No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

INTRODUCTION TO MANAGEMENT ACCOUNTING

QUESTIONS

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

INSTRUCTION: Select the best answer from the choices provided. Source: AICPA/ CMA/RPCPA/Review Books and various test banks.

1. It is a field of accounting that provides financial information and nonfinancial information to an organization's managers. and other internal decision makers
a. Cost accounting
b. Bookkeeping
c. Managerial accounting
d. Financial accounting

2. Following are the principles governing the design of management accounting system, except
a. The system should help to establish the decision-making authority over the organization's assets.
b. The information generated by the system should support planning and decision-making.
c. The reports should provide a means for performance monitoring and evaluation.
d. None of the above

3. Management accounting is used by a company's management for a multitude of purposes which are as follows, except
a. evaluation
b. planning
c. marketing
d. reporting.

4. Management accounting includes the following processes, except

a. measurement.
b. Communication
c. Interpretation.
d. delegation.

5. Managerial accounting differs from financial accounting in that financial accounting is

a. involved more heavily in decision analysis.
b. future oriented.
c. concerned primarily with external financial reporting.
d. concerned with qualitative information.

6. Statement 1 Managerial control and engineering control are synonymous

Statement 2 Control from the viewpoint of management accounting is defined as the process of setting maximum limits on financial expenditures.

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

Statement 1 Statement 2
a. True True
b. False False
c. True False
d. False True

7. In financial accounting, certain rules and regulations must be followed on how financial statements must be presented to readers. In managerial accounting, no such restrictions generally
apply because it is
a. an entirely different field that need not observe the broad guidelines in financial accounting.
b. designed to provide management with non-financial information for decision-making.
c. designed to provide accounting and other financial data to assist management in making business decisions.
d. discipline that does not require preparation of financial statements.

8. In comparing management and financial accounting, which of the following more accurately describes management accounting information?
a. comparable, verifiable, monetary
b. budgeted, informative, adaptable
c. required, estimated, internal
d. historical, precise, useful

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

9. Which of the following statements about management or financial accounting is false?

a. Management accounting should be flexible.
b. Financial accounting must follow GAAP.
c. Management accounting is not subject to regulatory reporting standards.
d. Both management and financial accounting are subject to mandatory record-keeping requirements.

10. The primary purpose of management accounting is to provide relevant information to

a. Both internal and external users
b. Internal users
c. External users
d. Those charged with governance

11. Managers that are making economic decisions are more concerned with receiving information that is
a. Relevant, flexible and available immediately
b. Relevant, completely accurate and precise
c. Always financial in nature
d. Completely accurate and precise

12. Management accounting

a. Is concerned with financial information only
b. Focuses on the entirety of a business rather than the individual segments
c. Complies with external reportorial requirements
d. Is allowed to make use of the measurement and allocation bases in GAAP

13. Management Accountants

a. are found primarily at lower levels of the organizational hierarchy.
b. often work on cross-functional teams.
c. are found throughout an organization.
d. are found throughout an organization and work on cross- functional teams.

14. Management accounting and cost accounting

a. are required for recordkeeping as are financial accounting and tax accounting.
b. provide cost information about products and services, as well as information for internal decision making.
c. require an entirely separate group of accounts than financial accounting.
d. focus solely on the determination of costs to produce a product or provide a service.

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

15. Decision-making is required in which aspect of management functions?

a. Planning
b. Planning and organizing
c. Organizing and control
d. Planning, organizing and control

16. The primary objective of management accounting is

a. to provide stockholders and potential investors with useful information for decision making.
b. to provide banks and other creditors with information useful in making credit decisions.
c. to provide management with information useful for planning and control of operations.
d. to provide supervising government agencies with information about the company’s management affairs.

17. Management accounting information

a. uses historical cost as the basis for reports to managers who are making decisions about future courses of action.
b. should be developed and provided only if its benefits exceed its costs.
c. does not reflect the financial criteria of verifiability or consistency.
d. should serve the basic needs of investors and creditors.

18. Which of the following is included in the day-to-day work of the management team?
a. decision making
b. controlling
c. planning
d. all of the above

19. Paying rent, purchasing supplies, and purchasing inventory are which of the day-to-day work activities of the management team?
a. decision making
b. directing operational activities
c. planning
d. only A and B

20. Management accounting’s role in the control processes is to provide

a. managers with information that can be used to determine customer satisfaction levels.
b. investors and creditors information on the financial stability of the company.
c. managers with relevant information to compare with expectations.
d. input to managers on the best ways to achieve continuous improvement in the production process.

