Test Bank all - Decision Making Learning Objective True / False...

Cost Management Measuring Monitoring and Motivating Performance 2e Eldenburg Wolcott (Test Bank all Chapters) (Answers at the end of each Chapter) 1 / 4

Chapter 1: The Role of Accounting Information in Management

Decision Making

Learning Objective True / False Multiple Choice Matching Exercises Short Answer Problems

Q1: What types of decisions do

managers make for an organization?

1-4 1-12

S: 59, 67

W: 78, 83, 84

• 6

Q2: What is the role of

accounting information in management decision making?

5-9 13-20, 32

S: 60-62

W: 68-70, 80

3 3, 4

Q3: How do uncertainties and

biases affect the quality of decisions?

10-13 21-30

W: 72, 73

2 1, 5, 7 1

Q4: How can managers make

higher-quality decisions?

14-18 31, 34-44

S: 58

W: 71

• 4

Q5: What information is relevant

for decision making?

19-22 45-51

S: 63-65

W: 74, 75, 77,

79, 81, 82

4 1 2 1, 2

Q6: What is ethical decision

making, and why is it important?

23-25 52-57

S: 66

W: 76

5

S: Questions from the study guide

W: Questions from web quizzes on the student web site

Level of Complexity* True / False Multiple Choice Matching Exercises Short

Answer Problems Foundation: Repeat or paraphrase

information; Reason to single correct solution; Perform computations; etc.

All All All All 6 2

Step 1: Identify the problem, relevant

information, and uncertainties

1, 2, 5, 6,

7 1, 2

Step 2: Explore interpretations and

connections

3, 4 1

Step 3: Prioritize alternatives and

implement conclusions

Step 4: Envision and direct strategic

innovation

*Based on level in Steps for Better Thinking (Exhibit 1.10, textbook p. 16):

Note: Step 1, 2, 3, and 4 questions in this test bank are intentionally open-ended and subjective, giving students the opportunity to demonstrate skills such as judgment, reasoning, identification of uncertainties, identification or analysis of pros and cons, and so on. Therefore, student answers may not exactly match those shown in the solutions.

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1-2 Cost Management

True / False

• A vision statement is one way to clarify an organization’s basic purpose and ideology.
• Most managers follow a standard template and format when writing a vision statement.
• A vision statement helps employees understand how to deal with various stakeholder groups.
• Organizational core competencies are the tactics that managers use to take advantage of the vision.
• Accounting information is the only thing managers need to make financial decisions.
• Accounting information is used to monitor operations by comparing actual results to planned results.
• Accounting information cannot be used to motivate employee behavior.
• Cost accounting information is used for both external reporting and internal decision making.
• Cost accounting information, such as the valuation of ending inventory, is shown on external

financial statements.

• Because accounting information is highly objective and quantitative in nature, it is not subject to

uncertainties or management bias.

• Uncertainty and bias reduce decision quality.
• Uncertainties cause decision makers to ignore weaknesses in a preferred course of action.
• Uncertainties and biases do not affect external financial reports, because they are based on objective

standards.

• Because we can never completely remove biases and uncertainty from decision making, higher

quality decision processes are often imprecise.

• Higher quality decisions result from higher quality information, reports, and decision making

processes.

• Few management decisions can be made with absolute certainty.
• Open-ended problems are not often seen in business.
• When learning cost accounting, it is sufficient to learn the mechanics of applying cost accounting

methods.

• Incremental cash flows are relevant for decision making.
• Incremental cash flows are the same as unavoidable cash flows.
• Relevant information for decisions can focus both on learning from the past and anticipating the

future.

• The cost of your old automobile is relevant in the decision to purchase a new automobile.
• Ethical behavior is an individual obligation, but not an organizational obligation.
• Employees will always make ethical decisions if they act in the best interests of shareholders.
• Ethical behavior is required of every employee within an organization.

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Chapter 1: The Role of Accounting Info rmation in Management Decision Making 1-3

Multiple Choice

• Which of the following influences organizational strategies?
• Organizational vision
• Financial statement results
• Computer software
• Number of employees
• Which of the following statements regarding organizational vision is false?
• Organizational vision means the same as core competencies
• Organizational vision is one tool for expressing an organization’s main purpose
• Organizational vision should be communicated to all employees
• Managers sometimes divide the organizational vision into one or more written statements
• An organizational vision is sometimes broken down into
• Mission statement

II. Core values statement III. Code of conduct

• I only
• I and II only
• I, II, and III
• II and III only
• Organizational core competencies can include
• A mission statement
• Patents, copyrights and special legal protections
• A code of conduct
• An operating plan
• How are organizational strategies related to core competencies?
• Competencies are the tactics managers use to take advantage of strategies
• Competencies and strategies are an integral part of organizational vision
• Strategies help managers exploit competencies
• Strategies and competencies are actually two ways of expressing the same idea
• Organizational strategies
• Are reconsidered on a daily basis
• Should never be reconsidered once they are determined
• Are reconsidered quarterly
• Are reconsidered periodically in response to changes in the organization or environment
• Which of the following is an element of an operating plan?
• Developing an organizational mission
• Preparing financial statements
• Defining core values
• Budgeting employee costs

Use the following information for the next 5 questions:

Maude is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Maude sends her clients reminders for those dates, and shops for special gifts at the client’s request. She plans to do all of the work herself rather than hiring and managing additional employees.

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