,TESTBANK For Cost Accounting, 1e Farmer
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, CHAPTER 1
COST ACCOUNTING HAS PURPOSE
CHAPTER LEARNING OBJECTIVES
1.Explore the elements that support a company’s purpose, as well as your own.
2.Connect the purpose of cost accounting with the role of accountants in organizations.
3.Outline the frameworks, including ethics, that guide the profession.
*4.Increase your chances of success by becoming a lifelong learner.
Current count is:
Knowledge: 106
Comprehension: 5
Application: 0
Analysis: 0
Evaluation: 0
Synthesis: 0
Total: 111
Number and percentage of questions:
Easy: 27 questions, 24 percent (target of 25%)
Medium: 74 questions, 66 percent (target of 65%)
Hard: 10 questions, 9 percent (target of 10%)
Question types:
Multiple Choice: 93
Exercises: 18
FOR INSTRUCTOR USE ONLY
, 1-2 Test Bank for Cost Accounting, First Edition
MULTIPLE CHOICE QUESTIONS
1. A _____________ helps an organization, whether for profit or nonprofit, turn its purpose into
action by establishing the direction of the entity.
a. mission statement
b. strategic plan
c. SWOT analysis
d. vision
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: A strategic plan helps an organization, whether for profit or nonprofit, turn its purpose into action by establishing the direction of the entity.
2. An organization’s strategic plan includes its why, where and how for its purpose represented
by
a. opportunities, strengths and weaknesses.
b. opportunities, strengths, and mission.
c. mission, vision, and strategy.
d. mission, strengths, and strategy.
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: An organization’s strategic plan includes its why, where, and how for its purpose represented by mission, vision, and strategy.
3. In choosing a strategy, a business begins by undertaking a thorough examination of itself and
the industry within which it operates by performing a ______________ analysis.
a. mission and vision statement
b. strategic initiative
c. target objective
d. SWOT
Ans: D, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement Analysis and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: In choosing a strategy, a business begins by undertaking a thorough examination of itself and the industry within which it operates by performing a
SWOT analysis.
4. An organization’s __________ is its purpose; its reason for existing.
a. mission
b. strategy
c. initiative
d. strategic plan
Ans: A, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: An organization’s mission is its purpose, its reason for existing.
5. A SWOT analysis allows an organization to assess its
a. strategies, wealth, outlets, and targets.
b. strengths, warnings, outlets, and threats.
c. strengths, weaknesses, opportunities, and threats.
d. strategies, wealth, opportunities, and threats.
Ans: C, LO 1, Bloom: C, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: A SWOT analysis allows an organization to assess its strengths, weaknesses, opportunities, and threats.
FOR INSTRUCTOR USE ONLY
, 1-3 Test Bank for Cost Accounting, First Edition
6. What is a narrative that describes what the organization will look like, or a destination to
achieve, by some future date called?
a. SWOT analysis
b. Strategic plan
c. Vision
d. Mission
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: A narrative the describes what the organization will look like, or a destination to achieve, by some future date is called a vision.
7. Which of the following statements is correct regarding a SWOT analysis?
a.The basis for evaluation using the SWOT analysis focuses on external factors only.
b. Factors to assess in a SWOT analysis included elements described in Porter’s Five Forces.
c. Insignificant in setting a company’s strategy is determining the organization’s critical
success factors.
d. A SWOT analysis is typically used in the Mission and Vision stage in creating the strategic
plan for an organization.
Ans: B, LO 1, Bloom: C, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The correct statement regarding SWOT analysis is,” Factors to assess in a SWOT analysis included elements described in Porter’s Five Forces.”
8. Which balanced scorecard perspective considers how an organization supports its people and
infrastructure to drive and maintain new products and service development and growth?
a. Financial perspective
b. Customer perspective
c. Internal business process perspective
d. Learning and growth perspective
Ans: D, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The learning and growth perspective considers how an organization supports its people and infrastructure to drive and maintain new products and
service development and growth.
9. Which of the following represent internal factors in the SWOT analysis?
a. Opportunities and threats
b. Strengths and weaknesses
c. Strengths and opportunities
d. Weaknesses and threats
Ans: B, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement Analysis and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: Internal factors in the SWOT include strengths and weaknesses.
