TEST BANK
MANAGERIAL ACCOUNTING: TOOLS FOR BUSINESS DECISION-
MAKING
6TH CANADIAN EDITION
CHAPTER NO. 01: MANAGERIAL ACCOUNTING
SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE, BLOOM’S
TAXONOMY, LEVEL OF DIFFICULTY, AACSB CODES, AND CPA CODES
Item LO BT LODAACSB CPA Item LO BT LODAACSB CPA Item LO BT LODAACSB CPA
True-False Statements
1. 1 C E AN MA 3. 2 K E AN MA 5. 4 K E AN MA
2. 1 C E AN MA 4. 2 K E AN MA
Multiple Choice Questions
6. 1 K E AN MA 36. 2 K E AN MA 66. 4 C E AN MA
7. 1 K E AN MA 37. 2 C E AN MA 67. 4 K E AN MA
8. 1 K E AN MA 38. 2 K E AN MA 68. 4 K E AN MA
9. 1 C E AN MA 39. 2 K E AN MA 69. 4 C E AN MA
10. 1 K E AN MA 40. 3 C E E MA 70. 4 C E AN MA
11. 1 C E AN MA 41. 3 C E E MA 71. 4 K E AN MA
12. 1 K E AN MA 42. 3 K E AN MA 72. 4 K E AN MA
13. 1 K E AN MA 43. 3 K E AN MA 73. 4 C E AN MA
14. 1 C E AN MA 44. 3 K E AN MA 74. 4 K E AN MA
15. 1 K E AN MA 45. 3 K E AN MA 75. 4 C E AN MA
16. 1 C E AN MA 46. 3 C E AN MA 76. 4 C E AN MA
17. 1 C E AN MA 47. 3 K E AN MA 77. 4 C E AN MA
18. 1 K E AN MA 48. 3 K E AN MA 78. 4 AN M AN MA
19. 1 K E AN MA 49. 3 C E AN MA 79. 4 K E AN MA
20. 1 K E AN MA 50. 3 C E AN MA 80. 4 K E AN MA
21. 1 C E AN MA 51. 3 K E AN MA 81. 4 C E AN MA
22. 1 K E AN MA 52. 3 K E AN MA 82. 4 K E AN MA
23. 1 K E AN MA 53. 4 C E AN MA 83. 4 K E AN MA
24. 1 K E AN MA 54. 4 K E AN MA 84. 4 K E AN MA
25. 1 K E AN MA 55. 4 K E AN MA 85. 4 K E AN MA
26. 2 C E AN MA 56. 4 K E AN MA 86. 4 K E AN MA
27. 2 K E AN MA 57. 4 K E AN MA
28. 2 K E AN MA 58. 4 K E AN MA
29. 2 K E AN MA 59. 4 C E AN MA
30. 2 K E AN MA 60. 4 C E AN MA
31. 2 K E AN MA 61. 4 C E AN MA
32. 2 K E AN MA 62. 4 K E AN MA
33. 2 C E AN MA 63. 4 K E AN MA
34. 2 K E AN MA 64. 4 K E AN MA
35. 2 C E AN MA 65. 4 C E AN MA
, Bloom’s: AN = Analysis C = Comprehension K = Knowledge
LOD: E = Easy M = Medium H = Hard
AACSB: AN = Analytic E = Ethics
CPA: MA = Management Accounting
SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE, BLOOM’S
TAXONOMY, LEVEL OF DIFFICULTY, AACSB CODES, AND CPA CODES
(CONT’D)
Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA
Brief Exercises
87. 1 C E AN MA 90. 3 C E E MA 93. 4 C E AN MA
88. 2 C E AN MA 91. 3 C E E MA 94. 4 K E AN MA
89. 2 C E AN MA 92. 4 K E AN MA 95. 4 C E AN MA
Exercises
96. 1 C E AN MA 100. 2 K E AN MA 104. 1,4 AN M AN MA
97. 1,2 AN M AN MA 101. 3 C E AN MA 105. 4 AN M AN MA
98. 2 C E AN MA 102. 3 C E AN MA
99. 2 AN M AN MA 103. 3 C E AN MA
Completion Statements
106. 1 K E AN MA 108. 1 K E AN MA 110. 2 K E AN MA
107. 1 K E AN MA 109. 2 K E AN MA 111. 2 K E AN MA
Matching
112. 4 K E AN MA
Short-Answer Essay
113. 1 C E AN MA 115. 3 AN M AN MA 117. 4 C E AN MA
114. 2 C E AN MA 116. 3 C E AN MA
Bloom’s: AN = Analysis C = Comprehension K = Knowledge
LOD: E = Easy M = Medium H = Hard
AACSB: AN = Analytic E = Ethics
CPA: MA = Management Accounting
