CHAPTER 1
THE ACCOUNTANT’S ROLE IN THE
ORGANIZATION
TRUE/FALSE
1. Management accounting information focuses on external reporting.
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: management accounting
Management accounting information focuses on internal reporting.
2. A good cost accounting system is narrowly focused on a continuous reduction of
costs.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: cost accounting
A good cost accounting system is broadly focused to provide information that helps
managers at all levels implement, monitor, and evaluate company strategies.
3. Modern cost accounting plays a significant role in management decision making.
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: cost accounting
4. The balance sheet, income statement, and statement of cash flows are used for
financial accounting, but not for management accounting.
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: financial accounting
The balance sheet, income statement, and statement of cash flows are used for
financial accounting and also for management accounting.
5. Financial accounting is broader in scope than management accounting.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: financial accounting, management accounting
Management accounting is broader in scope than financial accounting.
6. Cost accounting measures and reports short-term, long-term, financial, and
nonfinancial information.
Answer: True Difficulty: 2 Objective: 1
Terms to Learn: cost accounting
7. Cost management provides information that helps increase value for customers.
1-1
, Answer: True Difficulty: 1 Objective: 1
Terms to Learn: cost management
8. An ideal database should consist of data that could be used for a single purpose
only.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: management accounting
An ideal database should be able to be used for multiple purposes.
9. An Enterprise Resource Planning (ERP) System is a single database that collects
data and feeds into applications that support each of the company’s business
activities, such as purchases, production, distribution, and sales.
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: management accounting
10. Cost accounting provides information only for management accounting purposes.
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: cost accounting
Cost accounting provides information for financial accounting as well as for
management accounting purposes.
11. Cost management involves long-term and short-term decisions that attempt to
increase value for customers and lower costs of products or services.
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: cost management
12. All strategies should be evaluated regarding the resources and capabilities of the
company.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: strategy
13. The best-designed strategies are valuable whether or not they are effectively
implemented.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: strategy
Implementation is essential or the strategy is useless.
1-2
,14. The key to a company’s success is creating value for customers while
differentiating itself from its competitors.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: strategy
15. The key to a company’s success is always to be the low cost producer in a particular
industry.
Answer: False Difficulty: 2 Objective: 2
Terms to Learn: strategy
The low cost producer in a particular industry will not necessarily be successful.
16. Companies generally follow one of two basic strategies: 1) providing a quality
product or service at low prices, or 2) offering a unique product or service often
priced higher than competing products.
Answer: True Difficulty: 2 Objective: 2
Terms to Learn: strategy
17. Management accountants should have little or no role in deciding on a company’s
strategy.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: strategy
Management accountants should play a significant role in deciding on a company’s
strategy.
18. Companies can decide on an appropriate strategy based strictly on internally
available information.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: strategy
Companies must obtain external information as well as internal information to
decide on an appropriate strategy.
19. Strategic cost management describes cost management that specifically focuses on
strategic issues.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: strategic cost management
1-3
, 20. The supply chain refers to the sequence of business functions in which customer
usefulness is added to products or services.
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: supply chain
The value chain refers to the sequence of business functions in which customer
usefulness is added to products or services.
21. An effective way to cut costs is to eliminate activities that do not improve the
product attributes that customers value.
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: cost management
22. For optimal planning success it is best if each business function within the value
chain is performed one at a time in sequence.
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: value chain
Optimally, success is achieved when two or more of the individual business
functions work concurrently as a team.
23. For best results, cost management emphasizes independently coordinating supply
chain activities within your company and not interfering with other companies.
Answer: False Difficulty: 2 Objective: 3
Terms to Learn: cost management
Cost management emphasizes integrating and coordinating supply chain activities
across all companies within the supply chain.
24. Technological innovation has led to shorter product-life cycles and a need to bring
new products to market more rapidly.
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: design of products, services, or processes
25. Key success factors include cost, quality, timeliness, and innovation.
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: value chain
1-4
THE ACCOUNTANT’S ROLE IN THE
ORGANIZATION
TRUE/FALSE
1. Management accounting information focuses on external reporting.
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: management accounting
Management accounting information focuses on internal reporting.