10. The correct flow of the steps in the creation of an organization’s strategic plan is
a. Mission and Vision→Strategies and Initatives→Goals and Objectives→Measures and
Targets→Results
b. Mission and Vision→Goals and Objectives→Strategies and Initiatives→Measures and
Targets→Results
c. Strategies and Initatives→Goals and Objectives→Mission and Vision→Measures and
Targets→Results
d. Mission and Vision→Measures and Targets→Strategies and Initatives→Goals and
Objectives→Results
Ans: B LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The correct flow of the steps in the creation of an organization’s strategic plan is Mission and Vision→Goals and Objectives→Strategies and
Initiatives→Measures and Targets→Results
FOR INSTRUCTOR USE ONLY
, 1-4 Test Bank for Cost Accounting, First Edition
11. When performing a SWOT analysis, a business would ask, “What are the organization’s need-
improvement areas that impede goal achievement” to address its
a. strengths
b. weaknesses
c. opportunities
d. threats
Ans: B, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: When performing a SWOT analysis, a business would ask, “What are the organization’s need-improvement areas that impede goal achievement”
to address its weaknesses.
12. An organization’s mission is the same as its
a. purpose.
b. vision.
c. objectives.
d. targets.
Ans: A, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: An organization’s mission is the same as its purpose.
13. A wide-reaching set of documents detailing a company’s purpose, future destination, and
short-term and long-term techniques for getting there is its
a. vision.
b. strategic plan.
c. balanced scorecard.
d. SWOT analysis.
Ans: B, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: A wide-reaching set of documents detailing a company’s purpose, future destination, and short-term and long-term techniques for getting there is
Its strategic plan.
14. Which of the following statements is correct?
a. A strategic plan conveys the idea of a coordinated, consolidated, short-term, organization-
wide plan.
b. Many strategic plans include both short-term and long-term goals to direct the organization
toward arriving at its vision.
c. Once an organization determines its mission, it does not need to change it.
d. Only for-profit entities need purpose and direction normally detailed in a strategic plan.
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The correct statement is, “Many strategic plans include both short-term and long-term goals to direct the organization toward arriving at its vision.”
15. In evaluating a nonprofit organization’s balanced scorecard, which perspective might be
addressed?
a. Customer perspective
b. Learning and growth perspective
c. Financial stewardship perspective
d. Internal business process perspective
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: In evaluating a nonprofit organization’s balanced scorecard, the financial stewardship perspective might be addressed. The other perspectives
are for a for-profit organization.
FOR INSTRUCTOR USE ONLY
, 1-5 Test Bank for Cost Accounting, First Edition
16. Which of the following would not be included in an organization’s strategic plan?
a. Mission (why)
b. Vision (where)
c. Timing (when)
d. Strategy (how)
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: An organization’s strategic plan includes its why (mission), where (vision) and how (strategy). It does not include when (timing).
17. Porter’s Five Forces used in the SWOT analysis would not include impacts of
a. customers.
b. the strategic plan.
c. existing competitors.
d. potential new entrants.
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: Porter’s Five Forces used in the SWOT analysis would not include impacts of the strategic plan, but would include the impacts of customers,
existing competitors, and potential new entrants.
18. The current or future external challenges that are unfavorable for an organization are referred
to as
a. threats.
b. opportunities.
c. strengths.
d. weaknesses.
Ans: A, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The current or future external challenges that are unfavorable for an organization are referred to as threats.
19. At a minimum, factors to assess in a SWOT analysis include elements described in
a. an organization’s critical success factors.
b. an organization’s key performance indicators (KPI).
c. Porter’s Five Forces.
d. The balanced scorecard.
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: At a minimum, factors to assess in a SWOT analysis include elements described in Porter’s Five Forces.
20. What a company does well that is helpful for its goal achievement is identified as
a. strengths.
b. weaknesses.
c. opportunities.
d. threats.
Ans A: LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: What a company does well that helpful for goal achievement is identified as strengths.
21. “SMARTER” goals should be all of the following except
a. relevant.
b. achievable.
c. universal.
d. meaningful.
FOR INSTRUCTOR USE ONLY
, 1-6 Test Bank for Cost Accounting, First Edition
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: Smarter goals should be relevant, achievable and meaningful, but should not be universal.