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 10. MC 16. MC 21. MC 96. Ex 113. SAE
2. TF 11. MC 17. MC 22. MC 97. Ex
6. MC 12. MC 18. MC 23. MC 104. Ex
7. MC 13. MC 19. MC 24. MC 106. C
8. MC 14. MC 20. MC 25. MC 107. C
9. MC 15. MC 21. MC 87. BE 108 C
Learning Objective 2
3. TF 28. MC 32. MC 36. MC 88. BE 110. C
4. TF 29. MC 33. MC 37. MC 89. BE 111. C
26. MC 30. MC 34. MC 38. MC 97. Ex 114. SAE
27. MC 31. MC 35. MC 39. MC 109. C
, Learning Objective 3
40. MC 44. MC 48. MC 52. MC 102. Ex
41. MC 45. MC 49. MC 90. BE 103. Ex
42. MC 46. MC 50. MC 91. BE 115. SAE
43. MC 47. MC 51. MC 101. Ex 116. SAE
Learning Objective 4
5. TF 59. MC 66. MC 73. MC 80. MC 92. BE 117. SAE
53. MC 60. MC 67. MC 74. MC 81. MC 93. BE
54. MC 61. MC 68. MC 75. MC 82. MC 94. BE
55. MC 62. MC 69. MC 76. MC 83. MC 95. BE
56. MC 63. MC 70. MC 77. MC 84. MC 104. Ex
57. MC 64. MC 71. MC 78. MC 85. MC 105. Ex
58. MC 65. MC 72. MC 79. MC 86. MC 112. Ma
Note: TF = True-False C = Completion BE = Brief Exercise
MC = Multiple Choice Ex = Exercise SAE = Short-Answer Essay
Ma = Matching
CHAPTER LEARNING OBJECTIVES
1. Explain the distinguishing features of managerial accounting.
Managerial accounting is needed in all types of businesses—service, merchandising, and
manufacturing. It also applies to all forms of business organization—proprietorships,
partnerships, and corporations. Managerial accounting is needed in not-for-profit entities, as
well as in profit-oriented enterprises. Managerial accounting provides tools that help
management make decisions and evaluate the effectiveness of those decisions.
The distinguishing features of managerial accounting are
∙ the primary users of reports—internal users, who are officers, department heads,
managers, and supervisors in the company;
∙ the type and frequency of reports—internal reports that are issued as frequently as needed;
∙ the purpose of reports—to provide special-purpose information for a particular user for a
specific decision;
∙ the content of reports—pertains to subunits of the business and may be very detailed and
may extend beyond the double-entry accounting system; the reporting standard is relevant
to the decision being made; and
∙ the verification of reports—no independent audits.
2. Identify the three broad functions of management and the role of management
accountants in an organizational structure.
The three functions are planning, directing, and controlling. Planning requires management to
look ahead and to establish objectives. Directing involves coordinating a company’s diverse
activities and human resources to produce a smoothly running operation. Controlling is the
process of keeping the activities on track.
Management accountants serve as staff members in an organization and play an important role
in providing the required information for decision making.
, 3. Explain the importance of business ethics.