2. A good cost accounting system is narrowly focused on a continuous reduction of
costs.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: cost accounting
A good cost accounting system is broadly focused to provide information that helps
managers at all levels implement, monitor, and evaluate company strategies.
3. Modern cost accounting plays a significant role in management decision making.
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: cost accounting
4. The balance sheet, income statement, and statement of cash flows are used for
financial accounting, but not for management accounting.
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: financial accounting
The balance sheet, income statement, and statement of cash flows are used for
financial accounting and also for management accounting.
5. Financial accounting is broader in scope than management accounting.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: financial accounting, management accounting
Management accounting is broader in scope than financial accounting.
6. Cost accounting measures and reports short-term, long-term, financial, and
nonfinancial information.
Answer: True Difficulty: 2 Objective: 1
Terms to Learn: cost accounting
7. Cost management provides information that helps increase value for customers.
1-1
, Answer: True Difficulty: 1 Objective: 1
Terms to Learn: cost management
8. An ideal database should consist of data that could be used for a single purpose
only.
Answer: False Difficulty: 2 Objective: 1
Terms to Learn: management accounting
An ideal database should be able to be used for multiple purposes.
9. An Enterprise Resource Planning (ERP) System is a single database that collects
data and feeds into applications that support each of the company’s business
activities, such as purchases, production, distribution, and sales.
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: management accounting
10. Cost accounting provides information only for management accounting purposes.
Answer: False Difficulty: 1 Objective: 1
Terms to Learn: cost accounting
Cost accounting provides information for financial accounting as well as for
management accounting purposes.
11. Cost management involves long-term and short-term decisions that attempt to
increase value for customers and lower costs of products or services.
Answer: True Difficulty: 1 Objective: 1
Terms to Learn: cost management
12. All strategies should be evaluated regarding the resources and capabilities of the
company.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: strategy
13. The best-designed strategies are valuable whether or not they are effectively
implemented.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: strategy
Implementation is essential or the strategy is useless.
1-2
,14. The key to a company’s success is creating value for customers while
differentiating itself from its competitors.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: strategy
15. The key to a company’s success is always to be the low cost producer in a particular
industry.
Answer: False Difficulty: 2 Objective: 2
Terms to Learn: strategy
The low cost producer in a particular industry will not necessarily be successful.
16. Companies generally follow one of two basic strategies: 1) providing a quality
product or service at low prices, or 2) offering a unique product or service often
priced higher than competing products.
Answer: True Difficulty: 2 Objective: 2
Terms to Learn: strategy
17. Management accountants should have little or no role in deciding on a company’s
strategy.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: strategy
Management accountants should play a significant role in deciding on a company’s
strategy.
18. Companies can decide on an appropriate strategy based strictly on internally
available information.
Answer: False Difficulty: 1 Objective: 2
Terms to Learn: strategy
Companies must obtain external information as well as internal information to
decide on an appropriate strategy.
19. Strategic cost management describes cost management that specifically focuses on
strategic issues.
Answer: True Difficulty: 1 Objective: 2
Terms to Learn: strategic cost management
1-3
, 20. The supply chain refers to the sequence of business functions in which customer
usefulness is added to products or services.
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: supply chain
The value chain refers to the sequence of business functions in which customer
usefulness is added to products or services.
21. An effective way to cut costs is to eliminate activities that do not improve the
product attributes that customers value.
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: cost management
22. For optimal planning success it is best if each business function within the value
chain is performed one at a time in sequence.
Answer: False Difficulty: 1 Objective: 3
Terms to Learn: value chain
Optimally, success is achieved when two or more of the individual business
functions work concurrently as a team.
23. For best results, cost management emphasizes independently coordinating supply
chain activities within your company and not interfering with other companies.
Answer: False Difficulty: 2 Objective: 3
Terms to Learn: cost management
Cost management emphasizes integrating and coordinating supply chain activities
across all companies within the supply chain.
24. Technological innovation has led to shorter product-life cycles and a need to bring
new products to market more rapidly.
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: design of products, services, or processes
25. Key success factors include cost, quality, timeliness, and innovation.
Answer: True Difficulty: 1 Objective: 3
Terms to Learn: value chain
1-4