22. _____________ goals complete the circle with feedback and adjustment components, which
are necessary for any good goal-setting plan.
a. “BALANCED”
b. “STRONG”
c. “SMARTER”
d. “FLEXIBLE”
Ans: C, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: SMARTER goals complete the circle with feedback and adjustment components, which are necessary for any good goal-setting plan.
23. A performance measurement tool used to evaluate what actually happened against an
organization’s stated objectives which integrates an organization’s vision, mission, and
strategy is a
a. balanced scorecard.
b. SWOT analysis.
c. strategic plan.
d. key performance indicator.
Ans: A, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: A performance measurement tool used to evaluate what actually happened against an organization’s stated objectives which integrates an
organization’s vision, mission, and strategy is a balanced scorecard.
24. Which of the following represents the correct four perspectives of the balanced scorecard?
a. Financial, organizational capacity, customer, and internal business process perspectives
b. Financial, customer, internal business process, and learning and growth perspectives
c. Financial, customer, business processes, and organization capacity perspectives
d. Customer, business processes, financial stewardship, and beneficiary/stakeholder
perspectives
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The four perspectives of the balanced scorecard are financial, customer, internal business process, and learning and growth perspectives.
25. Which of the following statements is true regarding the balanced scorecard?
a. The balanced scorecard focuses on financial measures alone to measure the success of an
organization.
b. Governmental agencies and nonprofit organizations use the same four perspectives as for-
profit organizations use in the balanced scorecard approach.
c. The balanced scorecard is a framework for measuring organizational performance using
both financial and nonfinancial measures.
d. The balanced scorecard uses the five elements described in Porter’s Five Forces to assess
the strategies and initiatives of an organization.
Ans C: LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The statement regarding the balanced scorecard which is true is, “The balanced scorecard is a framework for measuring organizational
performance using both financial and nonfinancial measures.”
FOR INSTRUCTOR USE ONLY
, 1-7 Test Bank for Cost Accounting, First Edition
26. Which of the following is a balanced scorecard perspective for governmental agencies and
nonprofit organizations?
a. Customer perspective
b. Organization capacity perspective
c. Internal business process perspective
d. Learning and growth perspective
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The organizational capacity perspective is the only balanced scorecard perspective for governmental agencies and nonprofit organizations.
27. Which of the following statements about cost accounting is correct?
a. Cost accounting has an external focus.
b. Cost accounting is very narrow in scope.
c. Cost accounting helps owners and managers make decisions about their companies.
d. Cost accounting cannot be tied to all functional areas of a company.
Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Cost
Accounting.
Solution: Cost accounting helps owners and managers make decisions about their companies is a correct statement. All other statements about cost
accounting are incorrect.
28. Who is at the heart of a multi-directional flow of financial information in the decision-making
process?
a. Management
b. Accountants
c. Board of directors
d. Stockholders
Ans: B, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Financial
Recordkeeping.
Solution: Accountants are at the heart of a multi-directional flow of financial information in the decision-making process.
29. Which of the following statements is true regarding accounting in the management decision-
making process?
a. The format and content of internal financial reports are determined by the framework,
principles, and rules of GAAP and/or IFRS.
b. The scope of external financial reports and the level of detail within is kept private, as it is
broader and more detailed than internal reports.
c. External financial reports and records are created from the same database of financial
transactions that populate the internal financial reports for decision-making purposes.
d. Financial reports and records initiate the entire decision-making process for management.
Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Strategy, Planning &
Performance: Decision Analysis.
Solution: The statement which is true is,” External financial reports and records are created from the same database of financial transactions that populate
the internal financial reports for decision-making purposes.
30. Which financial manager is responsible for the financial reporting process, which includes
creation and monitoring of the internal controls that support financial processes?
a. Chief financial officer
b. Treasurer
c. Internal auditor
d. Controller
Ans: D, LO 2, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Strategy, Planning & Performance:
Cost Management.
FOR INSTRUCTOR USE ONLY
, 1-8 Test Bank for Cost Accounting, First Edition
Solution: A Controller is the financial manager who is responsible for the financial reporting process, which includes creation and monitoring of the internal
controls that support the financial process.