All employees in an organization are expected to act ethically in their business activities. In
Canada, the professional accounting organization promotes high standards of ethics in the
accounting profession. These standards of ethics can be used as guidelines in dealing with the
public and the organizations’ members. In the United States, the Institute of Management
Accountants’ Statement of Ethical Professional Practice provides the codes of conduct.
Moreover, companies are now evaluating their performance with regard to their corporate social
responsibility.
4. Identify changes and trends in managerial accounting.
Managerial accounting has experienced many changes in recent years. Among these are a shift
toward meeting the needs of service companies and improving practices to better meet the
needs of managers. Improved practices include a focus on managing the value chain through
techniques such as just-in-time inventory and technological applications such as enterprise
resource planning (ERP). In addition, techniques have been developed to improve decision-
making, such as the theory of constraints and activity-based costing (ABC). Finally, many
companies now use the balanced scorecard and data analytics in order to have a more
comprehensive view of the company’s operations. Data analytics is important in business to
understand problems facing an organization, and to use data to both predict and influence
customer behaviour.
In Canada, the accounting profession has recently been reorganized by the founding of
CPA Canada (Chartered Professional Accountants of Canada) in 2013, into which the three
legacy accounting bodies—Chartered Accountants (CA), Certified Management Accountants
(CMA), and Certified General Accountants (CGA)—were merged.
TRUE-FALSE STATEMENTS
1. Management accounting and financial accounting, while in the same field, are mutually
exclusive disciplines.
2. Given the decision to employ straight-line amortization or a usage-based amortization
method, the management accountant’s need to report the most relevant economic information
to external users will determine which method is used.
3. Decision making is an integral part of the planning, directing, and motivating functions, but not
of the controlling function.
4. Employees with staff positions serve other employees, while those with line positions work
directly in line with the company’s revenue generating goals.
5. Activity-based costing is a method of allocating overhead costs to products.
ANSWERS TO TRUE-FALSE STATEMENTS
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. F 2. F 3. F 4. T 5. T
MANAGERIAL ACCOUNTING: TOOLS FOR BUSINESS DECISION-
MAKING
6TH CANADIAN EDITION
CHAPTER NO. 01: MANAGERIAL ACCOUNTING
SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE, BLOOM’S