21. Which of the following statements are true regarding financial and managerial accounting?

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

I. Both are mandatory.

II. Both rely on the same underlying financial data.
III. Both emphasize the segments of an organization, rather than just looking at the organization as a whole.
IV. Both are geared to the future, rather than to the past.
a. I, II, III, and IV
b. Only II and III
c. Only II, III and IV
d. Only II

22. Managerial accounting activity adds value to an organization by pursuing five major objectives, which include
a. providing information for decision making and planning.
b. measuring the performance of activities within an organization.
c. assisting managers in directing and controlling operational activities.
d. all of them

23. The following are the differences of management accounting and financial accounting, except
a. Degree of estimates being used
b. Quality of financial data used in reporting
c. Governed by the PFRS
d. Deals with economic events

24. The following are the characteristic of Management Advisory Services, except
a. Broad in scope
b. Deals with both quantitative and qualitative information
c. Involves varied assignments
d. Engagements are usually recurring

25. Which of the following statements about management or financial accounting is false?
a. Financial accounting must follow GAAP.
b. Management accounting is not subject to regulatory reporting standards.
c. Both management and financial accounting are subject to mandatory recordkeeping requirements.
d. Management accounting should be flexible.

26. Managerial accounting information:

a. pertains to the entity as a whole and is highly aggregated.
b. pertains to subunits of the entity and may be very detailed.
c. is prepared only once a year.

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

d. is constrained by the requirements of generally accepted accounting principles.

27. Managerial accounting is primarily concerned with:

a. segments of a company rather than the company as a whole.
b. the data needs of stockholders and creditors.
c. meeting the requirements of generally accepted accounting principles.
d. the company as a whole rather than a segment of the organization.

28. The major reporting standard for presenting managerial accounting information is
a. Relevance
b. generally accepted accounting principles
c. the cost principle
d. the current tax law

29. With respect to the time dimension, how does managerial decision compare with external performance evaluation?

a. b. c. d.
Managerial Decision Making Past Past Future Future
External Performance Past Future Past Future

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

30. Managerial accounting differs from financial accounting in that it is

a. more concerned with segments of a company.
b. less constrained by rules and regulations.
c. more concerned with the future.
d. all of the above.

31. The distinction between traditional accounting and cost management is

a. the focus of the former on accounting matters and the latter in support to management in making the right decisions for staying on a competitive position
b. the emphasis of former on record keeping and the latter on reporting
c. the focus of the former on cost cutting and the latter on product differentiation
d. the focus of the former on efficiency and the latter on quality.

32. Which of the following activities is not usually performed by a management accountant?
a. Assisting managers to interpret data in managerial accounting reports.
b. Designing systems to provide information for internal and external reports.
c. Gathering data from sources other than the accounting system.
d. Deciding the best level of inventory to be maintained.

33. How does managerial decision making compare with external performance evaluation?

Managerial Decision Making External Performance Evaluation

A. a. Detailed Detailed
B. b. Detailed More aggregated
C. c. More aggregated Detailed
D. d. More aggregated More aggregated

34. Management accountants would not

a. assist in budget planning.
b. prepare reports primarily for external users.
c. determine cost behavior.
d. be concerned with the impact of cost and volume on profits.

35. In the contemporary business environment, cost management focus is on

a. financial reporting and cost analysis.
b. common emphasis on standardization and standard costs.
c. development and implementation of the business strategy.
d. all of the above.

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

36. Management accounting is similar to financial accounting in that

a. both are governed by generally accepted accounting principles.
b. both deal with economic events.
c. both concentrate on historical data.
d. both classify reported information in the same manner.

37. Managerial accounting provides data for all of the following major objectives except:
a. planning and control of costs
b. supporting management planning
c. compliance with SEC reporting requirements
d. determining the costs of products

38. Management accountants generally exercise which type of authority?

a. Company
b. Functional
c. Line
d. Staff

39. The treasurer function is usually not concerned with

a. investor relations
b. financial reports
c. short-term financing
d. credit extension and collection of bad debts.

40. Which of the following statements is true?

a. Financial accounting is most concerned with meeting the needs of internal users.
b. Managerial accounting is highly regulated by rules and regulations.
c. Financial accounting is most concerned with addressing the needs of the firm as a whole.
d. Financial accounting is most concerned with addressing the needs of individual departments of the firm.