31. The Chief financial officer is responsible for
a. managing cash, cash equivalents, short-term investments, issuance of debt and equities,
and relationships with lenders only.
b. the financial reporting process, which includes creation and monitoring of the internal
controls that support financial processes only.
c. all processes within the finance and accounting functional areas and an important player in
strategic decisions for the company.
d. preparing internal and external financial reports and records.
Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Integrated
Reporting.
Solution: The Chief financial officer is responsible for all processes within the finance and accounting functional areas and an important player in
strategic decisions for the company.
32. The financial manager who is responsible for managing cash, cash equivalents, short-term
investments, issuance of debt and equities, and relationships with lenders is the
a. Controller
b. Treasurer
c. Chief financial officer
d. Auditor
Ans: B, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Integrated
Reporting.
Solution: The financial manager who is responsible for managing cash, cash equivalents, short-term investments, issuance of debt and equities, and
relationships with lenders is the Treasurer.
33. The primary difference in reporting between cost accounting and financial accounting is that
a. cost accounting reports support internal management decision-making whereas financial
accounting reports present financial statement information to external users and decision-
makers who do not work for the company.
b. cost accounting reports are externally focused whereas financial accounting reports are
internally focused.
c. cost accounting reports are subject to GAAP and/or IFRS whereas financial accounting
reports are not.
d. cost accounting reports cannot be arranged or presented in any reasonable way and cannot
be modified based on manager’s feedback whereas financial accounting reports can.
Ans: A, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Integrated
Reporting.
Solution: The primary difference in reporting between cost accounting and financial accounting is that cost accounting reports support internal
management decision-making whereas financial accounting reports present financial statement information to external users and decision-makers who do
not work for the company.
34. The decision-making framework for an organization consists of _________ steps.
a. three
b. four
c. five
d. six
Ans: C, LO 2, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The decision-making process for an organization consists of five steps.
FOR INSTRUCTOR USE ONLY
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, CHAPTER 1
COST ACCOUNTING HAS PURPOSE
CHAPTER LEARNING OBJECTIVES
1.Explore the elements that support a company’s purpose, as well as your own.
2.Connect the purpose of cost accounting with the role of accountants in organizations.
3.Outline the frameworks, including ethics, that guide the profession.
*4.Increase your chances of success by becoming a lifelong learner.
Current count is:
Knowledge: 106
Comprehension: 5
Application: 0
Analysis: 0
Evaluation: 0
Synthesis: 0
Total: 111
Number and percentage of questions:
Easy: 27 questions, 24 percent (target of 25%)
Medium: 74 questions, 66 percent (target of 65%)
Hard: 10 questions, 9 percent (target of 10%)
Question types:
Multiple Choice: 93
Exercises: 18
FOR INSTRUCTOR USE ONLY
, 1-2 Test Bank for Cost Accounting, First Edition
MULTIPLE CHOICE QUESTIONS
1. A _____________ helps an organization, whether for profit or nonprofit, turn its purpose into
action by establishing the direction of the entity.
a. mission statement
b. strategic plan
c. SWOT analysis
d. vision
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: A strategic plan helps an organization, whether for profit or nonprofit, turn its purpose into action by establishing the direction of the entity.
2. An organization’s strategic plan includes its why, where and how for its purpose represented
by
a. opportunities, strengths and weaknesses.
b. opportunities, strengths, and mission.
c. mission, vision, and strategy.
d. mission, strengths, and strategy.
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: An organization’s strategic plan includes its why, where, and how for its purpose represented by mission, vision, and strategy.
3. In choosing a strategy, a business begins by undertaking a thorough examination of itself and
the industry within which it operates by performing a ______________ analysis.
a. mission and vision statement
b. strategic initiative
c. target objective
d. SWOT
Ans: D, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement Analysis and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: In choosing a strategy, a business begins by undertaking a thorough examination of itself and the industry within which it operates by performing a
SWOT analysis.
4. An organization’s __________ is its purpose; its reason for existing.
a. mission
b. strategy
c. initiative
d. strategic plan
Ans: A, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: An organization’s mission is its purpose, its reason for existing.
5. A SWOT analysis allows an organization to assess its
a. strategies, wealth, outlets, and targets.
b. strengths, warnings, outlets, and threats.
c. strengths, weaknesses, opportunities, and threats.
d. strategies, wealth, opportunities, and threats.
