BASIC CONCEPTS IN MANAGEMENT ACCOUNTING

1. The major functions of management is (are):

A. strategic management and long-range planning.

B. planning and decision making.

C. identifying threats and opportunities for the firm.

D. all of the above. Bobadilla

2. The process of identifying, measuring, analyzing, interpreting, and communicating information in

pursuit of an organization's goals is called

A. managerial accounting C. management

B. financial accounting D. promotional activities Bobadilla

3. 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. Bobadilla

4. 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. Bobadilla

5. Which of the following is included in the day-to-day work of the management team?

A. decision making C. controlling

 B. planning D. all of the above Bobadilla

6. Paying rent, purchasing supplies, and purchasing inventory are which of the day-to-day work
activities of the management team?

A. decision making C. directing operational activities

B. planning D. only A and B Bobadilla

7. Which of the following statements is true when comparing managerial accounting to financial
accounting?

A. Managerial accounting places more emphasis on precision than financial accounting.

B. Both are highly dependent on timely information.

C. Both rely on the same accounting information system.

D. Managerial accounting is concerned with external decision makers. Bobadilla

8. Which of the following is true of managerial accounting rather than financial accounting?

A. The outputs of this accounting system are the primary financial statements.

B. The methods of this accounting system are established by an overseeing board.

C. The accounting methods are standardized to allow comparisons among companies.

D. The accounting system would be unique to each company. Bobadilla

9. 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. Bobadilla

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

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 C. Only II and III

B. Only II, III and IV D. Only II Bobadilla