41. A position in the organization chart that is directly related to achieving the basic objectives of an organization is called:
a. a staff position.
b. a line position.
c. chief finance officer.
d. controller.

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

42. All of the following are areas of MAS practice, except

a. Conducting special research
b. Introducing new concepts and methodologies
c. Marketing and public relations activities
d. Re-engineering processes, systems and policies

43. Deciding which alternative course of action is best suited to attain the set objectives is under what management function?
a. Planning
b. Organizing
c. Controlling
d. Monitoring

44. Utilization of available resources is carried out during

a. Planning
b. Organizing
c. Controlling
d. Monitoring

45. All of the following are areas of MAS practice, except

a. Conducting special research
b. Introducing new concepts and methodologies
c. Marketing and public relations activities
d. Re-engineering processes, systems and policies

46. Which statement is false? Managerial accounting information:

a. involves planning for the future
b. should be requested and used by management even if it is very costly to gather and analyse
c. helps managers make financing decisions
d. need not comply with generally accepted accounting principles

47. Internal reports must be communicated

a. Daily
b. Annually
c. Monthly
d. As needed

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

48. Which of the following is a staff position?

a. vice-president of production
b. vice-president of marketing
c. vice-president of finance
d. plant foreman

49. Which management position is responsible for raising capital?

a. Internal auditor
b. Treasurer
c. Controller
d. CFO

50. Each of the following would be considered a staff function EXCEPT the:
a. vice-president of finance
b. vice-president of corporate planning
c. vice-president of research and development
d. vice-president of marketing

51. Which statement about the extent of detail in a management accounting report is true?
a. It may depend on the frequency of the report.
b. It depends on the type of manager receiving the report.
c. It depends on the level of the manager receiving the report.
d. All of the given choices.

52. Which of the following characteristics is inherent to management accounting?

a. Reporting of historical information
b. Compliance to generally accepted accounting principles
c. Contribution approach income statement
d. External users of financial report

53. Which of the following statements is correct?

a. A certified public accountant can readily render management advisory services to the public.
b. A CPA with MBA and DBM degrees is automatically qualified to render management advisory services.

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

c. Competence as a standard in the rendition of management advisory services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate
degree, an MBA and other post graduate studies.
d. Adequate training and experience in both the analytical approach and process in a particular undertaking are requisites for the CPA to be involved in a management advisory service
engagement.

54. The following characterize management advisory services except

a. It involves decision for the future
b. It broader in scope and varied in nature
c. It utilizes more junior staff than senior members of the firm
d. It relates to specific problems where expert help is required

55. Which of the following statements is incorrect?

a. CPAs provide management advisory services to go around the ethical constraints as mandated by the Accountancy Law.
b. Businesses hire management consultants to help define specific problems and develop solutions.
c. CPAs who are performing management advisory services may be considered to be in the practice of management consulting.
d. Included in the practice of consulting is the provision of confidential service in which the identity of the client is concealed.

56. The primary purpose of management advisory services is

a. To conduct special studies, preparation of recommendations, development of plans and programs, and provision of advice and assistance in their implementation.
b. To provide services or to fulfill some social needs.
c. To improve the client’s use of its capabilities and resources to achieve the objectives of the organization.
d. To earn the best rate of return on resources entrusted to its care with safety of investment being taken into account and consistent with firm’s social and legal responsibilities.

57. The “controller” position in an organization is primarily classified as

a. Line position
b. Staff position
c. Both line and staff position
d. Neither a staff nor a line position

58. Controller is usually concerned with the following, except

a. Reporting and interpreting
b. Tax administration
c. Protection of assets
d. Insurance

59. One certification available to management accountants is the Certificate in Management Accounting (CMA). In the Philippines, the Philippine Association of Management Accountants (PAMA)
conducts the CMA Program, which has the following objectives, except:

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 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

a. to establish Management Accounting as a recognized profession in the field of business.

b. to encourage stricter and high quality educational standards in Management Accounting.
c. to provide objective means for measuring the Management Accountant's knowledge and competence.
d. to supervise or coordinate the Management Accountant's preparation of reports to government agencies.

60. Integrity is an ethical equipment for all management accountants. One aspect of integrity requires
a. maintenance of an appropriate level of professional competence.
b. performance of professional duties in accordance with applicable laws.
c. refraining from improper use of confidential information.
d. avoidance of actual or apparent conflicts of interest and advise all appropriate parties of any potential conflict.

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