Ans: C, LO 1, Bloom: C, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: A SWOT analysis allows an organization to assess its strengths, weaknesses, opportunities, and threats.
FOR INSTRUCTOR USE ONLY
, 1-3 Test Bank for Cost Accounting, First Edition
6. What is a narrative that describes what the organization will look like, or a destination to
achieve, by some future date called?
a. SWOT analysis
b. Strategic plan
c. Vision
d. Mission
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: A narrative the describes what the organization will look like, or a destination to achieve, by some future date is called a vision.
7. Which of the following statements is correct regarding a SWOT analysis?
a.The basis for evaluation using the SWOT analysis focuses on external factors only.
b. Factors to assess in a SWOT analysis included elements described in Porter’s Five Forces.
c. Insignificant in setting a company’s strategy is determining the organization’s critical
success factors.
d. A SWOT analysis is typically used in the Mission and Vision stage in creating the strategic
plan for an organization.
Ans: B, LO 1, Bloom: C, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The correct statement regarding SWOT analysis is,” Factors to assess in a SWOT analysis included elements described in Porter’s Five Forces.”
8. Which balanced scorecard perspective considers how an organization supports its people and
infrastructure to drive and maintain new products and service development and growth?
a. Financial perspective
b. Customer perspective
c. Internal business process perspective
d. Learning and growth perspective
Ans: D, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The learning and growth perspective considers how an organization supports its people and infrastructure to drive and maintain new products and
service development and growth.
9. Which of the following represent internal factors in the SWOT analysis?
a. Opportunities and threats
b. Strengths and weaknesses
c. Strengths and opportunities
d. Weaknesses and threats
Ans: B, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement Analysis and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: Internal factors in the SWOT include strengths and weaknesses.
10. The correct flow of the steps in the creation of an organization’s strategic plan is
a. Mission and Vision→Strategies and Initatives→Goals and Objectives→Measures and
Targets→Results
b. Mission and Vision→Goals and Objectives→Strategies and Initiatives→Measures and
Targets→Results
c. Strategies and Initatives→Goals and Objectives→Mission and Vision→Measures and
Targets→Results
d. Mission and Vision→Measures and Targets→Strategies and Initatives→Goals and
Objectives→Results
Ans: B LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The correct flow of the steps in the creation of an organization’s strategic plan is Mission and Vision→Goals and Objectives→Strategies and
Initiatives→Measures and Targets→Results
FOR INSTRUCTOR USE ONLY
, 1-4 Test Bank for Cost Accounting, First Edition
11. When performing a SWOT analysis, a business would ask, “What are the organization’s need-
improvement areas that impede goal achievement” to address its
a. strengths
b. weaknesses
c. opportunities
d. threats
Ans: B, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: When performing a SWOT analysis, a business would ask, “What are the organization’s need-improvement areas that impede goal achievement”
to address its weaknesses.
12. An organization’s mission is the same as its
a. purpose.
b. vision.
c. objectives.
d. targets.
Ans: A, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: An organization’s mission is the same as its purpose.
13. A wide-reaching set of documents detailing a company’s purpose, future destination, and
short-term and long-term techniques for getting there is its
a. vision.
b. strategic plan.
c. balanced scorecard.
d. SWOT analysis.
Ans: B, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: A wide-reaching set of documents detailing a company’s purpose, future destination, and short-term and long-term techniques for getting there is
Its strategic plan.
14. Which of the following statements is correct?
a. A strategic plan conveys the idea of a coordinated, consolidated, short-term, organization-
wide plan.
b. Many strategic plans include both short-term and long-term goals to direct the organization
toward arriving at its vision.
c. Once an organization determines its mission, it does not need to change it.
d. Only for-profit entities need purpose and direction normally detailed in a strategic plan.
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The correct statement is, “Many strategic plans include both short-term and long-term goals to direct the organization toward arriving at its vision.”
15. In evaluating a nonprofit organization’s balanced scorecard, which perspective might be
addressed?
a. Customer perspective
b. Learning and growth perspective
c. Financial stewardship perspective
d. Internal business process perspective
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: In evaluating a nonprofit organization’s balanced scorecard, the financial stewardship perspective might be addressed. The other perspectives
are for a for-profit organization.
