Chapter 1 Introduction to managerial accounting

Chapter 1 – Introduction to managerial accounting

MULTIPLE CHOICE

1.The main focus of managerial accounting is:

a.decision making.b.the preparation of financial statements.c.the preparation of budgets.d.documenting cash flows.ANS: A PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic | 2.Which of the following is not true about knowledge in the business environment?a.It is the same as data and information.b.It is the value added from shared information.c.It includes both quantitative and qualitative information.d.It must be managed in order for a company to remain competitive.ANS: A PTS: 1 DIF: Easy OBJ: 1.1 NAT: AACSB: Analytic | 3.Which of the following statements is not true regarding enterprise resource planning (ERP)?a.It integrates traditional accounting information systems with other information systems.b.It can be customised to provide specific and relevant information to different types of users.c.It has evolved in the past few years to address the shortcomings of traditional accounting information systems.d.It captures quantitative but not qualitative information.ANS: D PTS: 1 DIF: Easy OBJ: 1.1 NAT: AACSB: Use of technology |

4.ERP systems capture:

a.only qualitative data.b.only quantitative data.c.both qualitative and quantitative data.d.the same information as traditional accounting information systems.ANS: C PTS: 1 DIF: Easy OBJ: 1.1 NAT: AACSB: Use of technology |

5.An example of qualitative data is:

a.product cost.b.customer satisfaction.c.net income.d.operating costs.ANS: B PTS: 1 DIF: Easy OBJ: 1.1 NAT: AACSB: Analytic | ACCT Managerial Asia-Pacific Edition 1e Prabhu Sivabalan Roby Sawyers Steve Jackson Greg Jenkins (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

6.An example of quantitative data is:

a.company reputation.b.number of customer complaints.c.customer satisfaction.d.product quality.ANS: B PTS: 1 DIF: Easy OBJ: 1.1 NAT: AACSB: Analytic | 7.Which of the following statements is true?a.External and internal users of accounting information have exactly the same information needs.b.Financial accounting is less flexible than managerial accounting.c.Managerial accounting provides the best information to external users.d.Managerial accounting emphasises the organisation as a whole more than financial accounting.ANS: B PTS: 1 DIF: Easy OBJ: 1.2 NAT: AACSB: Analytic | 8.Which of the following is not an example of an external user of accounting information?a.Potential and existing stockholders b.Government taxing agencies c.Potential and existing creditors d.Management ANS: D PTS: 1 DIF: Easy OBJ: 1.2 NAT: AACSB: Analytic | 9.Which of the following is an example of an internal user of accounting information?a.Supplier b.Stockholder c.Manager d.Federal tax agency ANS: C PTS: 1 DIF: Easy OBJ: 1.2 NAT: AACSB: Analytic | 10.Which of the following is a characteristic of managerial accounting?a.It is used primarily by external users.b.It often lacks flexibility.c.It is often future-oriented.d.The information it provides is extremely precise.ANS: C PTS: 1 DIF: Easy OBJ: 1.2 NAT: AACSB: Analytic | 11.Which of the following is true regarding managerial accounting?a.It often emphasises segments rather than the organisation as a whole.b.It often must follow established rules called generally accepted accounting principles.c.Its primary focus is on providing information to external users.d.It is less flexible than financial accounting.ANS: A PTS: 1 DIF: Easy OBJ: 1.2 NAT: AACSB: Analytic | 2 / 4

• Which of the following statements about decision-making is true?
• Risk should not be taken into account.
• Objectives should be quantitative and not qualitative.
• Managers often do not have a clear understanding of the real source of the problem.
• Sunk costs should usually be taken into account.

ANS: C PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

• In the decision-making process, an example of a quantitative measure would include:
• employee morale.
• product satisfaction.
• customer service.
• number of kilograms needed.

ANS: D PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

14. Decision-makers should consider:

• only qualitative factors.
• only quantitative factors.
• both quantitative and qualitative factors.
• sunk costs as well as quantitative and qualitative factors.

ANS: C PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

15. Relevant costs are costs that:

• do not differ between alternatives.
• differ between alternatives.
• have already been incurred.
• may not be eliminated by choosing one alternative over another.

ANS: B PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

16. Costs that differ between alternatives are called:

• sunk costs.
• irrelevant costs.
• relevant costs.
• unavoidable costs.

ANS: C PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

• Mary Ann is trying to decide whether to fly to Florida or New York. The cost of her ticket will be the

same either way. The cost of the ticket is an example of a(n):

• sunk cost.
• opportunity cost.
• relevant cost.
• irrelevant cost.

ANS: D PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Reflective thinking |

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18. Sunk costs are:

• usually relevant.
• costs that will occur in the future.
• not relevant.
• costs that can be avoided.

ANS: C PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

19. Relevant costs:

• are sunk costs.
• are costs that differ among alternatives.
• are unavoidable.
• can not be opportunity costs.

ANS: B PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

• When making a decision, which of the following should not be considered?
• Relevant costs
• Opportunity costs
• Sunk costs
• Risk

ANS: C PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

• Which of the following is not true with regard to opportunity costs?
• They are the benefits forgone by selecting one alternative over another.
• They are relevant.
• They are sometimes difficult to quantify.
• They have already occurred in the past.

ANS: D PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

• You are now considering your housing options for next semester. If the cost of a dorm room and the

cost of an apartment are exactly the same, housing costs are:

• sunk costs.
• an opportunity cost.
• not relevant.
• relevant.

ANS: C PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

• You are now considering your housing options for next semester. If the cost of a dorm room and the

cost of an apartment are the same, but the apartment is larger, then:

• both cost and size are relevant.
• neither cost nor size is relevant.
• cost is relevant but size is not.
• size is relevant but cost is not.

ANS: D PTS: 1 DIF: Easy OBJ: 1.3 NAT: AACSB: Analytic |

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