TAXONOMY, LEVEL OF DIFFICULTY, AACSB CODES, AND CPA CODES
Item LO BT LODAACSB CPA Item LO BT LODAACSB CPA Item LO BT LODAACSB CPA
True-False Statements
1. 1 C E AN MA 3. 2 K E AN MA 5. 4 K E AN MA
2. 1 C E AN MA 4. 2 K E AN MA
Multiple Choice Questions
6. 1 K E AN MA 36. 2 K E AN MA 66. 4 C E AN MA
7. 1 K E AN MA 37. 2 C E AN MA 67. 4 K E AN MA
8. 1 K E AN MA 38. 2 K E AN MA 68. 4 K E AN MA
9. 1 C E AN MA 39. 2 K E AN MA 69. 4 C E AN MA
10. 1 K E AN MA 40. 3 C E E MA 70. 4 C E AN MA
11. 1 C E AN MA 41. 3 C E E MA 71. 4 K E AN MA
12. 1 K E AN MA 42. 3 K E AN MA 72. 4 K E AN MA
13. 1 K E AN MA 43. 3 K E AN MA 73. 4 C E AN MA
14. 1 C E AN MA 44. 3 K E AN MA 74. 4 K E AN MA
15. 1 K E AN MA 45. 3 K E AN MA 75. 4 C E AN MA
16. 1 C E AN MA 46. 3 C E AN MA 76. 4 C E AN MA
17. 1 C E AN MA 47. 3 K E AN MA 77. 4 C E AN MA
18. 1 K E AN MA 48. 3 K E AN MA 78. 4 AN M AN MA
19. 1 K E AN MA 49. 3 C E AN MA 79. 4 K E AN MA
20. 1 K E AN MA 50. 3 C E AN MA 80. 4 K E AN MA
21. 1 C E AN MA 51. 3 K E AN MA 81. 4 C E AN MA
22. 1 K E AN MA 52. 3 K E AN MA 82. 4 K E AN MA
23. 1 K E AN MA 53. 4 C E AN MA 83. 4 K E AN MA
24. 1 K E AN MA 54. 4 K E AN MA 84. 4 K E AN MA
25. 1 K E AN MA 55. 4 K E AN MA 85. 4 K E AN MA
26. 2 C E AN MA 56. 4 K E AN MA 86. 4 K E AN MA
27. 2 K E AN MA 57. 4 K E AN MA
28. 2 K E AN MA 58. 4 K E AN MA
29. 2 K E AN MA 59. 4 C E AN MA
30. 2 K E AN MA 60. 4 C E AN MA
31. 2 K E AN MA 61. 4 C E AN MA
32. 2 K E AN MA 62. 4 K E AN MA
33. 2 C E AN MA 63. 4 K E AN MA
34. 2 K E AN MA 64. 4 K E AN MA
35. 2 C E AN MA 65. 4 C E AN MA
, Bloom’s: AN = Analysis C = Comprehension K = Knowledge
LOD: E = Easy M = Medium H = Hard
AACSB: AN = Analytic E = Ethics
CPA: MA = Management Accounting
SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE, BLOOM’S
TAXONOMY, LEVEL OF DIFFICULTY, AACSB CODES, AND CPA CODES
(CONT’D)
Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA Item LO BT LOD AACSB CPA
Brief Exercises
87. 1 C E AN MA 90. 3 C E E MA 93. 4 C E AN MA
88. 2 C E AN MA 91. 3 C E E MA 94. 4 K E AN MA
89. 2 C E AN MA 92. 4 K E AN MA 95. 4 C E AN MA
Exercises
96. 1 C E AN MA 100. 2 K E AN MA 104. 1,4 AN M AN MA
97. 1,2 AN M AN MA 101. 3 C E AN MA 105. 4 AN M AN MA
98. 2 C E AN MA 102. 3 C E AN MA
99. 2 AN M AN MA 103. 3 C E AN MA
Completion Statements
106. 1 K E AN MA 108. 1 K E AN MA 110. 2 K E AN MA
107. 1 K E AN MA 109. 2 K E AN MA 111. 2 K E AN MA
Matching
112. 4 K E AN MA
Short-Answer Essay
113. 1 C E AN MA 115. 3 AN M AN MA 117. 4 C E AN MA
114. 2 C E AN MA 116. 3 C E AN MA
Bloom’s: AN = Analysis C = Comprehension K = Knowledge
LOD: E = Easy M = Medium H = Hard
AACSB: AN = Analytic E = Ethics
CPA: MA = Management Accounting
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 10. MC 16. MC 21. MC 96. Ex 113. SAE