FOR INSTRUCTOR USE ONLY
, 1-5 Test Bank for Cost Accounting, First Edition
16. Which of the following would not be included in an organization’s strategic plan?
a. Mission (why)
b. Vision (where)
c. Timing (when)
d. Strategy (how)
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: An organization’s strategic plan includes its why (mission), where (vision) and how (strategy). It does not include when (timing).
17. Porter’s Five Forces used in the SWOT analysis would not include impacts of
a. customers.
b. the strategic plan.
c. existing competitors.
d. potential new entrants.
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: Porter’s Five Forces used in the SWOT analysis would not include impacts of the strategic plan, but would include the impacts of customers,
existing competitors, and potential new entrants.
18. The current or future external challenges that are unfavorable for an organization are referred
to as
a. threats.
b. opportunities.
c. strengths.
d. weaknesses.
Ans: A, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The current or future external challenges that are unfavorable for an organization are referred to as threats.
19. At a minimum, factors to assess in a SWOT analysis include elements described in
a. an organization’s critical success factors.
b. an organization’s key performance indicators (KPI).
c. Porter’s Five Forces.
d. The balanced scorecard.
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: At a minimum, factors to assess in a SWOT analysis include elements described in Porter’s Five Forces.
20. What a company does well that is helpful for its goal achievement is identified as
a. strengths.
b. weaknesses.
c. opportunities.
d. threats.
Ans A: LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: What a company does well that helpful for goal achievement is identified as strengths.
21. “SMARTER” goals should be all of the following except
a. relevant.
b. achievable.
c. universal.
d. meaningful.
FOR INSTRUCTOR USE ONLY
, 1-6 Test Bank for Cost Accounting, First Edition
Ans: C, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: Smarter goals should be relevant, achievable and meaningful, but should not be universal.
22. _____________ goals complete the circle with feedback and adjustment components, which
are necessary for any good goal-setting plan.
a. “BALANCED”
b. “STRONG”
c. “SMARTER”
d. “FLEXIBLE”
Ans: C, LO 1, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: SMARTER goals complete the circle with feedback and adjustment components, which are necessary for any good goal-setting plan.
23. A performance measurement tool used to evaluate what actually happened against an
organization’s stated objectives which integrates an organization’s vision, mission, and
strategy is a
a. balanced scorecard.
b. SWOT analysis.
c. strategic plan.
d. key performance indicator.
Ans: A, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: A performance measurement tool used to evaluate what actually happened against an organization’s stated objectives which integrates an
organization’s vision, mission, and strategy is a balanced scorecard.
24. Which of the following represents the correct four perspectives of the balanced scorecard?
a. Financial, organizational capacity, customer, and internal business process perspectives
b. Financial, customer, internal business process, and learning and growth perspectives
c. Financial, customer, business processes, and organization capacity perspectives
d. Customer, business processes, financial stewardship, and beneficiary/stakeholder
perspectives
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The four perspectives of the balanced scorecard are financial, customer, internal business process, and learning and growth perspectives.
25. Which of the following statements is true regarding the balanced scorecard?
a. The balanced scorecard focuses on financial measures alone to measure the success of an
organization.
b. Governmental agencies and nonprofit organizations use the same four perspectives as for-
profit organizations use in the balanced scorecard approach.
c. The balanced scorecard is a framework for measuring organizational performance using
both financial and nonfinancial measures.
d. The balanced scorecard uses the five elements described in Porter’s Five Forces to assess
the strategies and initiatives of an organization.
Ans C: LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The statement regarding the balanced scorecard which is true is, “The balanced scorecard is a framework for measuring organizational
performance using both financial and nonfinancial measures.”
FOR INSTRUCTOR USE ONLY
, 1-7 Test Bank for Cost Accounting, First Edition
26. Which of the following is a balanced scorecard perspective for governmental agencies and
nonprofit organizations?
a. Customer perspective
b. Organization capacity perspective
c. Internal business process perspective
d. Learning and growth perspective
Ans: B, LO 1, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Business Acumen &
Operations: Operational Knowledge.
Solution: The organizational capacity perspective is the only balanced scorecard perspective for governmental agencies and nonprofit organizations.
