm’s approach to market share growth are build, hold, harvest and
divest.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
20. Under a build strategy, a company aims to increase its market share and competitive position
relative to others in the industry, maximizing its short-term earnings and positive cash flow.
Ans: False – Under a build strategy, a company aims to increase its market share and competitive position relative to others in
the industry, even at the expense of short-term earnings and cash flows, LO: 4, Bloom: C, Unit 1-2, Difficulty: Easy, Min: 1,
AACSB: Analytic AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
21. A harvest strategy focuses on short-term profits and cash, even at the expense of market share.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
22. A divest strategy is appropriate when a company desires to enter a particular market.
Ans: False – A divest strategy is appropriate when a company desires to exit a particular market, LO: 4, Bloom: K, Unit 1-2,
Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
23. A tool that managerial accountants have developed to assist in monitoring organizational
performance is the balanced scorecard.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
24. The balanced scorecard uses only nonfinancial information such as customer satisfaction or
employee turnover to measure performance.
Ans: False – While the balanced scorecard uses some financial performance measures, it places equal emphasis on nonfinancial
performance measures, LO: 4, Bloom: C, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC:
None, IMA: Strategy
25. A supply chain is a network of facilities that procure raw materials, transform them into
intermediate goods and then into final products, and deliver the final products to customers
through a distribution system.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Business Operations
26. The supply chain’s goal is to reduce or eliminate defects.
Ans: False – The supply chain’s goal is to get the right product to the right location in the right quantities, at the right time,
and at the right cost, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None,
IMA:Business Operations
27. Just-in-time inventory management is an inventory strategy that focuses on reducing waste and
inefficiency by ordering inventory items so that they arrive just when they are needed.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Strategy
28. Just-in-time implementations are simple and take little or no effort to implement and will work for
most companies.
Ans: False – Just-in-time implementations take time and effort to implement and will not work for everyone, LO: 4, Bloom: C,
Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Strategy
,1-8
29. The goal of an ERP system is to integrate all data from the company’s many business processes into
a single information system.
Ans: True, LO: 4, Bloom: K, Unit 1-2, Difficulty: Easy, Min: 1, AACSB: Technology, AICPA FN: Reporting, AICPA PC: None, IMA:
Technology
30. Ethical behavior is knowing right from wrong and conducting yourself accordingly, so that your
decisions are consistent with your own value system and the values of those affected by your
decisions.
Ans: True, LO: 5, Bloom: K, Unit 1-3, Difficulty: Easy, Min: 1, AACSB: Ethics, AICPA FN: Reporting, AICPA PC: Ethics, IMA: Ethics
31. Ethical business behavior is compliance with the law.
Ans: False – Ethical business behavior is not the same as mere compliance with the law, LO: 5, Bloom: C, Unit 1-3, Difficulty:
Easy, Min: 1, AACSB: Ethics, AICPA FN: Reporting, AICPA PC: Ethics, IMA: Ethics
32. A firm’s code of conduct is based on a set of core values that are meant to guide employees’
behavior.
Ans: True, LO: 5, Bloom: K, Unit 1-3, Difficulty: Easy, Min: 1, AACSB: Ethics, AICPA FN: Reporting, AICPA PC: Ethics, IMA: Ethics
and Values
Answers to True-False Statements
Item Ans. Item Ans. Item Ans. Item Ans.
1. F 9. T 17. T 25. T
2. F 10. F 18. F 26. F
3. T 11. T 19. T 27. T
4. F 12. F 20. F 28. F
5. T 13. F 21. T 29. T
6. T 14. F 22. F 30. T
7. F 15. T 23. T 31. F
8. T 16. T 24. F 32. T
, 1-9
MULTIPLE-CHOICE QUESTIONS
33. The leading professional organization for management accountants is the
a. American Association of Management Accountants.
b. Institute of Management Accountants.
c. National Association of Accountants.
d. Society of Management Accountants.
Ans: B, LO: 1, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Business
Operations
34. In the context of managerial accounting, relevant information
a. is information that will make a difference in the decision.
b. is information that has been provided by the controller.
c. must be provided in quantitative terms.
d. must be reviewed by the chief financial officer before being provided to managers.
Ans: A, LO: 1, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
35. Good managerial accounting information helps
a. creditors decide on good credit risks.
b. managers to do their jobs.
c. stockholders make informed investment decisions.
d. creditors assess liquidity.
Ans: B, LO: 1, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
36. Managerial accounting is used by managers to
a. partner with management decision-making, devise planning and performance management
systems, and provide expertise to assist management in an organization’s strategy.
b. assure accountability for an organization’s resources, and provides information used in planning,
evaluation and controlling functions.
c. provide information used in planning, evaluation and controlling functions, and provide
expertise to assist management in an organization’s strategy.
d. assure appropriate use of an organization’s resources, accountability for an organization’s
resources, and provides information used in planning, evaluation and controlling functions
within an organization.
Ans: A, LO: 1, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
37. Which of the following is not a way managers use managerial accounting?
a. Provide information used in planning, evaluation and controlling functions
b. Partner with management decision-making
c. Assure accountability for an organization’s resources
d. Communicate information to stockholders
Ans: D, LO: 1, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
, 1-10
38. Managerial accounting is used by managers to
a. plan, evaluate, and control financial statements and to assure appropriate use of and
accountability for organizational resources.
b. generate and analyze relevant information to support managers’ strategic decision making.
c. focus on past results to aid in decision-making for managers.
d. decide the long-term direction of a company and comply with GAAP.
Ans: B, LO: 2, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Business
Operations
39. The purpose of financial statements contained in annual reports is to
a. aid in monitoring day-to-day decisions of operations to ensure the company’s strategy is
followed.
b. aid external financial users in analyzing product costs for the company’s segments and perform
short-term planning.
c. provide information to external users for decision making.
d. communicate a company’s strategic direction and controlling activities to external users.
Ans: C, LO: 2, Bloom: K, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
40. An example of an external user is a
a. company president.
b. plant manager.
c. payroll supervisor.
d. creditor.
Ans: D, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting
41. An example of an external user is a
a. managerial accountant.
b. Vice-President of Marketing.
c. potential Investor.
d. Payroll Manager.
Ans: C, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
42. Which of the following is not a correct statement?
a. Managerial accounting benefits internal users.
b. Managerial accounting reports must comply with generally accepted accounting principles.
c. Managerial accounting includes reports and information prepared for a range of decision
makers within the organization.
d. Managerial accounting reports come in a variety of formats.
Ans: B, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
43. Which of the following is a characteristic of managerial accounting reports?
a. Managerial accounting reports are designed to provide the internal decision-makers with the
appropriate information.
b. Managerial accounting reports require compliance with a particular format.
c. Managerial accounting reports are distributed to the general public.
d. Managerial accounting reports are used by investors.
Ans: A, LO: 2, Bloom: C, Unit 1-1, Difficulty: Easy, Min: 2, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