2. TF 11. MC 17. MC 22. MC 97. Ex
6. MC 12. MC 18. MC 23. MC 104. Ex
7. MC 13. MC 19. MC 24. MC 106. C
8. MC 14. MC 20. MC 25. MC 107. C
9. MC 15. MC 21. MC 87. BE 108 C
Learning Objective 2
3. TF 28. MC 32. MC 36. MC 88. BE 110. C
4. TF 29. MC 33. MC 37. MC 89. BE 111. C
26. MC 30. MC 34. MC 38. MC 97. Ex 114. SAE
27. MC 31. MC 35. MC 39. MC 109. C
, Learning Objective 3
40. MC 44. MC 48. MC 52. MC 102. Ex
41. MC 45. MC 49. MC 90. BE 103. Ex
42. MC 46. MC 50. MC 91. BE 115. SAE
43. MC 47. MC 51. MC 101. Ex 116. SAE
Learning Objective 4
5. TF 59. MC 66. MC 73. MC 80. MC 92. BE 117. SAE
53. MC 60. MC 67. MC 74. MC 81. MC 93. BE
54. MC 61. MC 68. MC 75. MC 82. MC 94. BE
55. MC 62. MC 69. MC 76. MC 83. MC 95. BE
56. MC 63. MC 70. MC 77. MC 84. MC 104. Ex
57. MC 64. MC 71. MC 78. MC 85. MC 105. Ex
58. MC 65. MC 72. MC 79. MC 86. MC 112. Ma
Note: TF = True-False C = Completion BE = Brief Exercise
MC = Multiple Choice Ex = Exercise SAE = Short-Answer Essay
Ma = Matching
CHAPTER LEARNING OBJECTIVES
1. Explain the distinguishing features of managerial accounting.
Managerial accounting is needed in all types of businesses—service, merchandising, and
manufacturing. It also applies to all forms of business organization—proprietorships,
partnerships, and corporations. Managerial accounting is needed in not-for-profit entities, as
well as in profit-oriented enterprises. Managerial accounting provides tools that help
management make decisions and evaluate the effectiveness of those decisions.
The distinguishing features of managerial accounting are
∙ the primary users of reports—internal users, who are officers, department heads,
managers, and supervisors in the company;
∙ the type and frequency of reports—internal reports that are issued as frequently as needed;
∙ the purpose of reports—to provide special-purpose information for a particular user for a
specific decision;
∙ the content of reports—pertains to subunits of the business and may be very detailed and
may extend beyond the double-entry accounting system; the reporting standard is relevant
to the decision being made; and
∙ the verification of reports—no independent audits.
2. Identify the three broad functions of management and the role of management
accountants in an organizational structure.
The three functions are planning, directing, and controlling. Planning requires management to
look ahead and to establish objectives. Directing involves coordinating a company’s diverse
activities and human resources to produce a smoothly running operation. Controlling is the
process of keeping the activities on track.
Management accountants serve as staff members in an organization and play an important role
in providing the required information for decision making.
, 3. Explain the importance of business ethics.
All employees in an organization are expected to act ethically in their business activities. In
Canada, the professional accounting organization promotes high standards of ethics in the
accounting profession. These standards of ethics can be used as guidelines in dealing with the
public and the organizations’ members. In the United States, the Institute of Management
Accountants’ Statement of Ethical Professional Practice provides the codes of conduct.
Moreover, companies are now evaluating their performance with regard to their corporate social
responsibility.
4. Identify changes and trends in managerial accounting.
Managerial accounting has experienced many changes in recent years. Among these are a shift
toward meeting the needs of service companies and improving practices to better meet the
needs of managers. Improved practices include a focus on managing the value chain through
techniques such as just-in-time inventory and technological applications such as enterprise
resource planning (ERP). In addition, techniques have been developed to improve decision-
making, such as the theory of constraints and activity-based costing (ABC). Finally, many
companies now use the balanced scorecard and data analytics in order to have a more
comprehensive view of the company’s operations. Data analytics is important in business to
understand problems facing an organization, and to use data to both predict and influence
customer behaviour.
In Canada, the accounting profession has recently been reorganized by the founding of
CPA Canada (Chartered Professional Accountants of Canada) in 2013, into which the three
legacy accounting bodies—Chartered Accountants (CA), Certified Management Accountants
(CMA), and Certified General Accountants (CGA)—were merged.
TRUE-FALSE STATEMENTS
1. Management accounting and financial accounting, while in the same field, are mutually
exclusive disciplines.
2. Given the decision to employ straight-line amortization or a usage-based amortization
method, the management accountant’s need to report the most relevant economic information
to external users will determine which method is used.
3. Decision making is an integral part of the planning, directing, and motivating functions, but not
of the controlling function.
4. Employees with staff positions serve other employees, while those with line positions work
directly in line with the company’s revenue generating goals.
5. Activity-based costing is a method of allocating overhead costs to products.
ANSWERS TO TRUE-FALSE STATEMENTS
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. F 2. F 3. F 4. T 5. T