27. Which of the following statements about cost accounting is correct?
a. Cost accounting has an external focus.
b. Cost accounting is very narrow in scope.
c. Cost accounting helps owners and managers make decisions about their companies.
d. Cost accounting cannot be tied to all functional areas of a company.
Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Cost
Accounting.
Solution: Cost accounting helps owners and managers make decisions about their companies is a correct statement. All other statements about cost
accounting are incorrect.
28. Who is at the heart of a multi-directional flow of financial information in the decision-making
process?
a. Management
b. Accountants
c. Board of directors
d. Stockholders
Ans: B, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Financial
Recordkeeping.
Solution: Accountants are at the heart of a multi-directional flow of financial information in the decision-making process.
29. Which of the following statements is true regarding accounting in the management decision-
making process?
a. The format and content of internal financial reports are determined by the framework,
principles, and rules of GAAP and/or IFRS.
b. The scope of external financial reports and the level of detail within is kept private, as it is
broader and more detailed than internal reports.
c. External financial reports and records are created from the same database of financial
transactions that populate the internal financial reports for decision-making purposes.
d. Financial reports and records initiate the entire decision-making process for management.
Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Strategy, Planning &
Performance: Decision Analysis.
Solution: The statement which is true is,” External financial reports and records are created from the same database of financial transactions that populate
the internal financial reports for decision-making purposes.
30. Which financial manager is responsible for the financial reporting process, which includes
creation and monitoring of the internal controls that support financial processes?
a. Chief financial officer
b. Treasurer
c. Internal auditor
d. Controller
Ans: D, LO 2, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Strategy, Planning & Performance:
Cost Management.
FOR INSTRUCTOR USE ONLY
, 1-8 Test Bank for Cost Accounting, First Edition
Solution: A Controller is the financial manager who is responsible for the financial reporting process, which includes creation and monitoring of the internal
controls that support the financial process.
31. The Chief financial officer is responsible for
a. managing cash, cash equivalents, short-term investments, issuance of debt and equities,
and relationships with lenders only.
b. the financial reporting process, which includes creation and monitoring of the internal
controls that support financial processes only.
c. all processes within the finance and accounting functional areas and an important player in
strategic decisions for the company.
d. preparing internal and external financial reports and records.
Ans: C, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Integrated
Reporting.
Solution: The Chief financial officer is responsible for all processes within the finance and accounting functional areas and an important player in
strategic decisions for the company.
32. The financial manager who is responsible for managing cash, cash equivalents, short-term
investments, issuance of debt and equities, and relationships with lenders is the
a. Controller
b. Treasurer
c. Chief financial officer
d. Auditor
Ans: B, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Integrated
Reporting.
Solution: The financial manager who is responsible for managing cash, cash equivalents, short-term investments, issuance of debt and equities, and
relationships with lenders is the Treasurer.
33. The primary difference in reporting between cost accounting and financial accounting is that
a. cost accounting reports support internal management decision-making whereas financial
accounting reports present financial statement information to external users and decision-
makers who do not work for the company.
b. cost accounting reports are externally focused whereas financial accounting reports are
internally focused.
c. cost accounting reports are subject to GAAP and/or IFRS whereas financial accounting
reports are not.
d. cost accounting reports cannot be arranged or presented in any reasonable way and cannot
be modified based on manager’s feedback whereas financial accounting reports can.
Ans: A, LO 2, Bloom: K, Difficulty: Medium, AACSB: Analytic, AICPA: FC, Measurement, Analysis, and Interpretation, IMA: Reporting & Control: Integrated
Reporting.
Solution: The primary difference in reporting between cost accounting and financial accounting is that cost accounting reports support internal
management decision-making whereas financial accounting reports present financial statement information to external users and decision-makers who do
not work for the company.
34. The decision-making framework for an organization consists of _________ steps.
a. three
b. four
c. five
d. six
Ans: C, LO 2, Bloom: K, Difficulty: Easy, AACSB: Analytic, AICPA: FC: Measurement, Analysis, and Interpretation, IMA: Business Acumen & Operations:
Operational Knowledge.
Solution: The decision-making process for an organization consists of five steps.
FOR INSTRUCTOR USE ONLY
